2023 (1) TMI 751 - HC - Customs

Scope of the Advance Ruling - Whether the matter (case) was pending - Rejection of representations made by DRI for treating the CAAR s order dated 05.10.2021 as void ab initio - fraud and misrepresentation of facts - Section 28K(1) of the Customs Act - H ELD THAT - The proviso to Sub-Section (2) of 28-I of the Customs Act proscribes the CAAR from allowing any application filed for advance ruling, where question raised in the application is pending in the applicant s case before any officer of customs, the Appellate Tribunal or any Court or if the said question has already been decided by the Appellate Tribunal or any Court. In the present case, DRI had not issued any pre-consultation notice or show cause notice which would indicate that the question regarding classification of any goods was pending before DRI. Thus, even if it is accepted that an officer of DRI is an officer of Customs, it cannot be accepted that the question raised by the respondent in its application under Section 28H of the Customs Act was pending in the applicant s case before DRI. In order for a question to be considered as pending before any officer of customs, it would be necessary for the question to be raised in any notice enabling the assessee to respond to the said issue. Merely because an officer of customs contemplates that a question may arise, does not mean that the question is pending consideration. For a question to be stated to be pending, the concerned officer must formally set forth the same for the assessee to contest the same. Any preliminary exercise done by an officer of customs, to consider whether any question for consideration arises, would not preclude the CAAR from giving its advance ruling on that question. The possibility that a question would arise for consideration of a customs officer, appellate tribunal or court, is not a ground contemplated under Clause (a) of the proviso to Section 28-I(2) of the Customs Act. Clearly, a distinction must be made between that question pending consideration and a possibility of a question arising consideration. There are no infirmity with the impugned order rejecting the representations made by DRI - appeal dismissed.

Issues Involved:
1. Validity of the CAAR's order dated 05.10.2021.
2. Allegations of fraud and misrepresentation by the respondent.
3. Classification of imported goods under the Customs Tariff Act.
4. Procedural compliance under Section 28-I of the Customs Act.
5. Pending investigations and their impact on advance ruling applications.

Detailed Analysis:

1. Validity of the CAAR's Order Dated 05.10.2021:
The Directorate of Revenue Intelligence (DRI) filed an appeal under Section 28KA of the Customs Act, 1962, impugning the CAAR's order dated 08.08.2022, which rejected DRI's representation to treat the CAAR's order dated 05.10.2021 as void ab initio. The CAAR had ruled in favor of the respondent, accepting their classification of goods. The court found no misrepresentation or suppression of facts by the respondent, as the relevant details were disclosed in their application.

2. Allegations of Fraud and Misrepresentation by the Respondent:
DRI contended that the respondent obtained the CAAR's order through "fraud and misrepresentation of facts," claiming the respondent failed to disclose an ongoing investigation by DRI. However, the CAAR and the court found that the respondent had disclosed that goods under two Bills of Entry were detained by customs authorities at the instance of DRI and later released. The court concluded that there was no misrepresentation or suppression of facts by the respondent.

3. Classification of Imported Goods under the Customs Tariff Act:
The respondent classified the imported actuator and aerosol valves under CTH 84248990, while DRI argued they should be classified under CTH 9616, subjecting them to a higher duty. The CAAR ruled in favor of the respondent's classification. The court upheld this ruling, noting that the final assessment order dated 08.02.2019 had already classified the goods under CTH 84248990.

4. Procedural Compliance under Section 28-I of the Customs Act:
Section 28-I outlines the procedure for handling advance ruling applications. The court emphasized that for a question to be pending, it must be formally set forth for the assessee to contest. Since no show cause notice or pre-consultation notice was issued by DRI at the time of the respondent's application, the CAAR was correct in proceeding with the advance ruling. The court highlighted that the question of classification was not pending before any customs officer, appellate tribunal, or court.

5. Pending Investigations and Their Impact on Advance Ruling Applications:
DRI argued that the ongoing investigation should have precluded the CAAR from issuing an advance ruling. However, the court noted that the investigation alone does not constitute a pending question under Section 28-I. The CAAR had sought comments from relevant authorities, including DRI, Jaipur, and found no pending show cause notice against the respondent. The court concurred with the CAAR's view that an investigation does not amount to a pending question unless formal proceedings are initiated.

Conclusion:
The court dismissed the appeal, finding no merit in DRI's arguments. The CAAR's order was upheld, and the respondent's classification of goods was accepted. The court emphasized the importance of formal procedural steps in determining whether a question is pending and found that the respondent had complied with disclosure requirements.

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