By TIOL News Service

CHENNAI, AUG 11, 2016: THE Petitioner was issued a Show Cause Notice by the Commissioner of Customs, Tuticorin , demanding Customs duty of Rs 399.60 crores for alleged misuse of Advance Licence / Advance Authoirsation Scheme. The investigations were originally initiated by the officers of the Central Excise who alleged that the Petitioner was encashing accumulated CENVAT Credit by clearing the finished goods manufactured from material imported duty free under Advance Licence Scheme. Based on this, a Show Cause Notice was issued by the Commissioner of Customs. The Petitioners initially challenged the proceedings by the Central Excise officers in Writ Petitioners which were dismissed by the High Court. Against the same, they filed Wirt Appeals and also separate Writ Petition challenging the Show Cause Notice.

It is the contention of the Petitioners that though the Commissioner of Customs, Tuticorin , was empowered to issue the show cause notice, he had done so not on his own accord but at the instance of Commissioner of Central Excise, Tirunelveli. The draft show cause notice had been prepared by one who is not a Proper Officer.

After hearing rival contentions, the High Court held:

+ The entire matter is to be considered in the light of amendment to Section 28 of the Customs Act, 1962 and introduction of sub-section 11 thereto. Superintendents of Central Excise working in any place in India were appointed as officers of Customs under notification No.31/97 – Cus (NT) dated 07.07.1997. Once subsection 11 of Section 28 of the Customs Act, 1962, informs us that officers of Customs would be deemed to have always had the power of assessment u/s.17 of the Customs Act, 1962 and shall be deemed to have been and always had been the proper officers for the purposes of 'this section' viz., Section 28 which confers powers to issue show cause notice regards duty not levied or short levied or erroneously refunded or regards interest payable, part paid or erroneously refunded, the prayer in W.P.No.9774 of 2010 seeking issue of writ of mandamus directing the first respondent to appoint proper officer and to investigate, falls to the ground. Consequently, W.A. (MD)No.705 of 2011 is to be dismissed.

+ There is no impediment to the Customs Authorities issuing show cause notice on the basis of materials gathered/input received from Excise Authorities. In fact, Custom notification No.31/97 – Cus (NT) dated 07.07.1997 and the amendment of Section 28 of Customs Act, 1962 by introduction of sub-section 11 is only indicative of the legislative intent that various wings of revenue act closely and cohesively towards avoiding loss thereof. Central Excise Officers deemed to be Customs Officers had gathered material which forms the basis of the show cause notice. Such Excise officials/ Customs officers are deemed to be proper officers for the purposes of Sections 17 and 28 of the Customs Act, 1962. Thus, when viewed through the prism of Section 28(11) of the Customs Act, 1962, it can be seen that what petitioners are complaining about is what really is in the nature of intra departmental communications, a course not open to them. There is nothing to indicate that the Commissioner of Customs ( Tuticorin ) had not been satisfied with the clarification offered. Again, as rightly pointed out, the show cause notice informing that 'a position deemed to emerge' was indicative that the same had not been issued in a predetermined manner. In the light of Section 28(11) of the Customs Act, 1962, a discussion on whether Central Excise Officers are empowered to investigate customs violations becomes unnecessary. It is for the company to respond to the show cause notice and satisfy the authority concerned that the allegations against them are unfounded. The contention of the company having met its export obligations with the consequence that it was free to dispose of imported materials is also to be raised only before the authority concerned.

Accordingly, the Writ Petitions and the Writ Appeals were dismissed.

(See 2016-TIOL-1705-HC-MAD-CUS)