2025 (6) TMI 614 - AT - Customs

Jurisdiction of Directorate of Revenue Intelligence (DRI) officers to issue SCN - exemption from Anti-Dumping Duty - goods were manufactured in China and exported via Singapore - suppression of facts or not - extended period of limitation. Jurisdiction of the DRI to issue SCN first - HELD THAT - Snce a SCN issued without proper jurisdiction would be a nullity and the issue on merits would not survive. The Hon ble Supreme Court in its judgment on the review petition in the case of COMMISSIONER OF CUSTOMS Vs M/S CANON INDIA PVT. LTD. 2024 (11) TMI 391 - SUPREME COURT (LB) held that the officers of Directorate of Revenue Intelligence Commissionerates of Customs (Preventive) Directorate General of Central Excise Intelligence and Commissionerates of Central Excise and other similarly situated officers are proper officers for the purposes of Section 28 and are competent to issue show cause notice thereunder. Hence the plea raised by the appellant stating that the officers of the DRI are incompetent to exercise the powers under section 28 of the Customs Act 1962 fails. The quoting of section 28(1) instead of proviso to section 28(1) is an inadvertent error in the Show Cause Notice. A reading of the SCN as a whole clearly brings out the mens rea involved in attempting to evade duty. The statement of Shri B. Kirthi Kumar CEO of Shanti Rayons India (P) Ltd on 27.11.2009 indicates that the appellant was aware that anti-dumping duty at a higher rate was applicable for the goods produced by M/s Yibin Hiest Fibre Limited Corporation China and exported to them by a Singapore firm. Section 58 of the Indian Evidence Act 1872 as it stood at the relevant time states that a fact does not need to be proved in any proceeding if the parties or their agents admit it or if it is admitted by writing under their hands before the hearing or if it is deemed to have been admitted by their pleadings under any rule of pleading in force at the time. The principle behind this section is that a court only decides disputed facts so facts that are not in dispute need not be proved. Retraction of statements - HELD THAT - The appellant has not pleaded that the statement was retracted. Even in the case of retraction it is for the person who claims retraction to prove that the statement was made under force duress coercion etc. See K.P Abudul Majeed Vs. Commissioner of Customs 2014 (7) TMI 730 - KERALA HIGH COURT ; Surjeet Singh Chhabra Vs. UOI 1996 (10) TMI 106 - SUPREME COURT ; K.I. Pavuny Vs. Assistant Collector (HQ) Cochin 1997 (2) TMI 97 - SUPREME COURT Further as observed by the Hon ble Apex Court in Avadh Kishore Das Vs Ram Gopal and Ors. 1978 (12) TMI 185 - SUPREME COURT Section 31 of the Indian Evidence Act 1872 establishes that evidentiary admissions while not conclusive proof create an estoppel and shift the burden of proof. Unless shown incorrect they serve as effective proof of the facts admitted. Suppression of facts - HELD THAT - The Hon ble Gujarat High Court in Trafigura India 2023 (12) TMI 196 - GUJARAT HIGH COURT held that suppression can take the form of suggesting wrong facts to obtain some advantage which may not be available upon the disclosure of correct and genuine facts. Hence suppression may manifest itself in misrepresentation also. The appellant being aware of the statement by the CEO of the company given during an investigation carried out by DRI knew that the ground of suppression was involved and that the goods had also been seized and released on a bond. They also paid the differential anti-dumping duty involved before the issue of SCN and have not challenged the conclusion in the impugned order that the rate of ADD is correctly payable under Sl. No.25 of the notification 81/2009 Cus dated 13.07.2009. Section 114A invoked in the SCN also pertains to a case of willful mis-statement or suppression of facts etc. and supports the view that the non-citing of proviso to before section 28(1) was an inadvertent error. Hence no prejudice was caused to the appellant and the mere fact that the sub section was not expressly mentioned in the SCN would not vitiate the notice. Confiscation - redemption fine - HELD THAT - This is a case where the goods were released to the appellant on the execution of a bond. It is found that the Hon ble Apex Court in M/s. Weston Components Ltd. v. Commissioner of Customs New Delhi 2000 (1) TMI 45 - SC ORDER took the view that redemption fine can be imposed even in the absence of the goods as the goods were released to the appellant on an application made by it and on the appellant executing a bond. Since the goods were released on a bond the position is as if the goods were available. Hence there is no legal infirmity in the confiscation and redemption fine imposed by the Original Authority. Conclusion - i) The plea raised by the appellant stating that the officers of the DRI are incompetent to exercise the powers under section 28 of the Customs Act 1962 fails. ii) No prejudice was caused to the appellant and the mere fact that the sub section was not expressly mentioned in the SCN would not vitiate the notice. iii) Since the goods were released on a bond the position is as if the goods were available. Hence there is no legal infirmity in the confiscation and redemption fine imposed by the Original Authority. The lower authority has taken a view which is reasonable legal and proper and hence the impugned order upheld and the appeal rejected - The appeal is disposed of accordingly.

Summary

The core legal questions considered by the Tribunal in this appeal are:

1. Whether the Directorate of Revenue Intelligence (DRI) officers have jurisdiction to issue a Show Cause Notice (SCN) under Section 28 of the Customs Act, 1962.

2. Whether the appellant's claim of exemption from Anti-Dumping Duty (ADD) at USD 4.77 per kg was valid, given that the goods were manufactured in China and exported via Singapore, and whether the correct ADD rate was USD 5.20 per kg as per the relevant Customs Notification.

3. Whether any suppression of facts or misrepresentation by the appellant occurred, warranting invocation of the extended limitation period and imposition of penalties.

4. Whether the appellant's plea that the demand relates to the pre-self-assessment regime and any error by the Customs officer in assessment cannot be fastened on them is sustainable.

5. Whether the show cause notice was barred by limitation due to non-invocation of the larger period under proviso to Section 28(1) of the Customs Act.

6. Whether the goods, having been cleared and released on bond, could be subject to confiscation or redemption fine.

7. Whether the appellant was prejudiced by the appellate process, particularly the de novo adjudication and penalty imposition.

8. The propriety of language and conduct in the appeal memorandum filed by the appellant.

Issue 1: Jurisdiction of DRI to Issue SCN under Section 28

The legal framework centers on Section 28 of the Customs Act, 1962, which empowers "proper officers" to issue show cause notices for recovery of duty. The appellant contended that DRI officers lack jurisdiction to issue SCNs under this provision. The Court examined the Supreme Court's judgment in the review petition of Commissioner of Customs vs M/s Canon India Pvt. Ltd., which clarified that officers of the DRI, Customs Preventive Commissionerates, DGCEI, and similar authorities are "proper officers" within the meaning of Section 28 and competent to issue SCNs.

The Tribunal held that the appellant's challenge to DRI's jurisdiction fails in light of this authoritative precedent. Hence, the SCN issued by DRI is valid and not a nullity.

Issue 2 & 3: Correctness of ADD Rate and Suppression of Facts

The appellant imported Rayon Filament Yarn and claimed exemption from ADD at USD 4.77 per kg under Sl. No. 7 of Notification No. 81/2009-Cus dated 13.07.2009. The investigation revealed that the goods were manufactured by a Chinese company and exported through a Singaporean firm, making the appellant ineligible for the lower ADD rate. The correct rate was USD 5.20 per kg under Sl. No. 25 of the same notification.

The appellant admitted in statements that the goods were sourced from China via Singapore, but declared otherwise in the Bill of Entry, thus suppressing material facts. The Tribunal applied the principle that suppression may manifest as misrepresentation, citing the Gujarat High Court's decision in Trafigura India Pvt. Ltd., which held that suppression includes suggesting wrong facts to obtain undue advantage. This suppression justified invoking the extended limitation period and imposition of penalties under Section 114A of the Customs Act.

The Tribunal distinguished the appellant's reliance on a Punjab and Haryana High Court case where no suppression was found, emphasizing that in the present case, suppression was admitted and material to the assessment.

Issue 4: Pre-Self-Assessment Regime and Liability for Differential Duty

The appellant argued that under the pre-self-assessment regime, the assessment was the duty of the proper officer, and any mistake in assessing under Sl. No. 7 instead of Sl. No. 25 could not be fastened on them. The Tribunal rejected this, reasoning that suppression of facts by the importer prevents the proper officer from making a correct assessment, thus the importer cannot escape liability. The principle that an importer must make a true and complete declaration was emphasized.

Issue 5: Limitation and Invocation of Larger Period under Section 28(1)

The appellant contended that the SCN was time barred as it did not invoke the larger limitation period under the proviso to Section 28(1). The Tribunal found that the SCN erroneously cited only Section 28(1), omitting the proviso, but held this to be an inadvertent error not vitiating the notice. The appellant's own admissions and the facts indicated suppression, justifying invocation of the extended limitation period. The Tribunal relied on principles from the Indian Evidence Act regarding admissions and burden of proof, and Supreme Court precedents that minor errors in citing legal provisions do not invalidate SCNs if the officer is otherwise competent.

Issue 6: Confiscation and Redemption Fine on Cleared Goods

The appellant argued that since the goods had been cleared, they could not be confiscated. The Tribunal referred to the Supreme Court's decision in Weston Components Ltd., which held that goods released on bond are deemed available for confiscation purposes. Hence, imposition of redemption fine in lieu of confiscation was upheld as legal and proper.

Issue 7: Appellant's Position in Appeal and De Novo Proceedings

The appellant claimed they could not be worse off by filing an appeal and challenged the imposition of penalty and redemption fine. The Tribunal noted that the Commissioner (Appeals) had remanded the matter for de novo adjudication to ensure natural justice. The concept of de novo hearing was explained as a fresh trial without reference to prior conclusions. The Tribunal found no legal infirmity in the imposition of redemption fine during de novo proceedings and held that the appellant was not prejudiced by the appellate process.

Issue 8: Conduct and Language in Appeal Memorandum

The Tribunal expressed strong disapproval of the disrespectful and derogatory language used by the appellant in the appeal memorandum against the First Appellate Authority. It cited the principle nemo judex in causa sua ("no one is a judge in his own cause") and referred to the Punjab and Haryana High Court's admonition that lawyers must maintain dignity, courtesy, and restraint in pleadings. The Tribunal emphasized that appeals should be decided on the merits of legal arguments, not on the basis of disrespectful conduct.

Significant Holdings and Core Principles

"The officers of Directorate of Revenue Intelligence, Commissionerates of Customs (Preventive), Directorate General of Central Excise Intelligence and Commissionerates of Central Excise and other similarly situated officers are proper officers for the purposes of Section 28 and are competent to issue show cause notice thereunder."

"Suppression may manifest itself in misrepresentation also. The importer declaring a lower ADD rate in the Bill of Entry without stating the correct producer/exporter of the goods, which is essential for determining the rate of ADD as per the notification, would amount to suppression."

"The mere mentioning of a wrong provision of law would not vitiate the show cause notice as the assessing officer was otherwise competent to issue the same."

"Redemption fine can be imposed even in the absence of the goods as the goods were released to the appellant on an application made by it and on the appellant executing a bond."

"A 'de novo' trial means a new trial ordered by an appellate court when the original trial failed to make a determination in a manner dictated by law. The appellate court has power to direct the lower court to hold 'de novo' trial."

"The litigant and the lawyer are to take care not to over-step the limits of courtesy, propriety and decency. They cannot malign or ridicule the judicial officers in their judicial capacity."

In conclusion, the Tribunal upheld the correctness of the ADD rate demand, the validity of the SCN issued by DRI, the applicability of the extended limitation period due to suppression of facts, and the imposition of penalties including redemption fine. The appeal was rejected in its entirety, and the Tribunal admonished the appellant for the disrespectful tone in pleadings, emphasizing the importance of propriety in legal proceedings.