2002 (12) TMI 297 - AT - Customs

Summary

Issues Involved:
1. Provisional assessment of goods and applicability of Notification No. 203/92.
2. Jurisdiction of Directorate of Revenue Intelligence (DRI) in investigating, seizing goods, and issuing Show Cause Notices (SCN).
3. Validity of the Show Cause Notice and the Commissioner's decision on penalties and fines.
4. Imposition of fine and recovery of duty and interest.

Issue-wise Detailed Analysis:

1. Provisional Assessment of Goods and Applicability of Notification No. 203/92:
The Commissioner's decision was challenged on the grounds that the provisional assessment was based on the chemical testing of the goods, not the applicability of Notification No. 203/92. The Commissioner had relied on the judgment of the Bombay High Court in the case of M/s. Godrej & Boyce, which was deemed inapplicable by the Revenue as the provisional assessment was due to pending test reports, not the notification.

2. Jurisdiction of Directorate of Revenue Intelligence (DRI):
The Commissioner had ruled that the DRI's actions were without authority, citing the principle of comity of courts. However, the Revenue argued that DRI officials are empowered under Notification No. 19/90 and have the authority to investigate, seize, and issue SCNs. The Commissioner's reliance on the principle of comity of courts was deemed incorrect as DRI does not possess quasi-judicial powers but operates under the Customs Act, 1962, with the authority to investigate and issue SCNs answerable to the Commissioner of Customs.

3. Validity of the Show Cause Notice and the Commissioner's Decision on Penalties and Fines:
The Commissioner had confiscated the goods but did not impose any penalties, deeming the SCNs void. The Revenue contended that once goods are confiscated, penalties under Section 112 of the Customs Act are mandatory. The Commissioner's order was contradictory as it imposed a fine and denied duty-free benefits but did not impose penalties. The Revenue emphasized that the Commissioner should have imposed penalties in line with the Customs Act's scheme.

4. Imposition of Fine and Recovery of Duty and Interest:
The fine imposed by the Commissioner was considered too low given the value of the goods. The Revenue argued that the Commissioner should have imposed a higher fine and ordered the recovery of interest, citing the Supreme Court's decision in Agricultural and Processed Food Products v. Oswal Agro Furane Ltd., which mandated the recovery of interest on delayed duty payments to prevent undue benefits to the party.

Conclusion:
The Tribunal observed that the Commissioner erred in holding that DRI had no jurisdiction to seize goods and issue SCNs. The DRI officials were empowered under the statute and had not adjudicated the case themselves but made the SCNs answerable to the Commissioner of Customs. The Commissioner's application of the comity of courts principle was without legal basis. The Tribunal also noted the necessity of imposing penalties once goods are confiscated and reconsidering the fine imposed. The Commissioner's failure to order the recovery of interest was also highlighted. Consequently, the Tribunal set aside the impugned order and remanded the case for re-adjudication by the successor Commissioner, allowing the department's appeals by way of remand.