Andhra HC (Pre-Telangana)
M/S. Vuppalamritha Magnetic ... vs Directorate Of Revenue Intelligence ... on 26 October, 2016
Author: Anis
Bench: Anis
HONBLE SRI JUSTICE V.RAMASUBRAMANIAN AND HONBLE SMT. JUSTICE ANIS
Writ Petition No.25594 of 2016
26-10-2016
M/s. Vuppalamritha Magnetic Components Ltd., Secunderabad. Petitioner
Directorate of Revenue Intelligence (Zonal Unit), Represented by Additional
Director General, Chennai. Respondent
Counsel for petitioner: Sri P. Vikram
Counsel for respondent: Sri K.G. Krishna Murthy, senior counsel
<Gist:
>Head Note:
? Cases referred:
2016-TIOL-1257
HONBLE SRI JUSTICE V.RAMASUBRAMANIAN
AND
HONBLE SMT JUSTICE ANIS
Writ Petition No.25594 of 2016
Order: (per V. Ramasubramanian, J.)
The petitioner, who suffered an Order-in-Original, which was
also confirmed by Customs, Excise & Service Tax Appellate
Tribunal, South Zonal Bench, Bangalore (CESTAT) and later by this
Court, has come up with the present writ petition, challenging the
very initiation of proceedings with the issuance of a show cause
notice.
2. Heard Sri P. Vikram, learned counsel for the petitioner and
Sri K.G. Krishna Murthy, learned senior counsel representing the
learned standing counsel for the respondent.
3. The petitioner was issued with a show cause notice dated
30-07-2009, calling upon them to show cause as to why the blank
C.Ds imported by them under three bills of entry dated 07-01-2009,
classifying them under Ch.Sh.No.85238020 should not be classified
under Ch.Sh.No.85234090 and the benefit of exemption claimed
under Notification No.6/2016-CE, dated 01-03-2016 should not be
denied and for various consequential actions such as provisional
assessment, imposition of duty and penalty etc., should not be
taken.
4. The petitioner submitted its reply after which an Order-in-
Original dated 17-02-2012 was passed by the Commissioner of
Customs, confirming the proposals. Aggrieved by the said order, the
petitioner filed an appeal before CESTAT, but the same was
dismissed on 28-01-2015, for non-compliance with the conditional
order for pre-deposit. As against the orders dated 03-09-2014 and
27-10-2014 passed by the CESTAT, refusing to grant a total waiver
of pre-deposit condition, but granting only an extension of time for
making the deposit, the petitioner filed further appeals before this
Court. Those appeals were dismissed by this Court by an order
dated 10-03-2016. The petitioner then filed Special Leave Petitions
in S.L.P.(Civil) Nos.15781 to 15786 of 2016. But those SLPs were
also dismissed. The result is that the show cause notice 30-07-2009
has already worked itself out and the Order-in-Original passed by
the Commissioner confirming the proposals has already attained
finality.
5. But it appears that in a batch of writ petitions filed during
the years 2013, 2014 and 2015 before the Delhi High Court, a
Division Bench of the Delhi High Court passed a judgment dated 03-
05-2016 in Mangali Impex Ltd., v. Union of India, holding that prior
to 08-04-2011, it was only a proper officer who has been assigned
specific functions, could undertake the task of non-levy, short-levy or
erroneous refund and that if any officer other than the proper officer
had undertaken these tasks, they would not be valid. Therefore,
taking advantage of the said decision of the Division Bench of the
Delhi High Court, the petitioner has now come up with the present
writ petition, challenging the very show cause notice issued by the
Additional Director General, on the short ground that he was not a
proper officer.
6. It is seen from para-1 of the decision of the Division Bench
of the Delhi High Court in Mangali Impex Ltd., that the question that
arose before the High Court was about the constitutional validity of
Section 28 (11) of the Customs Act, 1962 inserted by the Customs
(Amendment and Validation) Act, 2011 with effect from 16-09-2011.
Under this amended provision, all persons appointed as Customs
Officers under Section 4 (1) of the Act prior to 6th 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.
7. It is relevant to note at this juncture that the 2011
Amendment itself was necessitated by a decision of the Supreme
Court in Commissioner of Customs v. Sayed Ali (2011 (3) SCC
537). It was held in the said decision that unless a person has been
specifically assigned the functions of a proper officer, he could not
invoke the powers conferred upon proper officers. It was this
decision of the Supreme Court that led to the amendment to Section
28, by Finance Act, 2011. On the question as to whether Section 28
(11) inserted by the Validation Act, 2011 was constitutionally valid or
not, the Delhi High Court held as follows:
.Conclusion on the effect and validity of Section 28 (11)
70.1 The net result of the above discussion is that the Department
cannot seek to rely upon Section 28(11) of the Act as authorising
the officers of the Customs, DRI, the DGCEI etc. to exercise
powers in relation to non- levy, short-levy or erroneous refund for a
period prior to 8th April 2011 if, in fact, there was no proper
assigning of the functions of reassessment or assessment in favour
of such officers who issued such SCNs since they were not proper
officers? for the purposes of Section 2(34) of the Act and further
because Explanation 2 to Section 28 as presently enacted makes it
explicit that such non-levy, short-levy or erroneous refund prior to
8th April 2011 would continue to be governed only by Section 28 as
it stood prior to that date and not the newly re-cast Section 28 of
the Act.
70.2 Section 28 (11) interpreted in the above terms would not
suffer the vice of unconstitutionality. Else, it would grant wide
powers of assessment and enforcement to a wide range of officers,
not limited to customs officers, without any limits as to territorial
and subject matter jurisdiction and in such event the provision
would be vulnerable to being declared unconstitutional.
8. Therefore, the sum and substance of the case of the
petitioner is that the whole proceedings initiated by the Additional
Director General were vitiated and are liable to be set aside, despite
the fact that the show cause notice has already culminated in an
Order-in-Original and the same has also been confirmed up to the
Supreme Court. It is argued that once the very initiation of
proceedings is without jurisdiction, the consequent events would
also be without jurisdiction. Once the foundation goes, the entire
edifice has to come down.
9. We have carefully considered the above submissions.
10. At the outset, we are of the considered view that the writ
petition is not maintainable. The show cause notice dated 30-07-
2009, which is under challenge in the present writ petition, is no
longer in force. The show cause notice has already culminated in a
Order of adjudication and the order of adjudication has also been
confirmed by the Tribunal, the High Court and the Supreme Court.
The doctrine of merger has come into play and the show cause
notice is not available any more for the petitioner to challenge.
11. Heavily reliance is placed by Mr. P. Vikram, learned
counsel for the petitioner on two things viz., 1) the judgment of the
Delhi High Court in Mangali Impex Ltd.,(supra); and 2) the
judgment of a Division Bench of the Punjab & Haryana High Court in
Rajinder Arora and others v. Union of India and others . In
Mangali Impex Ltd., (supra), the Division Bench of the Delhi High
Court set aside even the show cause notices, despite the fact that
the show cause notices had already culminated in orders of finality.
In Rajinder Arora and others v. Union of India and others (1
supra), a Division Bench of the Punjab & Haryana High Court also
dealt with a case where the show cause notice had culminated in a
order of adjudication, but it was the subject matter of an appeal
before the Tribunal. The Punjab & Haryana High8 Court held that in
the light of the decision of the Supreme Court in Sayed Ali and in
the light of the decision of the Delhi High Court in Mangali Impex
Ltd., the show cause notice, the adjudication order as well as the
consequential recovery proceedings were non-est and void abinitio.
12. But unfortunately, the Delhi High Court as well as the
Punjab & Haryana High Court have not considered the issue from
the point of view of merger. It is needless to point out that the
doctrine of merger is a common law doctrine founded on principles
of propriety in the hierarchy of justice delivery system. The
underlying principle behind the doctrine of merger is that there
cannot be more than one decree.
13. The issue can be looked at from another aspect also.
Today, the effect of our allowing the writ petition and setting aside
the show cause notice would be to set at naught, the order of
adjudication, the judgment of CESTAT, the judgment of this Court
and the order of Supreme Court. What cannot be achieved by the
petitioner directly cannot be achieved by them indirectly.
14. The contention that all proceedings founded upon a show
cause notice that was inherently lacking in jurisdiction, would be
non-est, null and void, is perhaps right as a simple statement of a
proposition of law. But it is not without exceptions. If this theory of
nullity and voidity is accepted, all proceedings initiated before 08-04-
2011, which have already culminated in orders of adjudication and
pursuant to which recoveries have been made, are also to be
deemed as non-est. Therefore, the Commissionerates of Excise
throughout the country can today be flooded with applications for
refund of the duty paid in pursuance of the orders of adjudication
passed on the basis of such show cause notices. The theory of
nullity and voidity cannot be extended to such an extent as to lead to
such disastrous consequences.
15. There is also one more aspect. It is not the case of the
petitioner that they challenged either the impugned show cause
notice or the Order-in-Original at the relevant point of time on the
ground that the show cause notice was issued by a person not
assigned the role of a proper officer. The petitioner had challenged
the show cause notice and the order of adjudication on other
grounds, which stand rejected up to Supreme Court. Therefore, the
principle of finality to litigation would put a seal on the present
attempt on the part of the petitioner to reopen the issue all over
again.
In view of the above, the writ petition is devoid of merits.
Hence, it is dismissed. There will be no order as to costs.
As a sequel thereto, miscellaneous petitions, if any, pending in
the writ petition shall stand closed.
________________________
V.RAMASUBRAMANIAN, J
___________ ANIS, J Date: 26-10-2016