Cus - Without adjudication & decision on legal position, quashing of order & restoring matter to original authority to pass fresh o-in-o is not correct - harassment to assessee and incovenience to department: High Court
By TIOL News Service
NEW DELHI, JUNE 05, 2018: THIS is a Revenue appeal against the order of CESTAT.
The following is the substantial question of law-
"Whether the Customs, Excise and Service Tax Appellate Tribunal ("CESTAT") was justified and correct in law in passing an order of remand to the original adjudicating authority to first decide the issue of jurisdiction, after decision of the Supreme court in Civil Appeal preferred against the decision of Delhi High court in Mangali Impex Limited v. Union of India - 2016-TIOL-877-HC-DEL-CUS?"
SCNs were issued by the ADG, DRI to the respondents and thereupon orders-in-original were passed by the Principal Commissioner of Customs (Import), ICD, Tughlakabad, New Delhi.
These original adjudication orders were challenged and set aside by the CESTAT in view of its earlier decision in' Final order No.53941-53942/2017, Doaba Stud & Agriculture Farm dated 12th June, 2017 ' wherein the impugned order was set aside and the matter was remanded to the original adjudicating authority to first decide the issue of jurisdiction after the availability of Hon'ble Supreme Court decision in the case of Mangali Impex Ltd. and then on merits of the case but by providing an opportunity to the assessee of being heard.
As mentioned, Revenue is aggrieved by this order and has challenged the same before the Delhi High Court.
Incidentally, the background is –
+ Supreme Court in'the case of Sayed Ali - 2011-TIOL-20-SC-CUS held that DRI were not proper officers under Section 2(34) of the Customs Act, 1962.
+ Post the judgment in Sayed Ali (supra), notification no. 44/2011-CUS (NT) dated 6th July, 2011 was issued by the CBEC, assigning functions to various officers including Additional Director General, DRI for the purposes of Section 28 of the Customs Act.
+ Thereafter, sub-Section (11) was inserted under Section 28 of the Customs Act vide the Customs (Amendment and Validation) Act, 2011 with effect from 16th September, 2011, assigning the function of proper officers to various DRI officers with retrospective effect.
+ The Delhi High court in the case of' Mangali Impex Limited - 2016-TIOL-877-HC-DEL-CUS held that DRI was not competent to issue show cause notice and hence the order-in-original passed thereafter would be void and illegal. It was alsoheld that the newly inserted sub-Section 11 to Section 28 of the Customs Act would not empower the officers of DRI or the DGCEI to issue show cause notice for the period prior to 8th April, 2011 i.e. period prior to the date on which the Finance Act, 2011 had received assent of the President.
+ This decision of the Delhi High Court was stayed by the Supreme Court vide order' dated 7th October, 2016 - 2016-TIOL-173-SC-CUS.
+ The Bombay High Court in' Sunil Gupta - 2014-TIOL-1949-HC-MUM-CUS' and High Court for the State of Telangana and the State of Andhra Pradesh in' Vuppalamritha Magnetic Components Ltd. - 2016-TIOL-2789-HC-AP-CUS 'have taken a contrary view to the one expressed by the Delhi High Court in Mangali Impex (supra).
The High Court, therefore, observed –
++ The question whether or not officers of the DRI could have issued show cause notice and its effect on the final order is an issue which has to be examined and considered by the Tribunal.
++ The Tribunal, instead of deciding the said issue on merits, has passed an order setting aside the order-in-original to await the decision of the Supreme Court in the appeal preferred in the case of Mangali Impex (supra). ++ In other words, without adjudication and decision on the legal position, the orders-in-original have been quashed and set aside and restored to the authorities to pass fresh orders-in-original.
++ We do not think the said procedure is correct and proper. Tribunal should decide the issue on merits. Once an order-in-original is set aside, it would mean that the entire adjudication proceedings may have to be undergone again. This would be true even if ratio in Mangali Impex (supra) is not accepted. This, we think, would cause harassment to the assessee as well as inconvenience to the department.
Taking note of its order' dated 20th November, 2017 in Vipul Overseas Pvt. Ltd. - 2017-TIOL-2478-HC-DEL-CUS, remanding the case to the Tribunal for fresh decision, the question of law was answered in favour of the Revenue and against the assessee.
To cut short delay, the parties were directed to appear before the Tribunal on 23rd July, 2018.
In passing: Please also refer 2017-TIOL-2619-CESTAT-MUM.
(See 2018-TIOL-1057-HC-DEL-CUS)
