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TMI BlogOFFICERS OF ‘DRI’ HAVE NO POWER TO DEMAND AND COLLECT ANY AMOUNT FROM ASSESSEEX X X X Extracts X X X X X X X X Extracts X X X X ..... OFFICERS OF ‘DRI’ HAVE NO POWER TO DEMAND AND COLLECT ANY AMOUNT FROM ASSESSEE - By: - Mr. M. GOVINDARAJAN - Customs - Import - Export - SEZ - Dated:- 24-6-2017 - - Introduction As the apex intelligence organization of Indian Customs, it is the prime responsibility of DRI to enforce the provisions of the Customs Act, 1962 . The charter of duties of the DRI includes collection, collation, analysis and dissemination of intelligence relating to smuggling. It also, in cases having pan-India repercussions, works out such intelligence on its own. DRI has over the years, built up a formidable reputation as the premier agency in the field of anti-smuggling on account of its accumulated body of work. DRI has established a vast intelligence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gathering network which relies heavily on traditional human intelligence resources as well as contemporary intelligence gathering tools. Functions of DRI The following are the functions of the DRI- Collection of intelligence about smuggling of contraband goods, narcotics, under-invoicing etc. through sources of India and abroad, including secret sources; Analysis and dissemination of such intelligence to the field formations for action and working on such intelligence, where necessary. Keeping watch over important seizures and investigation cases. Associating or taking over the investigations which warrant specialized handling by the Directorate; Guiding important investigation/prosecution cases. Keeping liaison with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign countries, Indian Missions and Enforcement agencies abroad on anti-smuggling matters; To keep liaison with C.B.I. and through them with the INTERPOL. To refer cases registered under the Customs Act to the Income Tax Department for action under the Income Tax Act. To keep statistics of seizures and prices/rates etc. for watching trends of smuggling and supply required material to the ministry of Finance and other Ministries. To study and suggest remedies for loopholes in law and procedures to combat smuggling. Issue The issue to be discussed in this article is whether the officers of DRI are having jurisdiction to demand and collect any amount from the assessee with reference to decided case law. Case law I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Calcutta Iron Steel Company V. CESTAT, Chennai 2017 (3) TMI 1069 - MADRAS HIGH COURT the assessee is engaged in the business of importing goods. The assessee, in the course of its business, in and about March, 1995 had imported Non-Alloy Heavy Melting Steel Scrap. Two Bills of Entry were filed with the customs authorities. After examination and assessment, the concerned goods were cleared against advance licences issue under Duty Exemption Entitlement Certificate Scheme. The assessee in October and November, 1995 imported two other consignments of goods which were declared as rejected/damaged/non-serviceable scrap/ rolls under two bills of entry. The said goods were in the nature of steel scrap, which had arisen out of rol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls used in steel rolling mills, which, after they had worn out, were scrapped by rolling mills. The DRI based on intelligence conducted investigation into the matter. It is at the time of investigation the assessee deposited a sum of ₹ 14,23,600/- with the Customs authorities on 17.01.1996. A show cause notice was issued to the assessee which was adjudicated by the Commissioner vide order dated 30.06.1997 as detailed below- The goods should be considered as rolls for re-rolling mills, and not as heavy melting scrap; The licence produced is not valid to cover the goods under import as admitted by them; The goods shall be classified under CTH 84.55.30 as rolls for re-rolling mills and charged to duty at the rate of 25% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plus 15%; The duty amount of ₹ 4,57,892/- shall be adjusted against the amount of ₹ 14,23,600/- which was voluntarily paid by the importers during the course of investigation; The duty liability in respect of past clearance as admitted by the party is allowed to be adjusted against the amount voluntarily paid during the time of search in November 1995; The goods under seizure were confiscated under section 111(d) and (m) of the Customs Act. However the goods were allowed to be redeemed on payment of fine ₹ 3 lakhs; A personal penalty of ₹ 1 lakh was imposed under section1 112(a) of the Customs Act, 1962 . The assessee preferred an appeal before the Tribunal. The Tribunal remitted the matter fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r fresh adjudication to the Commissioner but the Commissioner was directed to confine himself to the bill of entries which were the subject matter of show cause notice. On remand the Commissioner held that scrapped goods were classifiable under CTH 7204.99 as against 8455.30. Therefore the charge leveled against the assessee in the show cause notice were dropped. The assessee applied for refund the sum of ₹ 9,70,685/- which is the remaining amount after adjustment of duty out of the deposit ₹ 14,23,600/- deposited by him during the search. This amount was refunded to him. The assessee further claimed a refund of ₹ 4,52,735/- which was adjusted as duty which was dropped in the remand proceedings. The refund applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was rejected on the ground of time bar. The assessee filed an appeal before the Commissioner (Appeals). The Commissioner directed to refund ₹ 4,52,735/- but rejected the prayer for the payment of interest. The Tribunal allowed interest on the refund of ₹ 452735/- but did not allow interest on ₹ 9,70,685/- Being impugned with this order the assessee approached the High Court for grant of interest on the sum of ₹ 9,70,685/-. The assessee put forth the following arguments before the High Court- The deposit ₹ 14,23,600/- made by the appellant was made under threat and duress, as the DRI officials had landed up at the assessee s premises, when, wedding celebrations were on; Even if it is assume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as voluntary deposit, after the passing of the adjudication order, it took the color of a duty, since the Commissioner had not only adjusted a sum of ₹ 4,57,892/- towards duty of consignments cleared in October 1995 and November 1995 but also issued direction that the balance amount should be adjusted in respect of duty liability; Therefore the Tribunal erred in law in concluding that the sum of ₹ 9,70,865/0 was in the nature of security deposit and no interest would accrue or be payable to the assessee under section 27A of the Act ; The Department contended the following- As the amount deposited was in the nature of security deposit the Tribunal rightly held that no interest would be payable to the assessee u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 27A of the Act ; Section 27(2) of the Act provides that interest payable only if duty has been determined and therefore interest can be paid if only duty is refunded and only on the delayed refund; When DRI collected the amount there was no assessment and that itself would that the amount paid at that point in time by the assessee were voluntary in nature; The High Court held that the argument of the Department that when DRI collected the amount there was no assessment and that itself would amount to voluntary in nature is self destructive. To say that payments were made voluntarily when DRI officials descended on the premises of the assessee when wedding celebrations were on would amount to turning a blind e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ye to the harsh realities obtaining on ground. As a matter of fact, in the view of High Court, the officers of DRI had clearly no jurisdiction to demand and collect any amount from assessee, in view of the fact that they are not vested with powers of an Assessing Officers. If it were to accept this argument by the Court then it would amount to allowing the Revenue to take advantage of the wrong. The Revenue has enjoyed the benefits of the money collected from the assessee on account of purported liability to pay duty, which was ultimately proved to have been wrongly foisted. Therefore interest is payable to the appellant by the Revenue since it can only be termed as exaction under ostensible authority of law. - - Scholarly articles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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