2018 (6) TMI 23 - HC - Customs

Jurisdiction of the officer of DRI to issue show cause notice - whether or not officers of the DRI could have issued show cause notice? - justification for order of Remand - Whether CESTAT was justified and correct in law in passing an order of remand to the original adjudicating authority to first decide the issue of jurisdiction, after decision of the Supreme court in Civil Appeal preferred against the decision of Delhi High court in Mangali Impex Limited v. Union of India, 2016 (5) TMI 225 - DELHI HIGH COURT ? Held that - The Delhi High court in the case of Mangali Impex Limited versus Union of India, 2016 (5) TMI 225 - DELHI HIGH COURT has held that DRI was not competent to issue show cause notice and hence the order-in-original passed thereafter would be void and illegal - the decision and ratio in Mangali Impex has been stayed by the Supreme Court in the case of Union of India versus Mangali Impex Limited, 2016 (8) TMI 1181 - SUPREME COURT . The question whether or not officers of the DRI could have issued SCN and its effect on the final order is an issue which has to be examined and considered by the Tribunal. The Tribunal, instead of deciding the said issue on merits, has passed an order setting aside the order-in-original to await the decision of the Supreme Court in the appeal preferred in the case of Mangali Impex - Once an order-in-original is set aside, it would mean that the entire adjudication proceedings may have to be undergone again. This would be true even if ratio in Mangali Impex is not accepted. The question of law is accordingly answered in favour of the Revenue and against the assessee with an order of the remand to the Tribunal.

Summary

Issues Involved:
Jurisdiction of DRI officers to issue show cause notices under the Customs Act and the correct legal procedure to be followed by the Tribunal in such cases.

Analysis:

Issue 1: Jurisdiction of DRI Officers
The controversy arose from the issuance of show cause notices by the Directorate of Revenue Intelligence (DRI) to the respondents, leading to original adjudication orders by the Office of the Principal Commissioner of Customs. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside these orders based on the decision in Doaba Stud & Agriculture Farm v. Commissioner of Customs, where the jurisdiction of DRI officers to issue such notices was questioned. The Tribunal noted conflicting decisions by various High Courts, including the Delhi High Court in Mangali Impex Ltd. v. Union of India, which held that DRI officers were not competent to issue show cause notices. However, the matter was sub-judice before the Supreme Court, with a stay on the Delhi High Court's judgment. The Tribunal remanded the case to the original adjudicating authority to decide the jurisdiction issue post the Supreme Court's decision in Mangali Impex Ltd.

Issue 2: Correct Legal Procedure
The High Court criticized the Tribunal's approach of setting aside the orders-in-original without deciding the jurisdiction issue on merits. The Court emphasized that the Tribunal should have adjudicated the matter instead of quashing the orders-in-original, as this would necessitate redoing the entire adjudication process. The Court referred to its previous orders remanding cases for fresh decisions by the Tribunal, allowing for a comprehensive examination of the jurisdiction issue and the legal position regarding DRI officers' authority to issue show cause notices. The Court ruled in favor of remanding the case to the Tribunal for a proper decision on the jurisdiction issue without being influenced by previous judgments.

In conclusion, the High Court's judgment addressed the jurisdictional issue regarding DRI officers' authority to issue show cause notices under the Customs Act and emphasized the need for a thorough examination of this issue by the Tribunal. The Court highlighted the importance of following the correct legal procedure to avoid unnecessary delays and inconvenience to both the assessee and the department.