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2022 (1) TMI 1141 - AT - CustomsJurisdiction - power of Principal Additional Director General, DRI to issue SCN - proper officer under section 28 of the Customs Act to issue the notice or not - HELD THAT - This precise issue was examined by the Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS 2021 (3) TMI 384 - SUPREME COURT . 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. The Punjab and Haryana High Court in M/S STEELMAN INDUSTRIES VERSUS UNION OF INDIA AND OTHERS 2021 (8) TMI 1236 - PUNJAB AND HARYANA HIGH COURT also, in view of the decision of the Supreme Court in Canon India, allowed the Writ Petition and set aside the entire proceedings arising from the show cause notice as the Additional Director General, DRI was not the proper officer. The show cause notice dated 30.01.2009 issued by the Principal Additional Director General, DRI under Section 28 of the Customs Act 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 dated 29.05.2020 passed by the Principal Commissioner, therefore, cannot be sustained - In this view of the matter, it would not be necessary to examine the issues raised on the merits of the appeal. Appeal allowed - decided in favor of assessee.
Issues Involved:
1. Jurisdiction of the Principal Additional Director General, DRI to issue the show cause notice under Section 28 of the Customs Act. 2. Validity of the proceedings initiated by the Principal Additional Director General, DRI. 3. Relevance of 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. 4. Impact of pending review petition against the Supreme Court's decision in Canon India on the current proceedings. Detailed Analysis: Jurisdiction of the Principal Additional Director General, DRI: The core issue was whether the Principal Additional Director General, DRI had the jurisdiction to issue the show cause notice under Section 28 of the Customs Act. The appellant's counsel argued that the Principal Additional Director General, DRI was not the "proper officer" under Section 28, as established by the Supreme Court in Canon India Pvt. Ltd. vs. Commissioner of Customs and Commissioner of Customs, Kandla vs. M/s. Agarwal Metals and Alloys. The Supreme Court had clarified that the power to recover duty not paid or short paid after assessment and clearance is conferred on the officer who initially assessed and cleared the goods. Validity of the Proceedings Initiated by the Principal Additional Director General, DRI: The Tribunal noted that the Supreme Court in Canon India had unequivocally held that the proceedings initiated by the Additional Director General, DRI were without any authority of law and thus invalid. The Supreme Court emphasized that the "proper officer" under Section 28 must be the one who initially assessed and cleared the goods or his successor, not an officer from another department. Relevance of Supreme Court's Decisions: The Tribunal extensively referred to the Supreme Court's decisions in Canon India and Agarwal Metals and Alloys. The Supreme Court had observed that the power to re-assess or recover duties is an administrative review power conferred on the same officer who made the initial assessment. The Tribunal also cited various High Court decisions, including those from the Bombay, Madras, Karnataka, and Punjab and Haryana High Courts, which followed the Supreme Court's reasoning in Canon India to set aside proceedings initiated by the DRI. Impact of Pending Review Petition: The Department's representative suggested deferring the hearing until the review petition against the Canon India judgment was decided. However, the Tribunal rejected this submission, referencing the Karnataka High Court's decision in Mohan C. Suvarna, which dismissed a similar plea. The Tribunal concluded that pending review petitions do not affect the binding nature of the Supreme Court's decisions. Conclusion: The Tribunal allowed the appeals filed by the assessee (Customs Appeal No. 50948 of 2020 and 50949 of 2020) and dismissed the appeal filed by the Department (Customs Appeal No. 51136 of 2020). The Tribunal held that the show cause notice issued by the Principal Additional Director General, DRI was without jurisdiction, rendering all subsequent proceedings invalid. Consequently, the order dated May 29, 2020, passed by the Principal Commissioner was unsustainable. The Tribunal did not find it necessary to examine the merits of the appeal due to the jurisdictional issue.
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