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2021 (11) TMI 341 - AT - CustomsProper officer - jurisdiction to issue Show Cause Notice (SCN) - Power of Additional Director General, DRI - HELD THAT - This precise issue was examined by the Supreme Court in Canon India. The Supreme Court observed that the nature of the power to recover the duty, not paid or short paid after the goods have been assessed and cleared for import is a power that has been conferred to review the earlier decision for assessment. This power which has been conferred under section 28 of the Customs Act on the proper officer, must necessarily mean the proper officer who, in the first instance, assessed and cleared the goods. Thus, the Additional Director General, DRI did not have the jurisdiction to issue the show cause notice. It would thus be seen that the Supreme Court in Canon India 2021 (3) TMI 384 - SUPREME COURT held that the entire proceedings initiated by the Additional Director General, DRI by issuance of a show cause notice was without any authority of law and was, therefore, liable to be set aside. The aforesaid decision of the Supreme Court in Canon India was subsequently followed by the Supreme Court in Agarwal Metals and Alloys 2021 (9) TMI 316 - SUPREME COURT . The show cause notice dated 30.01.2009 issued by the Additional Director General, DRI is, therefore, without jurisdiction as the said officer was not the proper officer and, therefore all proceedings undertaken by the Department on this show cause notice is, therefore, without jurisdiction. - The order passed by the Commissioner of Customs (Adjudication), therefore, cannot be sustained. Confiscation of the goods under section 111 and imposition of penalty under section 112 of the Customs Act - HELD THAT - In Bakeman s Home Products 1997 (6) TMI 178 - CEGAT, NEW DELHI , the Tribunal held that the proposal for confiscation and penalty cannot be segregated from duty demand and, therefore, the proceedings for confiscation and imposition of penalty cannot be sustained. Order set aside - Decided against the Revenue.
Issues Involved:
1. Jurisdiction of the Additional Director General, DRI to issue the show cause notice under section 28 of the Customs Act. 2. Validity of proceedings initiated under section 124 of the Customs Act for confiscation and penalty if the show cause notice under section 28 is invalid. Detailed Analysis: 1. Jurisdiction of the Additional Director General, DRI to issue the show cause notice under section 28 of the Customs Act: The appellant challenged the jurisdiction of the Additional Director General, DRI to issue the show cause notice under section 28 of the Customs Act, arguing that he was not the "proper officer" as defined by the Act. The Supreme Court's decisions in Canon India Pvt. Ltd. vs. Commissioner of Customs and Commissioner of Customs, Kandla vs. M/s. Agarwal Metals and Alloys were cited to support this contention. The Supreme Court in Canon India clarified that the power to recover duty not paid or short paid, conferred under section 28, is a power to review the earlier decision of assessment and must be exercised by the officer who initially assessed and cleared the goods. Consequently, the Additional Director General, DRI did not have the authority to issue the show cause notice, making the proceedings initiated by him without jurisdiction and liable to be set aside. The Tribunal also referenced several High Court decisions, including those from the Bombay, Madras, Karnataka, and Punjab and Haryana High Courts, which similarly invalidated proceedings initiated by the DRI on the grounds that the officers were not the "proper officers" under section 28 of the Customs Act. Additionally, various Tribunal benches had set aside orders where show cause notices were issued by the Department of Revenue and Intelligence. 2. Validity of proceedings initiated under section 124 of the Customs Act for confiscation and penalty if the show cause notice under section 28 is invalid: The Department argued that even if the notice under section 28 was invalid, the notice issued under section 124 for confiscation of goods and imposition of penalty should still be valid. However, the appellant contended, relying on the Tribunal's decision in Bakeman’s Home Products Pvt. Ltd. vs. Collector of Cus., Bombay, that the proposals for confiscation and penalty cannot be segregated from the duty demand. If the duty demand fails due to the show cause notice being issued by an unauthorized officer, the proceedings for confiscation and penalty also cannot survive. The Tribunal accepted the appellant's submission, noting that the demand of duty on the allegation of mis-declaration of value cannot be separated from the actions of confiscation and penalty based on the same mis-declaration. Consequently, since the demand of duty was found to be without jurisdiction, the actions for confiscation and penalty could not be sustained. Conclusion: The Tribunal concluded that the show cause notice dated 30.01.2009 issued by the Additional Director General, DRI was without jurisdiction, rendering all proceedings based on it invalid. The order dated 31.05.2012 passed by the Commissioner of Customs (Adjudication) was set aside, and the appeal was allowed. The request to defer the hearing until the review petition in Canon India was decided was rejected, as similar requests had been denied by other courts.
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