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2021 (8) TMI 1236 - HC - CustomsJurisdiction - power of proper officer to issue SCN - Section 28(4) of Customs Act, 1962 - Rule 16 of the Customs and Central Excise Duties and Service Tax Drawback Rules 1995 - HELD THAT - The judgments passed by Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS 2021 (3) TMI 384 - SUPREME COUR and various other Courts clearly show that one of the issues which has been raised in the present writ petition to the effect that the Joint Director, DRI is not the proper officer to issue show cause notice has been held in favour of the petitioner. It has further been held that the entire proceedings stand vitiated and are required to be set aside. It is deemed appropriate to allow the writ petition and to set aside the entire proceedings from the issuance of the SCN to the passing of the order - application disposed off.
Issues Involved:
1. Jurisdiction of the Joint Director, Directorate of Revenue Intelligence (DRI) to issue a show cause notice under Section 28(4) of the Customs Act, 1962. 2. Validity of the order-in-original dated 15.05.2015 based on the show cause notice issued by the Joint Director, DRI. 3. Applicability of the Supreme Court judgment in M/s Canon India Pvt. Ltd. Vs. Commissioner of Customs to the present case. 4. Consequences of proceedings initiated by an incompetent authority. Issue-wise Detailed Analysis: 1. Jurisdiction of the Joint Director, DRI to Issue Show Cause Notice: The core issue in this writ petition was whether the Joint Director, DRI, had the jurisdiction to issue a show cause notice under Section 28(4) of the Customs Act, 1962. According to Rule 16 of the Customs and Central Excise Duties and Service Tax Drawback Rules, 1995, only a "proper officer" of the customs department can raise a demand. Section 2(34) of the Customs Act defines a "proper officer" as an officer of customs who is assigned those functions by the Board or the Commissioner of Customs. The Supreme Court in M/s Canon India Pvt. Ltd. held that the Joint/Additional Director (DRI) is not the "proper officer" to issue a show cause notice under Section 28(4) of the Customs Act, 1962. This precedent was pivotal in the present case as the show cause notice culminating in the order-in-original dated 15.05.2015 was issued by the Joint Director, DRI. 2. Validity of the Order-in-Original Dated 15.05.2015: Given that the show cause notice dated 29.11.2012 was issued by an officer not designated as the "proper officer," the entire proceedings, including the order-in-original dated 15.05.2015, were challenged. The petitioner argued, based on the Supreme Court's judgment, that any action taken by an incompetent authority is void ab initio. The Court agreed, stating that proceedings initiated by an officer not specifically entrusted with the necessary functions are illegal. 3. Applicability of the Supreme Court Judgment in M/s Canon India Pvt. Ltd. Vs. Commissioner of Customs: The Supreme Court's judgment in M/s Canon India Pvt. Ltd. was directly applicable to this case. The Court in that case clarified that only the officer who initially assessed and cleared the goods, or his successor, could issue a show cause notice under Section 28(4). The judgment emphasized that the term "the proper officer" refers specifically to the officer who performed the initial assessment, not any officer of the same rank from a different department. This interpretation was crucial in determining the lack of jurisdiction of the Joint Director, DRI, in the present case. 4. Consequences of Proceedings Initiated by an Incompetent Authority: The Court held that any proceedings initiated by an officer without proper jurisdiction are invalid. This principle was supported by multiple judgments, including the Division Bench of the Karnataka High Court in Shri Mohan C. Suvarna Vs. Principal Commissioner of Customs and the Punjab and Haryana High Court in M/s Godrej & Boyee Manufacturing Co. Ltd. Vs. Union of India. Both cases reinforced that orders based on show cause notices issued by unauthorized officers must be set aside. Consequently, the entire proceedings from the issuance of the show cause notice to the passing of the order dated 15.05.2015 were invalidated. Conclusion: The writ petition was allowed, and the proceedings from the issuance of the show cause notice dated 29.11.2012 to the order dated 15.05.2015 were set aside. The authorities were granted liberty to initiate fresh proceedings in accordance with the law. The petitioner retained the right to raise all available pleas in any new proceedings initiated by the respondent authorities. All miscellaneous applications were disposed of in these terms.
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