2015 (8) TMI 1047 - SC - Customs

Issuance of show cause notice Re-opening of assessment order Appellant issued show cause notice in which certain frauds were alleged against respondent and on that basis previous order of assessment was reopened Tribunal vide impugned order allowed appeal against said reopening of assessment order on ground that Commissioner could not have issued show cause notice as prior order of Commissioner had merged into order passed by revisionary authority and principles of res judicata applied. Held that - Even if certain material came to the notice of the Commissioner, which became the basis for the show cause notice, the only proper course was to challenge the said order of the Joint Secretary by taking out other proceedings, as admissible in law. - It would be open to appellant to invoke principles of Section 14 of Limitation Act insofar as limitation is concerned as the matter is kept pending in various judicial fora, including this court. - No infirmity in order of tribunal Decided against Revenue.

Summary

Issues:
1. Reopening of proceedings by Commissioner after order passed by Joint Secretary
2. Application of principles of res judicata
3. Validity of show cause notice issued by Commissioner

Analysis:
The case involved the export of children's garments to Russia under the claim of drawback, with the value of goods being a contentious issue. The Assistant Collector assessed the goods at a certain value for drawback purposes, which was challenged by the respondent through appeals and revision applications. The Joint Secretary, Government of India, remanded the case for fresh consideration, ultimately enhancing the value of goods. Subsequently, the Commissioner issued a show cause notice alleging fraud against the respondent and seeking to reopen the issue.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) set aside the Commissioner's order, citing that the show cause notice could not have been issued as the matter had been settled by the higher authority, the Joint Secretary. The principle of res judicata was applied, emphasizing that the Commissioner could not reopen the proceedings after the order passed by the revisionary authority had merged the Commissioner's order. The Supreme Court upheld the CESTAT's decision, emphasizing that the show cause notice under Section 28 of the Customs Act was improper in this scenario.

The Court clarified that if the Commissioner had new material, the appropriate course would have been to challenge the Joint Secretary's order through other legal proceedings. The Court affirmed the CESTAT's order but granted the appellant the liberty to pursue other proceedings within the confines of the law. The respondent was given the opportunity to defend against any new proceedings initiated by the appellant. The civil appeal was ultimately dismissed, with the appellant permitted to explore further legal options, including invoking the principles of the Limitation Act regarding time constraints.