2022 (3) TMI 121 - AT - Customs

Jurisdiction - competence of ADG DRI to issue the SCN - Valuation of imported goods - 4-colour and 5-colour offset printers - rejection of the declared value of the imported goods - demand of differential duty along with interest - levy of penalties and personal penalties - HELD THAT - Learned Counsel was correct in pointing out that in Canon India 2021 (3) TMI 384 - SUPREME COURT Hon ble Supreme Court had held that officers of DRI are not proper officers to issue the SCN demanding duty under section 28 as per section 2(34). Learned departmental representative was correct in pointing out that under consideration in Canon India was the question whether DRI officers were proper officers under section 2(34) and not whether they were proper officers under section 28(11). As per section 28(11), all persons appointed as Customs officers under section 4(1) prior to 6th July 2011 were proper officers for assessment under section 17 and proper officers under section 28. This provision was not in question in Canon India but it was upheld in Mangali Impex (prospectively) 2016 (5) TMI 225 - DELHI HIGH COURT and Sunil Gupta 2014 (12) TMI 151 - BOMBAY HIGH COURT . We are not aware of any other judgment of any High Court or Supreme Court setting aside the validity of Section 28(11). Thus, section 28(11) is valid and is on the statute book. Undisputedly, in this case, since the assessment was done by the assessing officers in the Custom House, such officer who did the assessment or his successor in office is the proper officer and ADG DRI cannot be the proper officer and has no jurisdiction to issue the SCN demanding duty under section 28. Other person appointed as Customs officers under section 4(1) may be a proper officer by virtue of Section 28(11) but he/she must also be the proper officer , i.e., he/she must have had done the original assessment under section 17 in that case to be competent to issue an SCN under section 28 - as far as DRI officers is concerned, since the Government has not entrusted any functions under section 6 of the Customs Act, they could not have performed such functions. Therefore, all the functions of the officers of DRI under the Customs Act in this case which culminated in the issue of the SCN viz., searches, summons, recording of statements under the Customs Act are also vitiated. Therefore, neither those activities of officers of DRI under the Customs Act nor the SCN into which they culminated can be upheld. The impugned order cannot be sustained because it is issued adjudicating the SCN dated 22.5.2014 issued by ADG, DRI who is not competent to issue the SCN as per Canon India. Further, the SCN itself was the culmination of investigations including searches, seizures, and recording of statements under the Customs Act by the DRI officers and DRI officers have no jurisdiction to perform any functions under the Customs Act Canon India. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenging an order in original dated 17.1.2014 passed by the Commissioner of Customs (Port) Kolkata regarding undervaluation of imported goods, differential duty, interest, and penalties imposed on the importer and related individuals.

Detailed Analysis:

1. Background and Allegations:
The appeals challenged the order dated 17.1.2014 passed by the Commissioner of Customs (Port) Kolkata, involving the rejection of declared value of imported goods, demand of differential duty, interest, and penalties imposed on the importer and related individuals. The Directorate of Revenue Intelligence (DRI) conducted investigations on the importer for gross undervaluation of imported printers, leading to the issuance of a Show Cause Notice proposing to reject the declared value, re-assess duty, recover differential duty, and impose penalties.

2. Contentions and Legal Precedents:
The appellants argued that the SCN issued by ADG DRI was invalid under section 28 of the Customs Act, citing the judgment in Canon India by the Hon'ble Supreme Court. They contended that DRI officers were not proper officers to issue such SCNs. However, the Departmental Representative supported the impugned order, highlighting the validity of Section 28(11) and the retrospective amendment upholding the same by various High Courts.

3. Judicial Analysis and Decision:
The Tribunal analyzed the competence of ADG DRI to issue the SCN under section 28. While Canon India held that DRI officers were not proper officers under section 2(34), the Tribunal emphasized the validity of Section 28(11) which deems certain Customs officers as proper officers for assessment and under section 28. The Tribunal clarified that the officer who conducted the original assessment under section 17 is the proper officer under section 28.

4. Validity of SCN and Jurisdiction:
The Tribunal further elaborated that DRI officers lacked jurisdiction to perform functions under the Customs Act in the absence of entrustment under section 6. Citing Commissioner of Customs Ahmedabad vs. Suncity Strips and Tubes Pvt Ltd., the Tribunal emphasized that DRI officers could not exercise functions without proper authorization.

5. Precedents and Conclusion:
The Tribunal referred to various judgments by the Supreme Court, High Courts, and the Tribunal following the Canon India ruling. Considering the lack of competence of ADG DRI to issue the SCN and the invalidity of the entire proceeding, the impugned order was set aside, and all appeals were allowed with consequential relief to the appellants.

In conclusion, the Tribunal's detailed analysis focused on the legality of the SCN issued by ADG DRI, the jurisdiction of DRI officers under the Customs Act, and the precedents set by various courts. The judgment emphasized the importance of proper authorization and adherence to statutory provisions in customs proceedings, ultimately leading to the setting aside of the impugned order and granting relief to the appellants.