Cus - Since application filed for settlement was allowed to be proceeded with by CCESC u/s 127C(1), it had exclusive jurisdiction in terms of s.127F(2) and DRI could not have issued any corrigendum/addendum to the SCN: HC
By TIOL News Service
NEW DELHI, APRIL 29, 2016 : BY a SCN dated 20.12.2013, the DRI alleged that there has been extensive under valuation of the imported photocopier machines by the Petitioners resulting in evasion of customs duty.
To buy peace, the Petitioners opted to file applications for settlement of the case on 7th April 2014. On 24th April, 2014 they received a letter from the Settlement Commission that the Bench had allowed their applications u/s 127C(1) of the Customs Act, 1962 and that " the case is allowed to be proceeded with subject to the conditions that the applicant satisfies all the requirements at the time of final hearing."
While the matter was with the Settlement Commission (CCESC), the Petitioners received the impugned Corrigendum/Addendum dated 12th August 2014 to the SCN dated 20th December 2013 changing the classification of the imported photocopier machines thereby enhancing the demand .
During the hearing on 5th December 2014, the Petitioners informed the Commission that they had challenged the said duty demand before the High Court by the impugned petition and requested the Bench to defer the hearings and keep the settlement in abeyance.By an order dated 23rd January 2015, the CCESC disposed of the applications but granted liberty to the Petitioners to apply afresh "after the decision of the High Court in the matter".
As mentioned, in this petition,the challenge is to Corrigendum/Addendum dated 12th August, 2014 issued by the Directorate of Revenue Intelligence (DRI), Delhi Zonal Unit to the Show Cause Notice dated 20th December, 2013 issued to the Petitioner.
The main submission of the Petitioner is that once the CESC decided to proceed with the applications filed before it, then, in terms of Section 127F(2) of the Act, the CCESC had exclusive jurisdiction to exercise the powers and perform the functions of any officer of customs, as the case may be, in relation to the case.
The Section 127F(2) reads:
| "(2) Where an application made under section 127B has been allowed to be proceeded with under section 127C, the Settlement Commission shall, until an order is passed under sub-section (5) of section 127C, have, subject to the provisions of sub-section (4) of that section, exclusive jurisdiction to exercise the powers and perform the functions of any officer of customs or Central Excise Officer, as the case may be, under this Act or in the Central Excise Act, 1944 (1 of 1944), as the case may be, in relation to the case." |
The counsel for the Respondent submitted that the order dated 24th April 2014 passed by the CCESC deciding to proceed with the application under Section 127C of the Act was passed without hearing the DRI.
In this matter, the High Court observed that there was sufficient opportunity for the DRI, if aggrieved by the order passed by the CCESC on 24th April, 2014,to have challenged that order in accordance with law. And, therefore, without adopting that course, it was not open to the DRI to have proceeded to issue a Corrigendum/Addendum dated 12th August, 2014 to the SCN dated 20th December, 2013 since in terms of Section 127F(2) of the Act, the exclusive jurisdiction to deal with the matter vested with the CCESC.
Inasmuch as the DRI had, on the date it issued the Corrigendum dated 12th August, 2014, no jurisdiction to issue Corrigendum/Addendum which made a very significant change to the SCN whereby the classification of the imported goods was changed and the duty demand correspondingly increased, the High Court added.
The High Court concluded that the impugned Corrigendum/Addendum dated 12th August, 2014 is plainly unsustainable in law as it is contrary to Section 127F(2) of the Act. The Corrigendum/Addendum dated 12.08.2014 was quashed.
The High Court also added that the Petitioner is permitted to revive its application before the CCESC.
The Writ petition was allowed.
(See 2016-TIOL-842-HC-DEL-CUS)
