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2014 (10) TMI 836 - HC - CustomsProper officer under Section 28(1) of the Customs Act - proceedings initiated under Rule 8 of the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 by the Deputy Commissioner of Central Excise - Held that - For the first time, the Board appointed Deputy Commissioners or Assistant Commissioners of Central Excise as proper officers for the purpose of Section 17 and Section 28 of the Act. Till such time, neither the Board nor the Commissioner of Customs had appointed them as proper officers. Though the Parliament amended Section 28, it has no application to the facts of this case, because the Deputy Commissioner of Central Excise who initiated the proceedings is not the officer of Customs. As the impugned notice was issued on 21-8-2001 and subsequent notices issued, which are all prior to 2005 as on that date the Deputy Commissioner of Central Excise was not appointed under Section 4(1) of the Customs Act as a Customs officer nor was he appointed as a proper officer under Section 2(34) by the Board or the Commissioner of Customs, he had no jurisdiction to issue show cause notice. It is exactly what the Tribunal has said. - Decided against the revenue.
Issues Involved:
1. Jurisdiction of the Deputy Commissioner of Central Excise under Rule 8 of the Customs Rules, 1996. 2. Definition and authority of the "Proper Officer" under Section 28(1) of the Customs Act. 3. Validity of show cause notices issued by the Deputy Commissioner of Central Excise. 4. Retrospective effect of the amendment to Section 28 of the Customs Act. Issue-wise Detailed Analysis: 1. Jurisdiction of the Deputy Commissioner of Central Excise under Rule 8 of the Customs Rules, 1996: The primary issue was whether the Deputy Commissioner of Central Excise had jurisdiction to initiate proceedings under Rule 8 of the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. The Tribunal had previously held that the Deputy Commissioner was not a proper Officer of Customs under Section 28(1) of the Customs Act, thus lacking jurisdiction. The High Court upheld this view, noting that the power to recover duties under Rule 8 was improperly vested in the Assistant Commissioner or Deputy Commissioner of Central Excise, who are not considered Customs Officers under the Act. 2. Definition and authority of the "Proper Officer" under Section 28(1) of the Customs Act: The term "Proper Officer" is defined under Section 2(34) of the Customs Act as an officer of Customs assigned functions by the Board or the Commissioner of Customs. The Supreme Court, in the case of Commissioner of Customs v. Syed Ali, clarified that only officers specifically assigned duties of assessment and re-assessment by the Board or Commissioner of Customs are deemed proper officers. The High Court reiterated that the Deputy Commissioner of Central Excise was not assigned such functions and thus was not a proper officer under the Customs Act. 3. Validity of show cause notices issued by the Deputy Commissioner of Central Excise: The High Court found that the show cause notices issued by the Deputy Commissioner of Central Excise were without jurisdiction. The notices were issued for the recovery of differential duty for the period from 27-8-1996 to 30-4-2001. The Tribunal's decision to set aside these notices was upheld, as the Deputy Commissioner was not authorized under Section 28(1) of the Customs Act to issue them. 4. Retrospective effect of the amendment to Section 28 of the Customs Act: An amendment to Section 28 by Act No. 14 of 2011 introduced a deeming provision that retrospectively recognized all officers appointed under Section 4(1) before 6th July 2011 as proper officers. However, the High Court noted that this amendment did not apply to the Deputy Commissioner of Central Excise in this case, as he was not appointed as a Customs officer under Section 4(1) nor recognized as a proper officer under Section 2(34) by the Board or Commissioner of Customs before the issuance of the show cause notices. Conclusion: The High Court dismissed the appeals, affirming the Tribunal's decision that the Deputy Commissioner of Central Excise lacked jurisdiction to issue the show cause notices. The substantial question of law was resolved in favor of the assessee, confirming that the Deputy Commissioner was not a proper officer under the Customs Act, and the notices issued were invalid.
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