2019 (4) TMI 337 - AT - Customs

Jurisdiction of officers of DRI to issue Show cause notice - Proper officer - Imposition of ADD - import of citric acid monohydrate - principle of finality of litigation - Held that - 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 the 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. Considering the criticality of competence to issue show cause notice, 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 finalisation of assessment is settled.

Issues:
1. Jurisdictional competence of officers to issue show cause notices for finalization of assessment under Customs Act, 1962.
2. Validity of retrospective validation of show cause notices issued by officers not designated as 'proper officers'.
3. Doctrine of merger in relation to show cause notices and orders of adjudication.
4. Finality of litigation and reopening of issues challenging the jurisdiction of officers.

Analysis:

Issue 1: Jurisdictional competence of officers to issue show cause notices
The appeal challenges the recovery of anti-dumping duty imposed on the import of 'citric acid monohydrate'. The appellant contests the jurisdiction of the Additional Director General of Revenue Intelligence to issue the show cause notice, citing a decision of the Hon'ble High Court of Delhi. However, the Authorized Representative argues in favor of this jurisdiction, referring to a decision of the Hon'ble High Court of Bombay. The Tribunal emphasizes that finalization of assessment falls under the exclusive competence of the 'proper officer' as defined in the Customs Act, 1962. The lack of competence of officers from the Directorate of Revenue Intelligence to exercise such powers was established by the Hon'ble Supreme Court. The Tribunal notes divergent decisions in various High Courts regarding the retrospective validation of show cause notices, ultimately setting aside impugned orders for remand to the original authority.

Issue 2: Validity of retrospective validation of show cause notices
The Tribunal discusses the constitutionality of the retrospective validation of show cause notices and the challenges raised in different High Courts. The decision in Mangali Impex v. Union of India by the Hon'ble High Court of Delhi, which was subsequently stayed by the Supreme Court, led to divergent views among High Courts. The Tribunal highlights the need to set aside orders originating from show cause notices issued by unauthorized officers until the jurisdictional issue is resolved. The principle of finality of litigation is emphasized to avoid sanctifying illegal proceedings if jurisdictional issues are overlooked.

Issue 3: Doctrine of merger in relation to show cause notices and orders of adjudication
The Tribunal refers to the decision of the Hon'ble High Court of Andhra Pradesh, emphasizing the doctrine of merger in the context of show cause notices and orders of adjudication. The Tribunal underscores the significance of not allowing challenges to show cause notices that have culminated in final orders, highlighting the impact on the hierarchy of justice delivery systems. The Tribunal stresses that setting aside show cause notices after final adjudication would disrupt the principle of finality in litigation.

Issue 4: Finality of litigation and reopening of issues challenging jurisdiction
The Tribunal acknowledges challenges to the competence of officers in issuing show cause notices post the decision in Mangali Impex v. Union of India. The Tribunal reiterates the importance of settling the question of jurisdiction before finalizing assessments. It emphasizes that remanding the matter back to the adjudicating authority for a fresh decision is necessary to ensure justice is served and jurisdictional issues are clarified.

In conclusion, the Tribunal sets aside the impugned order and remands the matter for fresh adjudication after resolving the jurisdictional concerns raised regarding the issuance of show cause notices by officers not designated as 'proper officers'.

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