2019 (2) TMI 692 - AT - Customs

Jurisdiction - power of DRI to issue SCN - section 28 of Customs Act, 1962 - Held that - The constitutionality of retrospective validation of competence to issue notice was challenged in different High Courts and, in the light of the decision of the Hon ble High Court of Delhi in Mangali Impex v. Union of India 2016 (5) TMI 225 - DELHI HIGH COURT , stayed subsequently by the Hon ble Supreme Court, and noting the diverging decisions of various High Courts the Hyderabad bench of this Tribunal, while disposing off the appeal in Alumeco India Extrusion Ltd v. Commissioner of Central Excise, Customs & Service Tax, Hyderabad-I 2009 (5) TMI 402 - CESTAT, BANGALORE has considered it appropriate not to dispose of matters in which this has been agitated. The principle of finality of litigation may have the effect of sanctifying illegal proceedings if, ignoring the issue of jurisdiction, merit alone is considered before competence is decided by the Hon ble Supreme Court. The inequity of a recovery upheld now with jurisdiction being nullified later is not particularly appealing to a judicial institution. Should it be held otherwise, there is no detriment to Revenue as the proceedings would then be reinstated. The ends of justice will be appropriately met if the impugned order is set aside and the matter remanded back to the adjudicating authority to be decided afresh after the question of jurisdiction of officers of Directorate of Revenue Intelligence to issue notice for recovery of duty is settled - appeal allowed by way of remand.

Summary

Issues:
1. Challenge against differential duty, interest, and penalty imposed under the Customs Act, 1962.
2. Competence of officers of Directorate of Revenue Intelligence to issue notices under section 28.
3. Constitutionality of retrospective validation of competence.
4. Impact of diverging decisions of High Courts on Tribunal decisions.
5. Doctrine of merger in challenging show cause notices.
6. Finality of litigation and reopening of issues.
7. Remand of the matter based on the criticality of competence to issue show cause notice.

Analysis:
1. The appeal challenged the order-in-original imposing a differential duty, interest, and penalty under the Customs Act, 1962. The appellant contested the decision based on a judgment by the Hon'ble High Court of Delhi regarding the competence of officers of Directorate of Revenue Intelligence to issue notices under section 28 for the period covered by retrospective grant of authority. On the other hand, the Authorized Representative referred to the appeal before the Hon'ble Supreme Court and a judgment by the Hon'ble High Court of Bombay, which upheld the empowerment of such officers to issue notices.

2. The issue of competence to issue show cause notices by Directorate of Revenue Intelligence officers was a central point of contention. Various High Courts had differing views on the constitutionality of retrospective validation of this competence. The Tribunal, considering the diverging decisions, decided not to dispose of matters where this issue was raised until the competence was clarified. Subsequent decisions of the Tribunal remanded impugned orders back to the original authority pending resolution of the competence issue.

3. The doctrine of merger in challenging show cause notices was discussed, highlighting the impact of judgments by different High Courts on the validity of such notices. The principle of finality in litigation was emphasized, indicating that reopening issues without challenging the competence of the officer at the relevant time could lead to sanctifying illegal proceedings. The Tribunal reiterated the need for a clear decision on competence before finalizing the matter.

4. Considering the criticality of competence in issuing show cause notices, the Tribunal set aside the impugned order and remanded the matter back to the adjudicating authority for a fresh decision once the question of jurisdiction of Directorate of Revenue Intelligence officers to issue recovery notices was settled. This decision aimed to ensure justice by resolving the jurisdictional issue before proceeding with the case further.