2021-TIOL-123-SC-CUS-LB
Canon India Pvt Ltd Vs CC
Cus - Main issue is whether after clearance of the cameras on the basis that they were exempted from levy of basic Customs duty under Notification No.15/2012, the proceedings initiated by the Directorate of Revenue Intelligence for recovery of duty not paid under Section 28(4) of the Customs Act, 1962 are valid in law - Exemption of basic customs duty accorded to Digital Still Image Video Cameras (DSIC) in terms of exemption notification 20/2005-Cus (as amended by 15/2012-Cus dt. 17.03.2012) came to be denied and the consequential confiscation of goods, demand of interest and imposition of penalty was upheld by the CESTAT, therefore, appeal before Supreme Court.
Held:
+ It is significant to note that while the decision to clear the goods for import because they were exempted from customs duties under Notification No.15/2012, was taken by Deputy Commissioner, Appraisal Group, Delhi Air Cargo, the show cause notice was issued by the Additional Director General, Directorate of Revenue Intelligence. [para 8]
+ The question that arises is whether the Directorate of Revenue Intelligence had authority in law to issue a show cause notice under Section 28(4) of the Act for recovery of duties allegedly not levied or paid when the goods have been cleared for import by a Deputy Commissioner of Customs who decided that the goods are exempted.
+ It is necessary that the answer must flow from the power conferred by the statute i.e. under Section 28(4) of the Act. This Section empowers the recovery of duty not paid, part paid or erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts and confers the power of recovery on “the proper officer". The obvious intention is to confer the power to recover such duties not on any proper officer but only on “the proper officer". [para 9]
+ There are only two articles 'a (or an)' and 'the'. `A (or an)' is known as the Indefinite Article because it does not specifically refer to a particular person or thing. On the other hand, 'the' is called the Definite Article because it points out and refers to a particular person or thing. There is no doubt that, if Parliament intended that any proper officer could have exercised power under Section 28 (4), it could have used the word 'any'. [para 10]
+ Parliament has employed the article “the" not accidently but with the intention to designate the proper officer who had assessed the goods at the time of clearance. [para 11]
+ The nature of the power to recover the duty, not paid or short paid after the goods have been assessed and cleared for import, is broadly a power to review the earlier decision of assessment. Such a power is not inherent in any authority. Indeed, it has been conferred by Section 28 and other related provisions. The power has been so conferred specifically on “the proper officer" which must necessarily mean the proper officer who, in the first instance, assessed and cleared the goods i.e. the Deputy Commissioner Appraisal Group. [para 12]
+ Where the statute confers the same power to perform an act on different officers, as in this case, the two officers, especially when they belong to different departments, cannot exercise their powers in the same case. Where one officer has exercised his powers of assessment, the power to order re-assessment must also be exercised by the same officer or his successor and not by another officer of another department though he is designated to be an officer of the same rank. In our view, this would result into an anarchical and unruly operation of a statute which is not contemplated by any canon of construction of statute. [para 13]
+ It is well known that when a statute directs that the things be done in a certain way, it must be done in that way alone. As in this case, when the statute directs that “the proper officer" can determine duty not levied/not paid, it does not mean any proper officer but that proper officer alone.
+ We find it completely impermissible to allow an officer, who has not passed the original order of assessment, to re-open the assessment on the grounds that the duty was not paid/not levied, by the original officer who had decided to clear the goods and who was competent and authorised to make the assessment.
+ The nature of the power conferred by Section 28 (4) to recover duties which have escaped assessment is in the nature of an administrative review of an act. The section must, therefore, be construed as conferring the power of such review on the same officer or his successor or any other officer who has been assigned the function of assessment. In other words, an officer who did the assessment, could only undertake re-assessment [which is involved in Section 28 (4)]. [para 14]
+ It is obvious that the re-assessment and recovery of duties i.e. contemplated by Section 28(4) is by the same authority and not by any superior authority such as Appellate or Revisional Authority. It is, therefore, clear that the Additional Director General of DRI was not “the" proper officer to exercise the power under Section 28(4) and the initiation of the recovery proceedings in the present case is without any jurisdiction and liable to be set aside. [para 15]
+ The Additional Director General of the DRI can be considered to be a Customs officer only if he is shown to have been appointed as Customs officer under the Customs Act. [para 16]
+ Notification No.17/2002 - Customs (NT) dated 7.3.2002 showsthat all Additional Directors General of the DRI have been appointed as Commissioners of Customs. [para 17]
+ By notification 40/2012-Cus(NT) dated 2 nd May 2012, it appears that a Deputy Commissioner or Assistant Commissioner of Customs has been entrusted with the functions under Section 28, vide Sl. No.3. [para 18]
+ By reason of the fact that the functions are assigned to officers referred to in Column (3) and those officers above the rank of officers mentioned in Column (2), the Commissioner of Customs would be included as an officer entitled to perform the function under Section 28 of the Act conferred on a Deputy Commissioner or Assistant Commissioner by the notification appears to be ill-founded.
+ Sub-Section (34) of Section 2 of the Customs Act does not confer any powers on any authority to entrust any functions to officers. [para 19]
+ Section 6 is the only Section which provides for entrustment of functions of Customs officer on other officers of the Central or the State Government or local authority. [para 20]
+ If it was intended that officers of the Directorate of Revenue Intelligence who are officers of Central Government should be entrusted with functions of the Customs officers, it was imperative that the Central Government should have done so in exercise of its power under Section 6 of the Act.
+ The notification which purports to entrust functions as proper officer under the Customs Act has been issued by the Central Board of Excise and Customs in exercise of non-existing power under Section 2(34) of the Customs Act. The notification is obviously invalid having been issued by an authority which had no power to do so in purported exercise of powers under a section which does not confer any such power. [para 21]
+ The entire proceeding in the present case initiated by the Additional Director General of the DRI by issuing show cause notices in all the matters are invalid without any authority of law and liable to be set-aside and the ensuing demands are also set- aside. [Commissioner of Customs vs. Sayed Ali and Another 2011-TIOL-20-SC-CUS refers] [para 23]
Limitation
+ It is pertinent to note that the importer had asked for a first check and had shown the cameras and the cameras were offered on 20.3.2012 along with Bill of Entry and literature detailing specifications of models.
+ It is difficult in such circumstances to infer that there was any wilful mis- statement of facts. In these circumstances, it must, therefore, follow that the extended period of limitation of five years was not available to any authority to re-open under Section 28(4). [para 28]
+ Bench considers it unnecessary to answer the issue whether the cameras that were cleared on the basis that they were exempted from customs duty under Exemption Notification No.15/2012 were in fact eligible for the exemption or not. The goods must be taken to have been validly cleared by the Customs officer. [para 29]
Conclusion:
++ Appeals are allowed. The common order dated 19.12.2017 passed by the CESTAT, New Delhi is set aside: Supreme Court Larger Bench[para 32]
- Appeals allowed :SUPREME COURT OF INDIA
2021-TIOL-572-HC-MUM-CX
Morde Foods Pvt Ltd Vs UoI
CX - Petitioners seek quashing of rejection of its application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 by respondent and further seek a direction to the respondents to accept its application in terms of the said scheme under the category of "litigation" - Alternative prayer made is for a direction to the respondents to accept the subsequent application of the petitioner in terms of the said scheme under the category of "arrears" after quashing its rejection on 30.01.2020 - Facts are that a show cause notice dated 24.12.2014 was issued to petitioner No.1 for recovering the differential excise duty - adjudicating authority passed order-in-original dated 16.06.2015 confirming the demand of differential central excise duty amounting to Rs.4,06,47,261.00 along with interest, penalty etc. - By an order dated 08.11.2019, CESTAT set aside the order-in-original dated 16.06.2015 and remanded the matter back to the original authority for a fresh decision - A declaration/application was made under the SVLDRS, 2019 in the prescribed form on 12.12.2019 under the 'litigation' category i.e., show cause notice pending as on 30.06.2019 - Amount payable in terms of the declaration was assessed at Rs.38,23,630.50 by the assessee after indicating the pre-deposit amount as 1,65,00,000.00 - However, the said declaration was rejected by the respondents on 13.01.2020, without granting any opportunity of hearing, on the ground of ineligibility, the reason for rejection being that the appeal was finally heard before 30.06.2019 by CESTAT - Therefore, the present petition.
Held:
+ CESTAT came to the conclusion that the adjudicating authority did not apply its mind to the essential aspect of limitation which has a bearing on the outcome of the process initiated by the show cause notice. Therefore, the impugned order-in-original was set aside and the matter was remanded back to the original authority for a fresh decision on the point of limitation. [para 23.1]
+ When the original order passed by the primary authority is set aside by the appellate authority, the legal consequence would be that the original order would cease to remain on record. It would stand erased from the record as if it was never passed. The second aspect is that the question of limitation was found to be the main point by CESTAT because it goes to the root of the demand. If this is upheld then the demand would not survive; but if it is negatived then the demand can certainly be assailed on other grounds since the order-in-original dated 16.06.2015 no longer subsists. This means that the petitioners have been reverted to the stage of hearing by the adjudicating authority on the show cause notice, reply to which was filed by the petitioners. But this hearing after remand has not taken place till date. [para 24]
+ The situation which arises in the present case is not covered by the eligibility exclusions under sub-section (1) of section 125 or under any of the provisions of the scheme. This is so because though the appeal of petitioner No.1 was heard by CESTAT on 10.05.2019 (which was certainly prior to 30.06.2019), it was finally disposed of subsequently on 08.11.2019.
+ While disposing of the appeal, CESTAT set aside the order in original dated 16.06.2015 and remanded the matter back to the adjudicating authority for de novo decision on the show cause notice dated 24.12.2014 firstly by confining to the point of limitation. Therefore, though the appeal was heard on 10.05.2019, by the subsequent order of CESTAT dated 08.11.2019 the said hearing held on 10.05.2019 was rendered redundant reverting the petitioner back to the stage of show cause notice at the stage of adjudication.
+ This was the position when petitioner No.1 filed its declaration (on 12.12.2019) under the litigation category and which facts were available on record when the designated committee decided the said declaration on 13.01.2020. If petitioner No.1 was at the stage of show cause notice with no fresh adjudication order then certainly it would be eligible to file declaration under the litigation category. [para 30]
+ A liberal view is required to be taken to make the scheme successful - Thought Blurb Vs. Union of India = 2020-TIOL-1813-HC-MUM-ST [para 31]
+ A reasonable and pragmatic approach has to be adopted - Jyoti Plastic Works Private Limited Vs. Union of India = 2020-TIOL-1874-HC-MUM-CX [para 32]
+ The decision of the designated committee i.e., respondent No.2 dated 13.01.2020 rejecting the declaration of petitioner No.1 under the litigation category on the ground of ineligibility was not correct and is liable to be interfered with; it would not be necessary for Bench to proceed to the subsequent declaration under the arrears category and its rejection by respondent No.2 on 30.01.2020. [para 33]
-Writ applications disposed of : BOMABY HIGH COURT |
