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2022 (1) TMI 135 - AT - CustomsJurisdiction - power of Additional Director General of DRI to issue SCN - section 28(4) of Customs Act, 1962 - penalty under section 114, 114A and 114 AA of Customs Act - HELD THAT - In M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS 2021 (3) TMI 384 - SUPREME COURT , the Hon ble Supreme Course has held that appeals must fail as the show cause notice(s) in the present cases was also issued by Additional Director General (ADG), Directorate of Revenue Intelligence (DRI), who is not a proper officer within the meaning of Section 28 (4) read with Section 2(34) of the Customs Act, 1962. Penalties were imposed under section 114, 114A and 114 AA of Customs Act - in the impugned order and the SCN for confiscation of goods or imposition of penalties is issued under section 124 of the Customs and not under Section 28 - HELD THAT - The SCN under Section 124 need not be issued by the proper officer . However, in the present case the basis for the proposed confiscation of goods and imposition of penalties in the SCN has been the re- assessment of the goods and demand of the duty under Section 28(4). The basis for re-assessment being unsustainable in view of Canon India, the proposals for confiscation and of goods and imposition of penalties cannot service either. Appeal allowed - decided in favor of appellant.
Issues Involved:
Appeal against Order-in-Original dated 13.11.2019 confirming customs duty, interest, and penalties imposed under various sections of the Customs Act, 1962, and confiscation of goods under different sections. Analysis: 1. Validity of Show Cause Notice (SCN) Issued by DRI: The appeals challenged the Order-in-Original dated 13.11.2019, which confirmed customs duty, interest, and penalties imposed on M/s State Trading Corporation of India Ltd. and others. The appellants argued that the SCN issued by the Additional Director General of DRI demanding duty under section 28(4) was without legal authority. They relied on the judgment of the Hon'ble Supreme Court in Canon India Pvt. Ltd. vs. Commissioner of Customs, which held that officers of DRI are not "proper officers" to issue such notices. The appellants contended that the entire proceedings based on the invalid SCN could not be sustained. 2. Precedents and Legal Authority: The Tribunal considered the precedents set by the Hon'ble Supreme Court and various High Courts following the Canon India judgment. The Supreme Court's Larger Bench decision in the matter of Agarwal Metals reiterated the invalidity of proceedings initiated by the DRI without proper authority. High Courts, including Karnataka and Madurai Bench of Madras High Court, also quashed impugned orders based on SCNs issued by the DRI. The Tribunal, therefore, concluded that the present case and impugned order could not stand due to the invalidity of the SCN issued by the ADG DRI. 3. Implications on Penalties and Confiscation: The impugned order imposed penalties under sections 114, 114A, and 114AA, and proposed confiscation of goods based on re-assessment under Section 28(4). However, since the SCN was invalid, the basis for proposed confiscation and penalties was unsustainable. The Tribunal noted that the SCN for confiscation or penalties should have been issued under Section 124 of the Customs Act, not Section 28. As the basis for re-assessment was flawed, the proposals for confiscation and penalties could not be upheld. Consequently, the impugned order was set aside, and the appeals were allowed with any consequential relief. In conclusion, the Tribunal found in favor of the appellants, setting aside the impugned order due to the invalidity of the SCN issued by the DRI and the consequent lack of legal basis for the customs duty, penalties, and confiscation imposed. The decision was based on established legal principles and precedents set by higher courts, emphasizing the importance of proper authority in initiating customs proceedings.
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