2021 (11) TMI 560 - AT - Customs

Jurisdiction - power of Additional Director General, Directorate of Revenue Intelligence(DRI) to issue SCN - Competent Authority to issue Show Cause Notice or not - jurisdictional error or not - Section 28(4) read with Section 124 of Customs Act, 1962 - HELD THAT - Hon ble Supreme Court in the matter of M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS 2021 (3) TMI 384 - SUPREME COURT while following its own decision in the matter of COMMISSIONER OF CUSTOMS VERSUS SAYED ALI 2011 (2) TMI 5 - SUPREME COURT has laid down that Additional Director General, DRI cannot be said to be a proper officer under Section 2(34) of Customs Act, 1962 and held that the entire proceedings initiated by ADG, DRI by issuing various Show Cause Notices are invalid without any authority of law and liable to be set aside. In the instant case also the Show Cause Notice was issued by the Additional Director General, DRI under Section 28 ibid, which as per the aforesaid decision of the Supreme Court is without any authority of law. Although Review Petition filed by the Revenue is pending before the Supreme Court in the above said case but thereafter in the case of COMMISSIONER OF CUSTOMS, KANDLA VERSUS M/S. AGARWAL METALS AND ALLOYS 2021 (9) TMI 316 - SUPREME COURT held that the Additional Director General, (DRI) is not a proper Officer within the meaning of Section 28(4) read with Section 124 of Customs Act, 1962. The Additional Director General, DRI, Lucknow is not a proper Officer to issue Show Cause Notice under Section 28(4) read with Section 124 of Customs Act, 1962, the impugned proceedings are set aside - appeal allowed.

Summary

Issues Involved:
1. Jurisdiction of Additional Director General, Directorate of Revenue Intelligence (DRI) to issue Show Cause Notice under Section 28(4) read with Section 124 of the Customs Act, 1962.
2. Inclusion of licensing fee, advertising and marketing expenses, and corporate marketing fee in the assessable value of imported goods.

Issue-wise Detailed Analysis:

1. Jurisdiction of Additional Director General, Directorate of Revenue Intelligence (DRI):
The primary issue addressed in the judgment is whether the Additional Director General, DRI, Lucknow, has the jurisdiction to issue a Show Cause Notice under Section 28(4) read with Section 124 of the Customs Act, 1962. The Appellant challenged the jurisdiction of the Additional Director General, DRI, citing the Supreme Court's decision in Canon India Pvt. Ltd. Vs. Commissioner of Customs (2021 (376) E.L.T. 3 (SC)), which held that the Additional Director General, DRI, is not a competent authority to issue Show Cause Notices.

The Tribunal noted that the Supreme Court, in the Canon India case, determined that the Additional Director General, DRI, cannot be considered a "proper officer" under Section 2(34) of the Customs Act, 1962. The Supreme Court's judgment emphasized that only officers specifically assigned functions by the Board or the Commissioner of Customs can be deemed proper officers. Consequently, any proceedings initiated by the Additional Director General, DRI, are invalid without legal authority.

The Tribunal also referenced several other judgments where Show Cause Notices issued by the DRI were quashed based on the Canon India decision. These judgments include:
- Commissioner of Customs, Kandla Vs. Agarwal Metals And Alloys [2021 (378) E.L.T. 7 (S.C.)]
- Givaudan India Pvt. Ltd. Vs. Pr.CC, ADG, DRI, Bangalore [2021 (8) TMI 178 – Karnataka High Court]
- Quantum Coal Energy (P) Ltd. Vs. CC, Tuticorin [2021-VII-229-MAD-CU]
- CC Vs. Dish TV India Limited [2021 (10) EMI 771-CESTAT New Delhi]
- Baburam Premchand Vs. Commissioner of Customs, Chennai [2021 (10) TMI 820 – CESTAT CHENNAI]
- Hi-Tec Corporation Vs. Commissioner of Customs, Chennai [2021 (8) TMI 1214 – CESTAT CHENNAI]
- Evershine Customs (C & F) Pvt. Ltd. And The Two Step Trading Co. Vs. Commissioner of Customs, New Delhi [2021 (8) TMI 906 – CESTAT New Delhi]
- Modern Insecticides Ltd. Vs. Commissioner of Customs, Ludhiana [2021 (10) TMI 598 – CESTAT CHANDIGARH]
- Shri Rajendra Sekaria, Balaji Solutions Pvt. Ltd. Vs. CC(ACC & Import), Mumbai [2021 (6) TMI 628 – CESTAT MUMBAI]

The Tribunal concluded that the Show Cause Notice issued by the Additional Director General, DRI, in the present case is without any authority of law, following the Supreme Court's decision in Canon India and subsequent judgments. Thus, the proceedings initiated by the DRI were set aside, and the appeal was allowed on this ground alone.

2. Inclusion of Licensing Fee, Advertising and Marketing Expenses, and Corporate Marketing Fee in Assessable Value:
Although the issue of including licensing fees, advertising and marketing expenses, and corporate marketing fees in the assessable value of imported goods was raised, the Tribunal decided not to delve into the merits of this issue. Instead, the Tribunal focused on the jurisdictional challenge, which was sufficient to resolve the appeal in favor of the Appellant.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned proceedings initiated by the Additional Director General, DRI, due to the lack of jurisdiction to issue the Show Cause Notice. The decision was based on the Supreme Court's judgment in Canon India Pvt. Ltd. and subsequent supporting judgments. The Tribunal did not address the merits of the issue regarding the inclusion of various fees in the assessable value of imported goods, as the jurisdictional issue was dispositive.