2022 (8) TMI 1394 - AAR - Customs

Appropriate Authority for investigation of issue - DRI, New Delhi - Classification of goods imported - actuator, aerosol valve, pumps etc. - mis-representation of facts - HELD THAT - Section 28K mentions two circumstances for declaring the advance ruling void, namely fraud or misrepresentation of facts, as distinct from three circumstances for invocation of extended period under Section 28(4) of collusion; or any wilful misstatement; or suppression of facts. Merriam Webster dictionary defines fraud to mean deceit or trickery, more specifically intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right. Clearly, the alleged act of omission of not elaborating on the details of DRI, New Delhi investigation by the applicant even if it were to be accepted would not be covered under the meaning of fraud. In the same vein, there are no misrepresentation of fact by the applicant, noting further that this authority had also ascertained from DRI Jaipur whether any SCN had been issued and they had replied in the negative. Noting the indisputable facts that the previous clearances had been allowed finally, i.e. without recourse to provisional assessment by the jurisdictional customs officers and no pre-consultation notice or show cause notice had been issued by any of the competent authority, this Authority would not have invoked the proviso (a) to Section 28-I(2) of the Customs Act, 1962. In a recent ruling in the application of M/s. HQ Lamps Manufacturing Co. Pvt. Ltd., this Authority has opined that an application may be considered pending before any officer only if it is pending before an officer in formal manner before an officer who is competent to answer the said question in terms of specific powers vested with the officer under the Customs Act. Having carefully considered the representation of DRI, it is not found that they have proffered any evidence of fraud or misrepresentation of facts by the applicant, which may have coloured my ruling even remotely. Having completed the examination of the representation filed by DRI, New Delhi under Section 28K of the Customs Act, 1962, the said representation is rejected.

Summary

Issues Involved:
1. Competence of DRI to file representation under Section 28K of the Customs Act, 1962.
2. Alleged misrepresentation and fraud by the applicant in obtaining the advance ruling.
3. Validity of the advance ruling based on the alleged misrepresentation and fraud.

Issue-wise Detailed Analysis:

1. Competence of DRI to file representation under Section 28K of the Customs Act, 1962:
The Customs Authority for Advance Rulings (CAAR) considered the representation made by the Directorate of Revenue Intelligence (DRI), New Delhi, regarding the advance ruling obtained by M/s. Spraytec India Ltd. The DRI contended that the applicant had misrepresented facts by not disclosing an ongoing investigation. The CAAR noted that Section 28K(1) of the Customs Act allows the Commissioner of Customs or any other officer to make a representation if an advance ruling is obtained by fraud or misrepresentation. The term "otherwise" in Section 28K was interpreted broadly to include officers such as those from DRI, not just the Principal Commissioner or Commissioner of Customs. Consequently, the DRI was deemed competent to file the representation.

2. Alleged misrepresentation and fraud by the applicant in obtaining the advance ruling:
The DRI alleged that M/s. Spraytec India Ltd. had failed to disclose an ongoing investigation by DRI, which would have impacted the acceptance of their application under Section 28-I(2)(a) of the Customs Act. The applicant countered that they had disclosed the detention of goods by the Customs authority at the instance of DRI and the subsequent release of the goods. They argued that the concerned Customs and DRI officials were aware of the proceedings, thus negating any claims of suppression or misrepresentation. The CAAR examined the affidavits and submissions and found that the applicant had indeed mentioned the detention and release of goods in their application, thereby rejecting the DRI's claim of non-disclosure.

3. Validity of the advance ruling based on the alleged misrepresentation and fraud:
The CAAR examined whether the applicant's brief mention of the investigation constituted fraud or misrepresentation. The authority referred to the definitions of fraud and misrepresentation, emphasizing that fraud involves intentional deceit. The CAAR concluded that the applicant's omission of detailed information about the DRI investigation did not amount to fraud or misrepresentation. The authority further noted that no show cause notice had been issued to the applicant, and the previous clearances had been finalized without provisional assessment. The CAAR determined that the advance ruling was not obtained by fraud or misrepresentation and thus could not be declared void.

Conclusion:
The CAAR rejected the representation filed by DRI, New Delhi, under Section 28K of the Customs Act, 1962, and upheld the validity of the advance ruling No. CAAR/Del/Spraytec/20/2021, dated 5-10-2021, stating that it was not obtained by fraud or misrepresentation of facts.