Madras High Court
The Commissioner Of Customs vs M.Priya Kumar on 29 June, 2022
Author: R.Mahadevan
Bench: R. Mahadevan, Mohammed Shaffiq
C.M.A.Nos.1372, 1382 and 1383 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED 29.06.2022
CORAM
THE HONOURABLE Mr. JUSTICE R. MAHADEVAN
AND
THE HONOURABLE Mr. JUSTICE MOHAMMED SHAFFIQ
C.M.A.Nos.1372, 1382 and 1383 of 2022
AND
C.M.P.No.9928 of 2022 in C.M.A.No.1372 of 2022 &
C.M.P.No.10054 of 2022 in C.M.A.No.1383 of 2022
The Commissioner of Customs
Sea Port-Export
Custom House
No.60 Rajaji Salai
Chennai 600 001 .. Appellant in all CMA.s
Vs
M.Priya Kumar
Proprietor of Indo World Shipping Services
Old No.236, New No.194, 1st Floor
Thambuchetty Street
Chennai 600 001 .. Respondent in CMA.No.1372 of 2022
M/s.Aankit Granites Ltd.
No.37, SIPCOT Industrial Complex
Hosur 635 126
Tamil Nadu .. Respondent in CMA.No.1382 of 2022
Rajesh Kumar Garg
Manager-Finance of M/s.Aankit Granites Ltd.
No.37, SIPCOT Industrial Complex
Hosur 635 126
Tamil Nadu
https://www.mhc.tn.gov.in/judis
.. Respondent in CMA.No.1383 of 2022
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C.M.A.Nos.1372, 1382 and 1383 of 2022
Civil Miscellaneous Appeals filed under Section 130 of the Customs
Act, 1962, to set aside the common order dated 24.10.2017 passed by the
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench,
Chennai, in Final Order No.42694-42696/2017.
For Appellant Mr.A.P.Srinivas
in all CMAs Senior Standing Counsel
For Respondent No appearance
in all CMAs
COMMON JUDGMENT
(Judgment of the court was delivered by R. MAHADEVAN, J.) These Civil Miscellaneous Appeals are filed by the appellant/Revenue against a common order dated 24.10.2017 passed by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) in Final Order Nos.42694- 42696/2017, suggesting the following substantial questions of law:-
"(i) When jurisdictional High Court judgments are available upholding the competency of the DRI to issue show cause notice under Section 28 of the Customs Act 1962, whether the CESTAT is correct in remanding the appeal.
(ii) Whether Tribunal is empowered to remand the case without deciding the issues raised therein on the ground that jurisdiction of the officer to issue show cause notice is under dispute."
https://www.mhc.tn.gov.in/judis 2/9 C.M.A.Nos.1372, 1382 and 1383 of 2022
2. The respondent(s) herein approached the CESTAT, by filing appeals as against the order dated 12.09.2008 passed by the Commissioner of Customs (Seaport-Export), Chennai, questioning the jurisdiction of the officials of the DRI, who have not been designated as proper officers under the Customs Act, 1962 during the relevant point of time, to issue show cause notices. According to the respondent(s), the show cause notices have been issued by the officials of DRI, who lack jurisdiction to do so. Therefore, they raised preliminary objection regarding the legality of the proceedings issued by such authorities.
3. The CESTAT, by the order dated 24.10.2017, which is impugned herein, allowed the appeals and remanded the matter to the original adjudicating authority. The relevant portion of the same is usefully extracted below:
"5. From the record, it appears that the preliminary issue which emerges in the present appeals is regarding the jurisdiction of the DRI officers to issue notice under the Customs Act. The appellant-assessee had taken a stand that in terms of the Hon'ble Apex Court decision in the case of Commissioner of Customs vs. Sayed Ali, 2011 (265) 17 (SC), the DRI officers were not proper officers in terms of Section 2 (34) of the Customs Act, 1962.
6. It is also seen that after the declaration of law by the Hon'ble Supreme Court (supra) the provisions of Section 28 of the Customs Act, 1962 were amended with effect from 08.04.2011 vide Finance Act, 2011.
7. It is also noticed that in order to overcome the situation https://www.mhc.tn.gov.in/judis created by the judgment of Hon'ble Supreme Court in the case of 3/9 C.M.A.Nos.1372, 1382 and 1383 of 2022 Sayed Ali (surpa), notification No.4/2011-Cus (NT), dated July 6, 2011 was issued by the CBEC, assigning the functions of the proper officer to various officers (including Additional-Director General, DRI) mentioned in the notification, for the purposes of Section 28 of the Act. Thus, w.e.f. July 6, 2011, the Additional- Director General, DRI was prospectively appointed as 'proper officer' for the purpose of Section 28 of the Customs Act. Hence, from 06.07.2011, ADG-DRI has been empowered to issue demand notice under Section 28.
8. Subsequently, sub-section 11 was inserted under section 28 of the Customs (Amendment and Validation) Act, 2011 dated 16.09.2011, assigning the functions of proper officers to various DRI officers with retrospective effect.
9. Later on, i.e., for the period subsequent to the amendment, the matter i.e., the DRI officers having the proper jurisdiction to issue the SCN or not had came up before the Hon'ble Delhi High Court in the case of Mangali Impex vs. Union of India (2016 335 ELT 605 Del.), and the High Court inter alia, held that even the new inserted Section 28 (11) does not empower either the officers of DRI or the DGCEI to issue the SCN or adjudicate for the period prior to 08.04.2011. Thus, it is seen that the said order of the Hon'ble Delhi High Court is in favour of the assessee and against the revenue.
10. However, it is further noticed that the said issue was also the subject matter of Hon'ble Mumbai High Court in the case of Sunil Gupta vs. Union of India (2015 (315) ELT 167 (Bom) as also of the Hon'ble High Court of Telangana and Andhra Pradesh in the case of Vuppalamritha Magnetic Components Limited vs. DRI (Zonal Unit), Chennai (2017 (345) ELT 161 AP) taking a view contrary to the one taken by the Hon'ble Delhi High Court.
11. Being conflicting decisions of various High Courts (supra), finally the matter reached to Hon'ble Supreme Court who on 07.10.2016 granted the stay of operation of the judgment passed by the High Court of Delhi. Thus, the issue is sub judice before the Hon'ble Supreme Court (2016-TIOL-173-SC-CUS/2016 (339) ELT A 49 (SC).
12. It may be mentioned that recently, the Hon'ble High https://www.mhc.tn.gov.in/judis Court of Delhi in the case of BSNL vs. UOI vide Writ Petition 4/9 C.M.A.Nos.1372, 1382 and 1383 of 2022 No.C/4438/2017 and CM No. 19387/2017 has dealt with the identical issue where the notice was also issued by DRI. The Hon'ble High Court of Delhi has considered the judgment in the case of Mangali Impex vs. UOI which is stayed by the Hon'ble Supreme Court reported as 2016 (339) ELT A 49 (SC). Finally, the Hon'ble High Court has granted liberty to the petitioner by observing that "petitioner is permitted to review the challenge depending on the outcome of the appeals filed by the UOI in the Supreme Court against the judgment of the Court in the case of Mangali Impex Limited."
13. By following the ratio laid down by the Hon'ble High Court of Delhi in the case of BSNL (supra) as well as by considering totality of facts and circumstances, we set aside the impugned order and remand the matter 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 and then on merits of the case but by providing an opportunity to the assessee of being heard. Till the final decision, the Status quo will be maintained.
In the result, both the appeals are allowed by way of remand.” Aggrieved over the same, the Revenue is before this court with these Civil Miscellaneous Appeals.
4. Heard both sides and perused the materials placed before this court.
5. Earlier, the issues involved herein have been considered and decided by a Co-ordinate Bench of this Court, in the case of The Commissioner of Customs v. M/s. Box Corrugators and Offset Printers, [2020 (5) TMI 475(Mds)], wherein, it was held as under:
"2. Since the issue relating to jurisdiction of DRI officials to https://www.mhc.tn.gov.in/judisissue show cause notice to the Assessee in such cases is said to be 5/9 C.M.A.Nos.1372, 1382 and 1383 of 2022 pending before the Hon'ble Supreme Court in the case of Mangali Impex vs. Union of India, in which the Hon'ble Supreme Court has granted stay order, as reported in 2016 (335) ELT 605 (Del.)], and the said Special Leave Petition is stated to be pending before the Hon'ble Supreme Court; that status having been checked up by us on the official website of the Hon'ble Supreme Court today and further, in view of the fact that the learned Tribunal has clearly protected the interest of both the Revenue as well as the Assessee by directing the Assessing Authority to keep the matter pending and maintain status quo till the Hon'ble Supreme Court decides the appeal of the Revenue in the case of Mangali Impex, filed against the decision of the Delhi High Court, we do not find any reason to interfere with the decision of the Tribunal, as in our opinion, no question of law arises for consideration in this appeal. Accordingly, we dispose of the appeal, with no order as to costs."
6. However, in the subsequent decision in the case of Commissioner of Customs, Tuticorin v. Sanket Praful Tolia, decided on 04.06.2021 in C.M.A.(MD) Nos.433 to 437 and 439 to 455 of 2021, wherein, the orders impugned are identical to that of the present cases, it was held by this Court as follows:
"5. The Revenue is before us contending that the Tribunal ought not to have remanded the matter to the adjudicating Authority and it should have taken a decision on the merits of the matter. The Revenue would further contend that Section 28(11) of the Act envisages that all persons appointed as officers of Customs under sub-section (1) of Section 4 of the Act before the sixth day of July, 2011 shall be deemed to have and always had the power of assessment under Section 17 of the Act and shall be deemed to have been and always had been the proper officers for the purpose of the said Section. In our view, this question cannot be decided at this juncture as the same is now pending before the Hon'ble Supreme Court. However, we do not agree with the order passed by the Tribunal in setting aside the order passed by the Appellate Authority and remanding the matter to the Adjudicating Authority. https://www.mhc.tn.gov.in/judis 6. In the case of the Commissioner of Customs, Tuticorin v.6/9
C.M.A.Nos.1372, 1382 and 1383 of 2022 The Customs, Excise & Service Tax Appellate Tribunal and others [CMA.(MD)Nos.375 to 379 of 2018] [2019 (31) G.S.T.L.33 (Mad.)], a Division Bench of this Court, to which one of us (T.S.Sivagnanam, J.) was a party, had an occasion to test the correctness of an identical order passed by the Tribunal and by a common Judgment, dated 4- 10-2019, set aside the order of the Tribunal and restored the appeals to the file of the Tribunal to be kept pending and await the decision of the Hon'ble Supreme Court. It was also made clear that the appellant
- Department shall not initiate any coercive action against the respondents/assessees. The operative portion of the said Judgment reads as follows:
"3. In these appeals, the Revenue has raised the following substantial questions of law,
(i) as to whether the Tribunal was right in allowing the appeals on the ground that the jurisdiction issue has to be decided by the Hon'ble Supreme Court in the appeal filed against the decision of the High Court of Delhi, in the case of Mangali Impex vs. Union of India reported in 2016(335)E.L.T.605(Del.);
(ii) The next question is as to whether the Tribunal was right in allowing the appeals and simultaneously directing status quo to be maintained till a final decision is arrived at.
4. Identical orders were tested for its correctness in the Principal Bench to which one of us (T.S.S., J,) is a party. After elaborate arguments, the Court held that the Tribunal was not justified in allowing the appeal and consequently directing status quo till the final decision of the Hon'ble Supreme Court and the appropriate procedure that should have been adopted is to keep the appeals pending and await the decision of the Hon'ble Supreme Court in the appeals filed against the decision in Mangali Impex. Therefore, we are inclined to take similar view in these appeals as well. Accordingly, the appeals filed by the Revenue are allowed and the order passed by the Tribunal is set aside and the appeals are restored to file of the Tribunal and the Tribunal shall keep the appeals pending and await the decision of the Hon'ble Supreme Court. It is made clear that the Department shall not initiate any coercive action against the respondents assessees and await final decision in the appeals, which have been restored to file of the Tribunal. No costs."
https://www.mhc.tn.gov.in/judis 7. We find that the above decision can be fully made 7/9 C.M.A.Nos.1372, 1382 and 1383 of 2022 applicable to the facts of the present case as the orders impugned in these appeals are identical to that of the orders impugned in CMA.(MD) Nos.375 to 379 of 2018."
7. Following the latest decision in Sanket Praful Tolia's case (supra), which is squarely covered by the issues involved herein, these Civil Miscellaneous Appeals are allowed by setting aside the order impugned herein and the matters are remanded to the Tribunal with a direction to keep the same pending and await the decision of the Hon'ble Supreme Court in the appeals filed against the decision in Mangali Impex. However, it is made clear that the appellant/Revenue shall not initiate any coercive action against the respondent/assessee and await the final decision in the appeals, which have been restored to the file of the Tribunal. Consequently, the substantial questions of law are left open. No costs. Connected Miscellaneous Petitions are closed.
[R.M.D., J.] [M.S.Q., J.]
29.06.2022
Index : Yes/No
gya
R.MAHADEVAN, J.
https://www.mhc.tn.gov.in/judis AND
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C.M.A.Nos.1372, 1382 and 1383 of 2022
MOHAMMED SHAFFIQ, J.
gya
C.M.A.Nos.1372, 1382 and
1383 of 2022
29.06.2022
https://www.mhc.tn.gov.in/judis
9/9