2022 (4) TMI 1306 - HC - Customs

Jurisdiction - power of DRI to issue SCN - Seizure of two containers on the ground of being overweighed - HELD THAT - The very same show cause notice and the Order in Original impugned in the present writ application was a subject matter of challenge before this High Court in M/S SJS INTERNATIONAL VERSUS UNION OF INDIA 2021 (12) TMI 1339 - GUJARAT HIGH COURT , where it was held that The initiation of the action on the part of the DRI on an intelligence of is severally questioned when the proper officer has already held in favour of the assessee classifying the item of export under a different head. The action of the respondent authority of issuance of the show cause notice dated 09.02.2018 is interfered with. The show cause notice in the present form is quashed and set aside with all consequential actions - application disposed off.

Issues Involved:
1. Jurisdiction of the respondent to issue the show cause notice (SCN).
2. Mis-declaration of weight, classification, and value of goods.
3. Principles of natural justice.
4. Limitation period for issuing SCNs.

Issue-wise Detailed Analysis:

1. Jurisdiction of the respondent to issue the show cause notice (SCN):
The petitioners challenged the SCN issued on 09.02.2018 by the Additional Commissioner of Customs, Mundra, arguing it was issued without jurisdiction. The respondent countered that the SCN was issued by the proper officer as per the monetary limit fixed by the Central Board of Indirect Taxes and Customs, and since the goods were exported from Mundra Port, it fell under the jurisdiction of the Principal Commissioner of Customs, Mundra. The court referenced the Madras High Court decision in K.P. Abdul Majeed vs. Collector of Customs & Central Excise, Cochin, which upheld the jurisdiction of the Commissionerate if the cause of action arose within its territorial jurisdiction.

2. Mis-declaration of weight, classification, and value of goods:
The SCN alleged that the petitioners mis-declared the weight, classification, and value of goods exported from 01.01.2011 to 30.06.2015. The respondent argued that the goods were misclassified and overvalued to fraudulently avail duty drawback. The court noted that the goods were examined and assessed by the proper officer under the Customs Act, 1962, and the petitioners had complied with the export procedures. The court found that the SCN was issued based on the investigation by the Directorate of Revenue Intelligence (DRI), which found discrepancies in the declared and actual weight and classification of the goods.

3. Principles of natural justice:
The petitioners contended that the respondent adjudicated the SCN and passed the impugned order in breach of the principles of natural justice. The court observed that the petitioners were given an opportunity to present their case, and the respondent followed due process in issuing the SCN and passing the order. However, the court found that the SCN was issued after a significant delay, which raised questions about the fairness of the proceedings.

4. Limitation period for issuing SCNs:
The court extensively discussed the limitation period for issuing SCNs under Rule 16 of the Customs and Central Excise Duties Drawback Rules, 1995, which does not prescribe a specific time limit. The court referred to several precedents, including the decision in Pratibha Syntex Limited vs. Union of India, which held that a reasonable period must be read into the rule. The court concluded that the SCN issued after more than three years from the date of payment of the drawback was time-barred and could not be sustained.

Conclusion:
The court allowed the writ application, quashing the SCN dated 09.02.2018 and all consequential actions. The court clarified that for shipping bills not covered by the decision in Pratibha Syntex Limited, the respondent authority could proceed if allowed under the law. The court emphasized the need to adhere to the principles of natural justice and the reasonable time period for issuing SCNs.

← Previous Next →