By TIOL News Service

MUMBAI, OCT 09, 2014: AGAINST the order passed by the Commissioner of Customs (Export), Nhava Sheva confirming a duty demand of Rs.2,98,49,448/- against M/s. Ambika Fibres u/s 28 (2) of the Customs Act, 1962 along with interest & equivalent penalty u/s 114A; penalties of Rs.75 lakhs each on Ramesh Arora and G.R. Fibres u/s 112(a) and a penalty of Rs.50 lakhs on Virander Behl of M/s. Alfa Exports & M/s. Alfa Exim u/s 112 (a) of the Customs Act, 1962 for aiding and abetting alleged evasion of Customs duty by M/s. Ambica Fibres, the appellants are before the CESTAT.

The appellant took a preliminary objection with regard to the jurisdiction of Directorate General of Central Excise Intelligence (DGCEI), Ahmedabad in issuing the show-cause notice dated 19/05/2005 and consequent adjudication proceedings leading to the impugned order. It is their submission that prior to issue of Notification No. 44/2011-Customs (NT) dated 06/07/2011 the DGCEI, Ahmedabad had no jurisdiction to issue show-cause notice in respect of imports which had taken place through various ports situated in Mumbai.

Reliance is placed on the decisions in C.K. Geever – 2009-TIOL-74-CESTAT-MAD, Swami Fashions (P) Ltd. Vs. CC, Tuticorin – 2008-TIOL-2371-CESTAT-MAD and Copier Force India Ltd. Vs. CC (Imports), Chennai – 2009-TIOL-75-CESTAT-MAD wherein in a similar situation, the question of jurisdiction of DGCEI officers exercising powers of Commissioner of Customs was considered by the Tribunal and in the absence of specific powers conferred on these officers, the show-cause notices and the follow up proceedings were set aside and the appeals were allowed.

The Additional Commissioner (AR) appearing for the Revenue reiterated the findings of the adjudicating authority.

In the words of the CESTAT, -"However, he (A.R) fairly submits that Notification No. 44/2011-Customs (NT) dated 06/07/2011 has not been given any retrospective effect. However, it is his submission that vitiating of show-cause notice by itself could not lead to quashing of the impugned order and therefore, he pleads for putting the appellants to term."

The Bench observed –

"5. Prima facie it appears that when the show-cause notice was issued on 19/05/2005 in respect of some transactions took much before that, the DGCEI, Ahmedabad Zonal Unit and its officers did not have all India jurisdiction to issue show-cause notices under Section 17 & 28 of the Customs Act. These powers have been conferred on these officers by Notification No. 44/2011-Customs (NT) dated 06/07/2011. It is a settled position of law that every notification issued under the Customs Act has only prospective application unless retrospectively is specifically granted by an act of the parliament. Therefore, Notification No. 44/2011-Customs (NT) dated 06/07/2011 is only prospective and cannot be said to have any retrospective application…."

Holding that the appellants have made out a prima facie case for grant of stay, the Bench granted unconditional waiver from pre-deposit of dues adjudged against the appellants and stayed the recovery.

In passing: Perhaps the following was missed by the AR et al -

The Supreme Court in the case of Sayed Ali - 2011-TIOL-20-SC-CUS held,

"…it is only the officers of customs, who are assigned the functions of assessment, which of course, would include re-assessment, working under the jurisdictional Collectorate within whose jurisdiction the bills of entry or baggage declarations had been filed and the consignments had been cleared for home consumption, will have the jurisdiction to issue notice under Section 28 of the Act".

Pursuant to this decision dated 18 th February, 2011, all the Show Cause Notices issued by DRI, suddenly became illegal. A panicked Board by Notification No. 44/2011-Cus(NT) dated 06.07.2011 notified DRI and DGCEI officers as Customs Officers for the purpose of Section 17 and 28 of the Customs Act, 1962.

Knowing fully well that this notification could not have a retrospective effect, the Central Government by the Customs (Amendment and Validation) Act, 2011, enacted on 16.09.2011, retrospectively amended Section 28 of the Customs Act to insert the following clause -

"(11) Notwithstanding anything to the contrary contained in any judgement, decree or order of any court of law, tribunal or other authority, all persons appointed as officers of Customs under sub-section (1) of section 4 before the sixth day of July, 2011 shall be deemed to have 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 purposes of this section."

So, all the purportedly invalid Show Cause Notices issued by both the powerful investigating agencies were made valid retrospectively.

We covered this issue exhaustively in DDT1597/28.04.2011, 1647/08.07.2011, 1657/22.07.2011 & 1701/27.09.2011.

Now, what…?

(See 2014-TIOL-1954-CESTAT-MUM)