2016 (9) TMI 877 - HC - Customs

Constitutional validity of Sections 27A and 28AA of the Customs Act 1962 - notifications no. 75/2003 Cus(NT) dated 12.09.2003, 18/2011-Cus(NT) dated 01.03.2011 (w. e. f. 01.04.2011) and 33/2016-Cus(NT) dated 01.03.2016 (w. e. f. 01.04.2016) - whether the Respondent is justified in adopting a discriminatory approach in the matter of interest, which is compensatory in character by awarding an Assessee in effect interest at only 6% per annum on the delayed refunds while charging an Assessee interest at present at 15% per annum on late payment of duty? - maintainability - SCN dated 16th April 2014 - Held that - there is no stay of the adjudication of the SCN dated 16th April 2014, which will proceed in accordance with law. The final order passed in the adjudication proceedings, limited to the extent of the issue of interest, will be subject to the outcome of the present petition - application disposed off.

Summary

Issues:
Constitutional validity of Sections 27A and 28AA of the Customs Act 1962 and related notifications; Discriminatory approach in interest rates; Jurisdiction of the Directorate of Revenue Intelligence (DRI); Maintainability of the petition.

Constitutional Validity of Sections and Notifications:
The petition challenges the constitutional validity of Sections 27A and 28AA of the Customs Act 1962, along with notifications 75/2003~Cus(NT) dated 12.09.2003, 18/2011-Cus(NT) dated 01.03.2011, and 33/2016-Cus(NT) dated 01.03.2016. The central issue revolves around the Respondent's alleged discriminatory approach in interest rates, specifically questioning the justification of awarding an Assessee interest at 6% per annum on delayed refunds while charging 15% per annum on late duty payments.

Jurisdiction of DRI and Preliminary Objection:
The Petitioner's counsel clarified not pressing the jurisdiction issue of the Directorate of Revenue Intelligence (DRI) to demand duty and interest pre-8th April 2011. The Respondent's Customs Department raised a preliminary objection on the maintainability of the petition, arguing that adjudication from the show cause notice dated 16th April 2014 has been consolidated in the office of the Commissioner of Customs, Nhava Sheva, Uran. However, the Petitioner's counsel pointed out that part of the cause of action arose within the jurisdiction of the Court, as indicated in the impugned show cause notice.

Court's Decision and Future Proceedings:
The Court rejected the preliminary objection raised by the Respondent regarding maintainability. Respondents were served notice, and replies were to be filed within four weeks. The Court scheduled the next hearing for 28th November 2016, clarifying that there was no stay on the adjudication proceedings from the show cause notice dated 16th April 2014. The final order in the adjudication, specifically on the interest issue, would be subject to the outcome of the petition. The application was disposed of, setting the stage for further legal proceedings.