2021 (4) TMI 1210 - HC - Customs

Validity of SCN - Case of petitioner is that the SCN was issued by an incompetent authority, not having jurisdiction under the provisions of the Customs Act, 1962, and therefore, the entire proceedings are liable to be set aside - proper authority as contemplated under Section 28(4) of the Customs Act - HELD THAT - The High Court cannot adjudicate the facts and merits with reference to documents and evidences. Trial is not entertainable under Article 226 of the Constitution of India. All such procedural aspects are to be followed by complete adjudication/trial by the original authorities as well as by the appellate authorities under the provisions of the Statute and the powers under Article 226 of the Constitution of India is limited to find out whether the processes contemplated under the Statutes and the procedural aspects are followed by the competent authorities as well as the appellate authorities or not. The High Court, under Article 226 of the Constitution of India, is not expected to usurp the powers of the appellate authorities by adjudicating the merits of the matter on certain documents and evidences - Powers of the High Court under Article 226 of the Constitution of India cannot be extended nor widened so as to allow lay hands on the facts and circumstances by conducting the trial, nor certain facts and circumstances with reference to documents and evidences can be assumed or presumed or inference can be drawn, which is not preferable. Usurping the powers of the appellate authorities by the High Court by invoking its powers under Article 226 of the Constitution of India is certainly unwarranted. The parties must be provided an opportunity to approach the appropriate authorities for redressal of their grievances in the manner known to law. In the event of entertaining all such writ petitions, the High Court will not only be over-burdened, but usurping the powers of the appellate authority is certainly not desirable - Jurisdictional error should not result in exoneration of liability. Jurisdictional error, if any committed, is technical, and thus, rectifiable. In such circumstances, the Courts are expected to quash the order passed by an incompetent authority and remand the matter back for fresh adjudication. Contrarily, if an assessee is exonerated from liability, undoubtedly, the purpose and object of the Act is defeated. Large number of writ petitions are filed without exhausting the statutory appeal remedies and High Court is also entertaining such writ petitions in a routine manner. Keeping such writ petitions pending for long time would cause prejudice to the interest of the assessee also. Thus, such statutory provisions regarding the appeal are to be decided at the first instance, enabling the litigants to avail the remedy by following the procedures as contemplated under law. Such writ petitions are filed may be on the ground of jurisdiction or otherwise. This Court has no hesitation in arriving at a conclusion that the petitioners are bound to exhaust the appellate remedy, either under Section 128 or Section 129 of the Customs Act, respectively - Petition dismissed.

Summary

Issues Involved:
1. Competency and jurisdiction of the authority issuing the show cause notice.
2. Requirement to exhaust the statutory appellate remedy before approaching the High Court.
3. Legal principles concerning the separation of powers and judicial review.

Detailed Analysis:

Competency and Jurisdiction of the Authority:
The petitioners challenged the Order-in-Original passed by the adjudicatory authorities, arguing that the show cause notice was issued by an incompetent authority lacking jurisdiction under the Customs Act, 1962. They contended that only "The Proper Officer" as defined under the Act is empowered to issue such notices. The petitioners relied on Section 28(4) of the Customs Act, which specifies that the proper officer must serve notice for recovery of duties not levied or paid due to collusion, wilful misstatement, or suppression of facts. They argued that the Directorate of Revenue Intelligence (DRI) was not the proper authority as per the statute. The petitioners supported their argument by citing the Supreme Court's judgment in M/s. Canon India Private Limited v. Commissioner of Customs, which held that the DRI did not have the authority to issue such notices.

Requirement to Exhaust the Statutory Appellate Remedy:
The respondents objected, stating that the petitioners had not exhausted the statutory appellate remedies under Sections 128 and 129 of the Customs Act. They argued that the writ petitions were filed to avoid the pre-deposit requirement under the statute. The respondents pointed out that the Supreme Court's decision in the Canon India case was rendered in a regular appeal after exhausting statutory remedies, unlike the present writ petitions. The respondents emphasized that the High Court should not entertain writ petitions in a routine manner, bypassing the appellate process.

Legal Principles Concerning the Separation of Powers and Judicial Review:
The court reiterated the importance of exhausting statutory appellate remedies before invoking the writ jurisdiction under Article 226 of the Constitution of India. It highlighted that the High Court's role is limited to ensuring that statutory processes and procedural aspects are followed by the competent authorities. The court stressed that it cannot usurp the powers of the appellate authorities by adjudicating the merits of the case based on documents and evidence, which is the domain of the appellate authorities.

The court also discussed the principle of separation of powers, emphasizing that judicial review should not interfere with the executive's statutory powers unless there are exceptional circumstances. It cited several Supreme Court judgments to underline that the High Court should not entertain writ petitions if an effective alternative remedy is available. The court noted that jurisdictional errors should not result in exoneration of liability but should be rectified by remanding the matter for fresh adjudication.

Conclusion:
The court concluded that the petitioners must exhaust the appellate remedy provided under the Customs Act. It directed the petitioners to file appeals within 60 days, and the appellate authorities were instructed to entertain these appeals without reference to the limitation period and adjudicate them on merits. The writ petitions were dismissed, and the court emphasized the need to follow statutory procedures to ensure justice and maintain institutional respect.