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2016 (1) TMI 875 - CESTAT NEW DELHI

2016 (1) TMI 875 - CESTAT NEW DELHI - TMI - Proper officers - Whether DRI is the proper officer - jurisdiction of DRI to initiate proceedings - assessment, re-assessment or levy of short remitted Customs duty under Section 17 and 28 of Customs Act, 1962 - Held that:- The officers namely those from the Directorate of Revenue Intelligence having been entrusted and assigned the functions as noted above, they are deemed to have been possessing the authority, whether in terms of Section 28 un-amended .....

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PRESIDENT AND R K SINGH, MEMBER (TECHNICAL) For the Petitioner : Shri Kamaljeet Singh & Shri S Vasudevan, Advs. For the Respondent : Shri Shri Rajiv Tandan, (Principal Commr.), Shri Govind Dixit & Shri Amresh Jain, DRs ORDER PER: R K SINGH: Vide Misc. Order No. 52733 dated 28.7.2015, CESTAT with reference to the appeal filed by M/s Bhagwati (422/2010-CU(DB), noted that the appellant has sought to urge additional ground to support its challenge to the jurisdiction of DRI to initiate proce .....

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are pending with CESTAT. CESTAT in para 4 and 5 of the said order observed as under: "4. We have heard Shri Kamaljeet Singh, Shri Vasudevan and other Counsel representing the several assessees who are parties to appeals wherein jurisdictional competence of the DRl is also in issue. We have also heard ld. DR for Revenue, who contends that the issue is no longer res integra and is concluded by judgements of Gujarat and Bombay High Courts which have ruled, according to Revenue, that provision .....

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contend that a challenge to provisions of Section 28(11) and the scope of the legislative and operative consequences flowing from such amendatory exercise are pending consideration before the Delhi High Court wherein show cause notices issued by DRI/Preventive Wings are challenged by way of writ petitions and vires of Section 28(11) is also in issue. On the above generic contention, assessees urge that the appeals should not be disposed and should await the decision of the Delhi High Court 5. Ha .....

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e wake of above quoted para-5. 3. The ld. Advocates representing the appellants essentially pleaded/contended that; (i) The judgment of Bombay High Court in the case of Sunil Gupta Vs. Union of India - 2015 (315) ELT 167 (Bom.) holding that Section 28(11) of the Customs Act, 1962 does have retrospective application, did not deal with the constitutional challenge to Section 28(11) itself while the issue before the Delhi High Court inter alia involves the question of constitutional validity of Sec .....

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harmonious reading of Section 28(11) which was introduced on 16.9.2011 makes it clear that the said sub section 11 did not cover old Section 28 (as it existed prior to 8.4.2011] and therefore the show cause notices issued prior to that date (i.e. 8.4.2011] would not be governed by the provisions of Section 28(11]. (iii] Section 28 confers authority on "the" proper officer and not on 'a' proper officer and as the assessment in these cases have been done by different officers, ot .....

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icers and as assessment had already been done by the assessing officer, DRI would not be eligible to issue the show cause notice. They cited the judgements in the case of Kenapo Textiles Pvt. Ltd. and Another Vs. State of Haryana & Others [84 STC 88], India Household and Healthcare Ltd. Vs. LG Household and Healthcare Ltd. (2007) 5 SCC 510. 4. The ld. Advocates also put forth several contentions to challenge the constitutional validity of Section 28(11] ibid but conceded that CESTAT cannot d .....

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ELT 21 (Guj.) support the view that DRI was fully competent to issue the show cause notice by virtue of Section 28(11) ibid. (iii) The challenge before the Delhi High Court includes challenge to the constitutional validity of the amendment but that is no reason to stall the proceedings relating to the DRI show cause notices as there is no stay to that effect by Delhi High Court. (iv) It is a totally untenable proposition that proceedings all over the country should be stalled merely because con .....

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at CESTAT is not competent to look into the aspect of constitutional validity of any provisions of the Customs Act of which it is a creature. It is a settled position which is also conceded by the appellants. Therefore, we are not taking up any of the contentions raised by the ld. Advocate with regard to the constitutional validity of Section 28(11). 7. Section 28(11) was introduced with effect from September 16, 2011 and is reproduced below : "(11) Notwithstanding anything to the contrary .....

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f Customs under sub section 1 of Section 4 before 6.7.2011 shall be deemed to have been and always had the power of assessment under Section 17 and shall be deemed to have been and always had been the proper officers for the purpose of this section (i.e. Section 28). It is not in dispute that DRI officers who issued the show cause notices were appointed as officers of Customs under sub-section 1 of Section 4 before 6.7.2011, Therefore in terms of Section 28(11) show cause notices issued by such .....

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ed prior to 8.4.2011 and that Section 28 (prior to 8.4.2011) did not have any provision similar to sub section 11 of "new" Section 28. Therefore the ld. Advocates contended, the show cause notices issued by DRI prior to 8.4.2011 would still continue to be treated as having been issued by officers not authorized to do so. This contention on the face of it may seem to have some traction. However, interpretation of Section 28(11) read with Explanation 2 to Section 28(11) has to be done in .....

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olidates and amends the law relating to customs. Clause (34) of section 2 of the said Act defines the expression "proper officer" in relation to the functions under the said Act to mean the officer of customs who is assigned those functions by the Central Board of Excise and Customs or the Commissioner of Customs, Recently, a question has arisen as to whether the Commissioner of Customs (Preventive) is competent to exercise and discharge the powers of a proper officer for issue of a no .....

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poses of assessment or re-assessment of duty and issue of show cause Notice to demand Customs duty under Section 17 read with Section 28 of the Act in respect of goods entered for home consumption is not competent to function as a proper officer which has not been the legislative intent. 2. In view of the above the Show Cause Notices issued over the time by the Customs officers such as those of the Commissionerates of Customs (Preventive), Directorate General of Revenue Intelligence and others, .....

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ary to clarify the true legislative intent that Show Cause Notices issued by Customs officers, i.e., officers of the Commissionerates of Customs (Preventive), Directorate General of Revenue Intelligence (DRI), Directorate General of Central Excise Intelligence (DGCEI) and Central Excise Commissionerates for demanding customs duty not levied or short levied or erroneously refunded in respect of goods imported are valid, irrespective of the fact that any specific assignment as proper officer was i .....

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nd reasons for which Section 28(11) was enacted will be a disharmonious and unholistic way of interpreting the scope of Section 28(11) read with the said Explanation appended thereto. The said Explanation clearly states that it is inserted "for the removal of doubts ". An explanation appended to a sub-section for removal of doubts can never be intended to defeat the very purpose/object of that sub-section and therefore it has to be so interpreted (while remaining within the acceptable .....

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;it is further more now a well settled principle of law that an illustration cannot control the main provision." In the case of Dy. Chief Controller of I&F New Delhi Vs. K.T. Kasalram -1999 (110) ELT 366 (SC), the Supreme Court affirmed the principle that "what particular meaning should be attached to words and phrases in a given instrument is usually to be gathered from the context, nature of the subject matter, purpose or intention of the author and the effect of one or the other .....

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boration on this point by reference to the various aspect of interpretation of statutes is eschewed in the wake of judgement of Bombay High Court in the case of Sunil Gupta (Supra). Para 25 of that judgement has taken note of this very issue and observed as under: "25. As a result of the above discussion and finding that Explanation 2 has not been dealing with the case, which was specifically dealt with by sub-section (11) of Section 28 of the Act, that we are of the opinion that the challe .....

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this Bill by which the section was substituted receiving the assent of the President of India, some cases were initiated and Section 28 was resorted to by the authorities. The Explanation 2 clarifies that they will proceed in terms of the un-amended provision. The position dealt with by insertion of Section 28(11) is distinct and that is about competence of the officer. The officers namely those from the Directorate of Revenue Intelligence having been entrusted and assigned the functions as not .....

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That alters the basis of the judgments, which have been delivered by any Court of law, Tribunal or other authority. Once this section says that all persons appointed as officers of Customs under Section 1(4) before 6th July, 2011 shall be deemed to have been and always to be the proper officers for the purpose of this section, then, the Notifications, which are referred by us above at page 369 and 373 of the paper book are specifically saved and validated. They have been given a retrospective ef .....

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proper officers for the purposes of Section 17 and 28 of the Act Precisely, that has been done in the instant case. 24. If that has been done, then, no assistance can be derived from the Judgment of the Hon'ble Supreme Court in the case of Sayed Ali (supra]. There, for want of jurisdiction or competence in the Collector of Customs (Preventive), the show cause notice was quashed by the Tribunal and that order was upheld by the Supreme Court. Before us, the issue is not whether any Collector .....

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r of Customs (Preventive) as a proper officer for the purpose of Section 28 as it then stood, he was not competent to issue show cause notice (see para 24 of Sayed Ali's Judgment). This position has now undergone a change and from 6th July, 2011, admittedly, they have been assigned these functions and of the Custom officers. They are therefore competent and the Notification in that behalf at page 373 of the paper book has been given a retrospective effect. It is not the argument of Mr. Singh .....

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lowed by CESTAT in several judgements mentioned earlier. The issue has also been settled in favour of Revenue by Gujarat high Court in Swati Menthol and Allied Chem. ltd, Vs. Jt. Director, DRJ - 2014 (304) ELT 21 (Guj.). In para 30 of the said judgement the Gujarat High Court has observed as under : "30. We agree with the counsel for the petitioners that under notification dated 2-5-2012, the officers of DRI have not been assigned specific function of adjudication under Section 28 of the Cu .....

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f Revenue Intelligence are appointed as the officers of the Customs. Under the notification dated 7-3-2002, the officers of DRI have been given jurisdiction over the whole of India. Most significant notification is one of 6-7-2011. As noted, the notification, for the purpose of Section 2(34) of the Customs Act, assigns functions of the proper officer to the various officers including those under the Directorate of Revenue Intelligence, such as Additional Director, joint Director, Deputy Director .....

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