2000 (11) TMI 260 - AT - Customs

Issues Involved:
1. Legality and propriety of the impugned order.
2. Jurisdiction of the Directorate of Revenue Intelligence (DRI).
3. Enhancement of declared value.
4. Confiscation of goods under Sections 111(d) and (m) of the Customs Act.
5. Imposition of penalty under Section 112A of the Customs Act.

Issue-wise Detailed Analysis:

1. Legality and Propriety of the Impugned Order:
The department challenged the order dated 29-12-1995 of the Commissioner of Customs, Mumbai, which vacated the seizure of goods and withdrew the show cause notices. The Tribunal was asked to determine if the impugned order was legally correct and proper. The Commissioner had found the show cause notices unsustainable on merits and void in law, concluding that the subject bill of entry should be finalized after accepting the license produced and that the assessing officer could take evidence regarding the value as deemed proper.

2. Jurisdiction of the Directorate of Revenue Intelligence (DRI):
The validity of the show cause notice issued by the Assistant Director, DRI, was challenged on the grounds that he was not a "proper officer" under Section 2(34) of the Customs Act. The Tribunal noted that under Notification 19/90, dated 26-4-1990, the Assistant Director, DRI, was appointed as an Assistant Collector of Customs under Section 4(1) of the Act. However, it was held that the designation as Assistant Collector of Customs did not automatically confer the authority to issue show cause notices for levy and collection of duty unless those functions were specifically assigned by the Board or the Commissioner of Customs. The Tribunal referenced the decision in Commissioner of Customs, Mumbai v. Pune Roller (1997 (89) E.L.T. 604) to support this interpretation, concluding that the show cause notice issued by the Assistant Director, DRI, was without authority and invalid.

3. Enhancement of Declared Value:
The department argued for enhancing the declared value from Rs. 15,30,325/- to Rs. 48,47,862/- based on evidence from fax messages and statements indicating under-invoicing. The Tribunal noted that the value of fur fabrics varied significantly depending on the print, length of pile, and weight per yard, with actual prices ranging from USD 3.7 to USD 6.8 per yard, contrary to the declared price of USD 1.5 per yard. However, due to the invalidity of the show cause notice, the Tribunal did not uphold the proposed enhancement of the declared value.

4. Confiscation of Goods under Sections 111(d) and (m) of the Customs Act:
The show cause notice had proposed confiscation of the goods under Sections 111(d) and (m) of the Customs Act, alleging that the artificial fur fabrics were not used in the export product and thus not entitled to DEEC benefit. The Tribunal, however, found that the show cause notice was invalid, and therefore, the proposed confiscation could not be upheld.

5. Imposition of Penalty under Section 112A of the Customs Act:
The department sought the imposition of penalties under Section 112A for the alleged under-invoicing and evasion of customs duty. The Tribunal, reiterating the invalidity of the show cause notice, concluded that the imposition of penalties could not be sustained.

Conclusion:
The Tribunal dismissed the department's appeal, holding that the show cause notice issued by the Assistant Director, DRI, was not legal and valid due to the lack of proper authorization. Consequently, the impugned order vacating the seizure and withdrawing the show cause notices was upheld. The department's application was dismissed on the grounds that the show cause notice was issued without authority, rendering the proceedings void.

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