2017 (9) TMI 684 - AT - Customs

Jurisdiction - power of DRI to issue SCN - whether DRI is competent to issue show-cause notice? - Held that - w.e.f. July 6, 2011, the Additional Director General, DRI was prospectively appointed as proper officer for the purpose of Section 28 of the Customs Act. Hence, from 06.07.2011 ADG-DRI has been empowered to issue demand notice under Section 28. Subsequently, sub-section 11 was inserted under section 28 of the Customs (Amendment and Validation) Act, 2011 dated 16.9.2011, assigning the functions of proper officers to various DRI officers with retrospective effect - Later on, i.e. for the period subsequent to the amendment, the matter i.e. the DRI officers having the proper jurisdiction to issue the SCN or not had came up before the Hon ble Delhi High Court in the case of Mangali Impex vs. Union of India 2016 (5) TMI 225 - DELHI HIGH COURT , and the High Court inter alia, held that even the new inserted section 28 (11) does not empower either the officers of DRI or the DGCEI to issue the SCN or adjudicate for the period prior to 8.4.2011. Recently, the Hon ble High Court of Delhi in the case of BSNL Vs. UOI 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. 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. Appeal allowed by way of remand.

Summary

Issues:
1. Recalling of the final order passed in the appeal by Revenue.
2. Jurisdiction of the Directorate of Revenue Intelligence (DRI) to issue show-cause notices under the Customs Act.

Issue 1: Recalling of the final order passed in the appeal by Revenue
The respondent filed a miscellaneous application seeking the recall of the Final Order dated 2.1.2017 passed in the appeal by Revenue. The Tribunal had earlier ordered for tagging both appeals against the same impugned order, but due to a lapse on the part of the Registry, the final order was passed ex parte. The respondent's counsel explained the delayed appearance was due to a delayed receipt of the hearing notice. The Tribunal, after hearing both sides and perusing the records, decided to recall the final order and restore the appeal to its original number to ensure fairness and proper adjudication.

Issue 2: Jurisdiction of the DRI to issue show-cause notices under the Customs Act
The primary issue in the present appeal revolved around the jurisdiction of the DRI to issue show-cause notices under the Customs Act. The respondent argued that based on a Supreme Court decision and subsequent amendments to the Customs Act, DRI officers were not proper officers to issue such notices. The Finance Act, 2011, and subsequent notifications empowered certain DRI officers as proper officers for specific purposes. However, conflicting decisions by various High Courts led to the matter being sub judice before the Supreme Court. Considering the conflicting judgments, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority to decide the jurisdiction issue after the Supreme Court's decision in a related case, ensuring the respondent's right to be heard and maintaining the status quo until a final decision is reached.

In conclusion, the Tribunal allowed both appeals by way of remand, emphasizing the importance of resolving the jurisdictional issue in light of the pending Supreme Court decision and providing an opportunity for the respondent to present their case on merit.