2018 (1) TMI 1636 - AT - Customs

Jurisdiction - power of DRI to issue SCN - Competent Officers to issue SCN or not - HELD THAT - Being conflicting decisions of various High Courts finally the matter reached to Hon ble Supreme Court who on 07.10.2016 granted the stay of operation of the judgment passed by the High Court of Delhi. Thus the issue is subjudice before the Hon ble Supreme Court. 2016 (8) TMI 1181 - SC ORDER . It may be mentioned that recently the Hon ble High Court of Delhi in the case of BSNL Vs. UOI vide 2017 (6) TMI 688 - DELHI HIGH COURT has dealt with the identical issue where the notice was also issued by DRI. The Hon ble High Court of Delhi has considered the judgment in the case of Mangli Impex Vs. UOI which is stayed by the Hon ble Supreme Court reported as 2016 (8) TMI 1181 - SC ORDER . Finally the Hon ble High Court has granted liberty to the petitioner by observing that petitioner is permitted to review the challenge depending on the outcome of the appeals filed by the UOI in the Supreme Court against the judgment of the Court in the case of Mangli Impex Ltd. It is found that the show cause notices involved in these appeals are also in jeopardy in view of the fact of Mangali Impex judgment as also the fact that the same has been stayed by the Hon ble Supreme Court. Matter remanded to the original adjudicating authority to first decide the issue of jurisdiction after the availability of Hon ble Supreme Court decision in the case of Mangli Impex and then on merits of the case - appeal allowed by way of remand.

Summary

Issues involved:
1. Jurisdiction of DRI officers to issue notice under the Customs Act.
2. Recovery of drawback amounts under Customs and Central Excise Duty Drawback Rules.
3. Conflict between High Court judgments on the issue of DRI officers' jurisdiction.
4. Stay granted by the Supreme Court on the judgment passed by the High Court of Delhi.
5. Recent judgment by the High Court of Delhi granting liberty to review the challenge depending on the Supreme Court's decision in a related case.

Issue 1: Jurisdiction of DRI officers to issue notice under the Customs Act:
The primary issue in the present appeals pertains to the jurisdiction of Directorate of Revenue Intelligence (DRI) officers to issue notices under the Customs Act. The appellant contended that DRI officers were not proper officers as per the Customs Act, citing a Supreme Court decision. Amendments were made to the Customs Act in 2011, designating the Additional Director General, DRI, as a proper officer. Subsequent amendments further clarified the functions of DRI officers as proper officers. However, conflicting High Court judgments arose on whether DRI officers had jurisdiction to issue show cause notices (SCNs) before the 2011 amendments. The matter was eventually stayed by the Supreme Court, pending a decision. The Tribunal considered these aspects and remanded the case to the original adjudicating authority for further review post the Supreme Court's decision.

Issue 2: Recovery of drawback amounts under Customs and Central Excise Duty Drawback Rules:
The appeals also involved the recovery of drawback amounts allegedly availed fraudulently under the Customs and Central Excise Duty Drawback Rules. The Tribunal referenced a specific case where a similar challenge was made regarding the recovery of drawback. High Courts held conflicting views on this matter, leading to the Supreme Court granting a stay on the Delhi High Court's judgment. The Tribunal acknowledged the complexity of the issue due to conflicting judgments and decided to remand the case for further consideration post the Supreme Court's decision.

Issue 3: Conflict between High Court judgments on the issue of DRI officers' jurisdiction:
The Tribunal highlighted the conflicting judgments of various High Courts regarding the jurisdiction of DRI officers to issue SCNs under the Customs Act. While the Delhi High Court ruled in favor of the assessee, other High Courts took a different stance. The matter eventually reached the Supreme Court, which stayed the Delhi High Court's judgment, indicating the unresolved nature of the issue. The Tribunal considered these conflicting decisions and decided to await the Supreme Court's final decision before proceeding further.

Issue 4: Stay granted by the Supreme Court on the judgment passed by the High Court of Delhi:
The Supreme Court granted a stay on the judgment passed by the High Court of Delhi regarding the jurisdiction of DRI officers to issue SCNs under the Customs Act. This stay indicated the significance of the matter and the need for a comprehensive resolution by the Supreme Court. The Tribunal acknowledged this stay and decided to remand the case for further review post the Supreme Court's decision.

Issue 5: Recent judgment by the High Court of Delhi granting liberty to review the challenge:
A recent judgment by the High Court of Delhi granted liberty to review the challenge based on the outcome of related appeals filed in the Supreme Court. This judgment provided an opportunity for the petitioner to reassess the challenge depending on the Supreme Court's decision in a related case. The Tribunal considered this recent judgment and decided to remand the case for a comprehensive review after the Supreme Court's decision, maintaining the status quo until the final resolution.

In conclusion, the Appellate Tribunal CESTAT CHENNAI addressed multiple complex issues related to the jurisdiction of DRI officers, recovery of drawback amounts, conflicting High Court judgments, the Supreme Court's stay on the Delhi High Court's judgment, and a recent judgment granting liberty for review. The Tribunal carefully considered these aspects and decided to remand the case for further review post the Supreme Court's decision, ensuring a fair and comprehensive resolution of the legal complexities involved in the appeals.