2023 (3) TMI 1289 - HC - Customs

Validity of demand against the clearing and forwarding agent in the absence of Service of SCN - it is alleged that liability has been fastened on the petitioner (agent) in violation of principles of natural justice - applicability of provisions of Section 147 of Customs Act - HELD THAT - The impugned order is vitiated on several grounds. One of the modes of assessment under the Customs Act is in terms of Section 28 thereof, which is invoked as against the importer by issue of a show cause notice. Section 147 is a provision which fastenes a corresponding, parallel and deemed liability on the agent of the principle as well. It thus stands to reason that the process and procedure for assessment that is followed qua the principle, the importer in this case, would have to be necessarily followed in the case of the agent as well. In the present case, admittedly no notice has been issued to the clearing agent under Section 28. The argument of the respondents that mere imposition of liability does not require prior notice on the clearing agent is rejected straightaway for the reason that such mulcting of duty is itself bound by the requirement of proper procedure for assessment, as set out under Section 28 of the Act. It simply cannot be countenanced that a demand could be thrust on an entity without following due process prior thereto. That apart, and as far as recovery is concerned, it is the case of the respondents that there has been no recovery in this matter as they are cognizant of the requirements under the proviso to Section 147(3) that the assessing officer has to record his opinion that the duty has not been recovered from the importer and proceed only thereafter with measures to recover the same from the agent. Petition allowed.

Summary

Issues involved:
The issues involved in the judgment are the liability of a clearing and forwarding agent for Anti Dumping Duty under Customs Notification No.16 of 2016 without proper notice or communication, and the application of Section 147 of the Customs Act, 1962 in imposing liability on the agent.

Details of the Judgment:

Issue 1: Liability of the clearing and forwarding agent for Anti Dumping Duty

The petitioner, a clearing and forwarding agent, was approached by Diamond Fancy Goods for clearance of a consignment. The goods were assessed to duty after clearance, and the petitioner later received an order demanding Anti Dumping Duty without prior notice. The petitioner argued that the order violated principles of natural justice and that Section 147 should only apply after exhausting measures against the primary importer. The respondents defended the order, stating that Section 147 imposes liability on the agent. The court found the order to be vitiated as proper assessment procedures were not followed for the agent as they were for the importer.

Issue 2: Application of Section 147 of the Customs Act, 1962

The court referred to a previous case where it was held that in order to proceed under Section 147(3), a notice must be served on 'the person chargeable with duty,' which in this case would be the clearing agent. As no notice was served on the clearing agent in the present case, the court ruled that the order against the agent was invalid. The court emphasized that proper procedure, including issuing a notice under Section 28, must be followed before imposing liability on an agent. The court also noted that the assessing officer must record an opinion that duty has not been recovered from the importer before proceeding to recover it from the agent.

In conclusion, the court set aside the impugned order against the petitioner clearing and forwarding agent, allowing the writ petition and closing the connected miscellaneous petition without costs.