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2024 (3) TMI 511 - HC - CustomsSustainability of supplementary Show Cause Notice, prior to insertion of second proviso to Section 124 of the Customs Act, 1962 w.e.f 29.03.2018 - effect to the second proviso to Section 124 of the Customs Act, 1962 which is effective from 29.03.2018 - retrospective or prospective effect? - to be treated as separate Show Cause Notice in terms of Section 124 of the Customs Act, 1962 or not - failure to appreciate the scope and context of the Customs (Supplementary Notice) Regulation, 2019 which was notified in exercise of the powers conferred by clause (f) of Sub-Section (2) of Section 157 read with second proviso to Section 124 of the Customs Act, 1962 - whether Regulation of the Customs (Supplementary Notice) Regulation, 2019 can be operative without the aid of Section 157 of the Customs Act wherein to Sub-Section (2)(f) was inbuilt with the wordings the Circumstances under which, and the manner in which, the supplementary notice may be issued? HELD THAT - The provisions states that no order confiscating any goods or imposing any penalty on any person shall be made under Chapter (XIV) of the Act unless the owner of the goods are such persons-(a) is given a notice in writing with the prior approval of the officer of the Customs not below the rank of Assistant Commissioner of Customs, informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty. Clause (b) and (c) would not be relevant for the purpose of this case equally the first proviso is also not relevant. The second proviso which was inserted by the Act 13 of 2018 with effect from 29.03.2018 states that notwithstanding issue of notice under Section 124 the proper officer may issue a supplementary notice under such circumstance and in such manner as may be prescribed. Whether prior to insertion of the second proviso with effect from 29.03.2018 can it be said that there was no power conferred on the authority to issue a supplementary show cause notice or an addendum to a show cause notice already issued under Section 124 of the Act? - HELD THAT - In STATE OF RAJASTHAN VERSUS. LEELA JAIN 1964 (9) TMI 59 - SUPREME COURT it was held that as a general construction of a proviso is concerned, it has been broadly stated that the function of a proviso is to limit the main part of the section and to carve out something which but for the proviso would have been within the operative part. In SHAH BHOJRAJ KUVERJI OIL MILLS AND GINNING FACTORY VERSUS SUBBASH CHANDRA YOGRAJ SINHA 1961 (4) TMI 82 - SUPREME COURT it was held that as a general rule, a proviso is added to an enactment to qualify or create an exception to what is in the enactment and ordinarily a proviso is not interpreted as stating a general rule. In COMMNR. OF INCOME TAX-I, AHMEDABAD VERSUS GOLD COIN HEALTH FOOD PVT. LTD. 2008 (8) TMI 5 - SUPREME COURT the Hon ble Supreme Court referred Principles of Statutory Interpretation 11th Edition, 2008 by Justice G.P Singh wherein it was said that if a statute is curative or merely declaratory of the previous law, the retrospective operation is generally intended. A clarificatory amendment will have retrospective effect and therefore if the Principle Act which existed as law when the constitution came into force, the amending Act also will be part of the existing law. Having steered clear of the above issue, we also would endeavour to examine as to whether the use of the words supplementary in the notice dated 18.05.2017 would in effect be a supplementary show cause notice or a show cause notice issued at the first instance. Reverting back to the facts of the case, the notice dated 18.05.2017 states that certain facts emerged after the issuance of the notice dated 26.08.2016 to which the respondent was not a noticee. It has been further stated that after issuance of the show cause notice dated 26.08.2016 few more facts emerged and the same were investigated and hence the notice dated 18.05.2017 was issued and the same has to be read along with the notice dated 26.08.2016 and will be adjudicated. Thus, the purport and purpose for using the word supplementary in the notice dated 18.05.2017 is to connote that it has to be read along and adjudicated along with the notice dated 26.08.2016 and nothing more. Admittedly, in the notice dated 18.05.2017 the first three noticees are the officers of the department and the respondent herein is the second noticee, the first noticee, being the Deputy Commissioner and the third noticee being the Inspector of Customs along with these three noticees who are the officers of the department one more person who has been included as a noticee who was not a noticee in the notice dated 26.08.2016 is Jyoti Biswas. The other noticees namely 5 to 10 are the noticees in the notice dated 26.08.2016. Therefore, it is clear that the show cause notice dated 18.05.2017 is a notice issued based on new facts which emerged pursuant to the investigation conducted after the issuance of the show cause notice dated 26.08.2016 and for all the purposes it shall be treated as show cause notice and the word supplementary used therein is only to indicate that it needs to be adjudicated along with the notice dated 26.08.2016. Therefore, the adjudicating authority was correct in rendering the finding in his order dated 09.01.2023 that the supplementary show cause notice, although termed as the supplementary, is actually an independent show cause notice even though it relates with the case of smuggling which is also a subject matter of the first show cause notice dated 26.08.2016. The tribunal has committed an error in interfering with the order dated 09.01.2023 passed by the adjudicating authority - The order passed by the tribunal is set aside, the order of the adjudicating authority dated 09.01.2023 stands restored and the substantial questions of law are answered in favour of the appellant revenue - Appeal allowed.
Issues Involved:
1. Legality of the Supplementary Show Cause Notice issued on 18.05.2017. 2. Retrospective or prospective application of the second proviso to Section 124 of the Customs Act, 1962. 3. Applicability of the Customs (Supplementary Notice) Regulation, 2019. Summary: Issue 1: Legality of the Supplementary Show Cause Notice The appeal concerns the legality of the Supplementary Show Cause Notice issued on 18.05.2017 by the Commissioner of Customs (Port), Kolkata. The tribunal had set aside this notice, holding it was not legally sustainable as it was issued prior to the insertion of the second proviso to Section 124 of the Customs Act, 1962, which became effective on 29.03.2018. The court examined whether the power to issue such supplementary notices existed before the amendment. Issue 2: Retrospective or Prospective Application of the Second Proviso The court analyzed whether the second proviso to Section 124, effective from 29.03.2018, should be considered retrospective or prospective. The court concluded that the power to issue supplementary show cause notices was implicit in Section 124 even before the insertion of the second proviso. The second proviso was deemed declaratory of the previous law, implying retrospective operation. Issue 3: Applicability of the Customs (Supplementary Notice) Regulation, 2019 The tribunal had also failed to appreciate the scope and context of the Customs (Supplementary Notice) Regulation, 2019. The court held that the proper officer's power to issue supplementary notices was inherent in the statute, and the 2019 Regulations merely provided explicit guidelines for issuing such notices. Conclusion: The court found the tribunal erred in its decision, reinstating the adjudicating authority's order dated 09.01.2023. The court directed the adjudicating authority to proceed with the adjudication of the show cause notice dated 18.05.2017 and the addendum dated 22.09.2017, ensuring reasonable opportunity for the parties involved. The appeal was allowed, and the substantial questions of law were answered in favor of the appellant revenue.
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