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M/s Alumeco India Extrusion Ltd. Versus CCE, Customs & ST, Hyderabad

Jurisdiction to issue SCN - Benefit of N/N. 93/2004-Cus. dt. 10.09.2004 - DEEC licences - violation of Rule 5 (3) of CCR, 2004 - Held that: - Discernably, conflicting views have thus been taken by different High Courts on this issue. - Matter is pending before the Supreme Court - it would be imprudent and improper for us to reach a decision in the present appeal by following any of the High Court decisions discussed supra including that of the jurisdictional High Court of Telangana and Andhra Pr .....

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n No. E/EH/30494/2016, Appeal No. E/1073/2009 - A/30572/2017 - Dated:- 23-2-2017 - Dr. Satish Chanda, President And Mr. Madhu Mohan Damodhar, Member (Technical) Sh. G. Natarajan, Advocate for the Appellant Sh. Guna Ranjan, Superintendent (AR) for the Respondent ORDER [ Order Per Justice ( Dr. ) Satish Chandra ] The appellants are engaged in manufacture of various Aluminum Profiles falling under Chapter 76 of the Central Excise Tariff Act, 1985. They also import duty-free materials for manufactur .....

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manded. Appellant filed application before the Settlement Commission, Mumbai Bench for settlement of the case. The Commission settled the matter vide its final order dt. 22.06.2007. Appellant subsequently took cenvat credit amounting to ₹ 32,68,212/- in September 2007. However, another SCN dt. 07.10.2008 was issued alleging violation of Rule 5 (3) of Cenvat Credit Rules, 2004 and inter alia proposing recovery of alleged irregularly availed cenvat credit of ₹ 32,68,218/-. The proposed .....

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equent to the DRI investigation and issuance of SCN by DRI dt. 06.03.2007 which further led to issue of notice by Central Excise authorities on 07.10.2008 for recovery of cenvat credit allegedly wrongly availed by appellant. Thus, the entire issue has emanated out of first SCN dt. 06.03.2007 issued by DRI. However, DRI officers were not proper officers under Section 2 (34) of the Customs Act, 1962 at the relevant point of time as settled by the Hon ble Apex Court in the case of Commissioner of C .....

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relied upon the Sayed Ali judgment to hold that DRI officers have no power to issue SCNs prior to 06-07-2011. 3.1 Ld.A.R submits that as Mangali Impex judgment of Hon ble Delhi High Court, having been admitted by Hon'ble Apex Court and stay granted thereat [as reported in UOI Vs Mangali Impex Ltd. 2016 (339) ELT A49 (SC)], appellant cannot take help of that judgement and pray for allowing their appeal. 4. We have heard both sides and have gone through the facts of the case. 5. Without doubt .....

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34), he did not have jurisdiction to issue a show cause notice under Section 28 of the Customs Act, 1962. 5.1 The review petition filed by the department was dismissed by the Hon ble Apex Court on the ground of delay as well as merits as reported in Commissioner Vs Sayed Ali 2011 (274) ELT A109 (SC). 5.2 Government amended Section 28 of the Customs Act, 1962 w.e.f. 08-04-2011 vide Finance Act, 2011. Subsequently, sub-section (11) was inserted in Section 28 by the Customs (Amendment and Validatio .....

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n 17 and shall be deemed to have been and always had been the proper officers for the purposes of this section. Explanation 1. For the purposes of this section, relevant date means, (a) in a case where duty is not levied, or interest is not charged, the date on which the proper officer makes an order for the clearance of goods; (b) in a case where duty is provisionally assessed under section 18, the date of adjustment of duty after the final assessment thereof or re-assessment, as the case may b .....

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It is also noticed that in order to overcome the situation created by the judgement of Hon'ble Supreme Court in the case of Sayed Ali, Notification NO.44/2011-Cus. (N.T), dated July 6,2011, was issued by the CBEC, assigning the functions of the proper officer to various officers (including Additional Director General, DRI) mentioned in the notification, for the purposes of Section 28 of the Act. Thus, w.e.f. July 6, 2011, Additional Director General, DRI was prospectively appointed as ' .....

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The Hon ble Supreme Court has remanded the matter back to the Tribunal with a direction to examine the matter afresh particularly in the light of the decision in Sayed Ali case. 5.5 The validity of this newly enacted Section 28 (11) of Customs Act was further challenged in a number of cases, however with contesting outcomes. 5.6 The Hon ble Mumbai High Court in the judgement in the case of Sunil Gupta Vs UOI decided on 03-01-2014, reported in 2015 (315) ELT 167 (Bom.), distinguished the Apex Co .....

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ther 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 effect. These Notifications were holding the field and were not quashed or set aside. In the teeth of .....

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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 of Customs (Preventive) could be said to be on par with the officers mentioned in the earlier Notificat .....

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ompetent 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 that the law cannot be amended retrospectively. It is also not his argument that the validating Act does not .....

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at we are of the opinion that the challenge in the Writ Petition is without any merit. The Explanation removes the doubts and states that even those cases which are governed by Section 28 and whether initiated prior to the Finance Bill, 2011 receiving the assent of the President shall continue to be governed by Section 28, as it stood immediately before the date on which such assent is received. The reference to Finance Bill therein denotes the bill by the section itself was substituted by Act 8 .....

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trusted and assigned the functions as noted above, they are deemed to have been possessing the authority, whether in terms of Section 28 un-amended or amended and substituted as above. In these circumstances, for these additional reasons as well, the challenge to this sub-section must fail. 5.7. However, a contrary view was taken by the Hon ble Delhi High Court in Mangali Impex Ltd. Vs UOI 2016 (335) EL 605 (Del.), inter alia, holding that newly inserted Section 28 (11) does not empower officers .....

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icers of the Customs, DRI, the DGCEI etc. to exercise powers in relation to non-levy, short-levy or erroneous refund for a period prior to 8th April 2011 if, in fact, there was no proper assigning of the functions of reassessment or assessment in favour of such officers who issued such SCNs since they were not proper officers for the purposes of Section 2(34) of the Act and further because Explanation 2 to Section 28 as presently enacted makes it explicit that such non-levy, short-levy or errone .....

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vulnerable to being declared unconstitutional. 70.3 As regards the period subsequent to 8th April 2011, it is evident that if the administrative chaos as envisaged by the Supreme Court in Sayed Ali (supra) should not come about, there cannot be any duplicating and/or overlapping of jurisdiction of the officers. It would have to be ensured through proper co-ordination and administrative instructions issued by the C.B.E. & C. that once a SCN is issued specifying the adjudicating officer to who .....

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Telangana and Andhra Pradesh, decided on 26-10-2016, in the case of Vuppalamritha Magnetic Components Ltd. Vs DRI (Zonal Unit), Chennai, reported in 2017 (345) ELT 161 (AP), dissented from the Mangali Impex Judgement of Delhi High Court and took a contrary view inter alia as under : "10. At the outset, we are of the considered view that the writ petition is not maintainable. The show cause notice dated 30-7-2009, which is under challenge in the present writ petition, is no longer in force. .....

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gment of a Division Bench of the Punjab & Haryana High Court in Rajinder Arora and Others v. Union of India and Others [2016 (339) E.L.T. 370 (P & H)]. In Mangali Impex Ltd., (supra), the Division Bench of the Delhi High Court set aside even the show cause notices, despite the fact that the show cause notices had already culminated in orders of finality. In Rajinder Arora and Others v. Union of India and others (1 supra), a Division Bench of the Punjab & Haryana High Court also dealt .....

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igh Court as well as the Punjab & Haryana High Court have not considered the issue from the point of view of merger. It is needless to point out that the doctrine of merger is a common law doctrine founded on principles of propriety in the hierarchy of justice delivery system. The underlying principle behind the doctrine of merger is that there cannot be more than one decree. 13. The issue can be looked at from another aspect also. Today, the effect of our allowing the writ petition and sett .....

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ptions. If this theory of nullity and voidity is accepted, all proceedings initiated before 8-4-2011, which have already culminated in orders of adjudication and pursuant to which recoveries have been made, are also to be deemed as non est. Therefore, the Commissionerates of Excise throughout the country can today be flooded with applications for refund of the duty paid in pursuance of the orders of adjudication passed on the basis of such show cause notices. The theory of nullity and voidity ca .....

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upreme Court. Therefore, the principle of finality to litigation would put a seal on the present attempt on the part of the petitioner to reopen the issue all over again." 5.9. Discernably, conflicting views have thus been taken by different High Courts on this issue. 5.10. However as already discussed supra, on appeal, the Hon ble Supreme Court has granted stay on the Mangali Impex judgement (supra) vide its order dt.01-08-2016, the account thereof as reported in 2016 (339) ELT A49 (SC), i .....

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ng order : Exemption from filing c/c of the impugned judgment and permission to file synopsis and list of dates granted. Issue notice. In the meanwhile, there shall be a stay of operation of the impugned judgment and order passed by the High Court of Delhi. The Delhi High Court in its impugned order had held that department cannot seek to rely upon amended provisions of Section 28(11) of Customs Act, 1962 as authorising the officers of the Customs, DRI, the DGCEI, etc., to exercise powers in rel .....

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ection 28 as it stood prior to that date and not the newly re-cast Section 28 of the Act." 5.11 The incontrovertible fact that emerges from these discussions is that the Mangali Impex judgment has been stayed by the Supreme Court and is therefore undeniably subjudice. Indubitably, finality in the matter will be arrived at only after the Hon ble Supreme Court gives its verdict in the said case. In such an event, as ruled by the Hon'ble Apex Court in UOI Vs West Coast Paper Mills Ltd. -20 .....

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