Customs, Excise and Gold Tribunal - Delhi
Konia Trading Co. vs Commissioner Of Customs on 23 June, 2004
Equivalent citations: 2004(170)ELT51(TRI-DEL)
ORDER
K.K. Usha, J. (President)
1. The issue that has come up for consideration before the Larger Bench is whether Additional Director General of DRI has power to issue notice under Section 28 of the Customs Act, 1962. Reference was necessitated in view of the difference of opinion between different Benches of the Tribunal of coordinate jurisdiction.
2. The challenge in this appeal is against the order passed by Commissioner of Customs, Jaipur dated 12-7-2001. Order related to import made by the appellant-company under Bill of Entry dated 7-5-1998. The Commissioner rejected the transaction value declared and demanded duty to the extent of Rs. 5,20,729/- from the appellant-company under Section 28 of the Customs Act in addition to the duty already paid. Penalty under Section 112(a) and interest under Section 28AB of the Customs Act, 1962. The above proceedings before the Commissioner were initiated pursuant to a show cause notice dated 29-12-2000 issued by the Additional Director Generation of DRI.
3. The contention of the appellant which is relevant for the issue before us is that the Additional Director General of DRI has no jurisdiction to issue a notice under Section 28(1) of the Customs Act, 1962. Relevant portion of/Section 28 reads as follows :-
28. Notice for payment of duties, interest etc. -
(1) When any duty has not been levied or has been short-levied or erroneously refunded, or when any interest payable has not been paid, part paid or erroneously refunded, the proper officer may, -
(a) in the case of any import made by any individual for his personal use or by Government, or by any educational, research or charitable institution or hospital, within one year;
(b) in any other case, within six months, from the relevant date, serve notice on the person chargeable with the duty or interest which has not been levied or charged or which has been so short-levied or part paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice;
Provided that where any duty has not been levied or has been short-levied or the interest which has not been levied or charged or has been part paid or the duty or interest has been erroneously refunded by reason or collusion or any wilful mis-statement or suppression of facts by the importer or the exporter or the agent or employee of the importer or exporter, the provisions of this sub-section shall have effect as if for the words 'one year' and 'six months', the words 'five years' were substituted."
The above would show that notice under Section 28(1) has to be issued by the 'proper officer'. The term 'Proper Officer' has been defined under Section 2(34) of the Customs Act as follows :-
"'proper officer', in or in relation to any functions to be performed under the Act, means the officer of customs who is assigned those functions by the Board or the Commissioner of Customs."
It is the case of the appellant that for an officer to exercise jurisdiction under Section 28(1) as 'proper officer' he has to be specifically designated as a 'proper officer' to exercise the functions under Section 28(1). Additional Director, DRI has not been notified as a 'proper officer' to exercise jurisdiction under Section 28(1) and therefore the show cause notice under Section 28(1) is bad in law for lack of jurisdiction.
4. The learned DR would submit that under Notification dated 26-4-1990 Additional Director General of DRI (Hqrs.), New Delhi has been appointed as Collector of Customs having jurisdiction over whole of India. That being so he will be a 'proper officer' as defined under Section 2(34). No separate or specific notification is, therefore, required. The above notification has been issued by the Government of India in exercise of its power under Sub-section (1) of Section 4 of the Customs Act. Section 4 reads as follows :-
"4. Appointment of officer of customs. -
(1) The Board may appoint such persons as it thinks fit to be officers of Customs.
(2) Without prejudice to the provisions of Sub-section (1), Board may authorise a Chief Commissioner of Customs or a Joint or Assistant or Deputy Commissioner of Customs to appoint officers of Customs below the rank of Assistant Commissioner."
Therefore, according to the Revenue show cause notice in this case has been issued by an officer who has jurisdiction to issue the notice under Section 28(1).
5. Both sides relied on different decisions in support of their contentions. We will now refer to those decisions.
The appellant relies on the following decisions of the Tribunal :-
(1) Commissioner of Customs, Bombay v. Poona Roller - 1997 (89) E.L.T. 604 (Tribunal) (2) Bakeman's Home Products Pvt. Ltd. v. CC, Bombay - 1997 (95) E.L.T. 278 (Tribunal) (3) Manohar Bros. (Capacitors) v. CC II, Bombay - 1998 (98) E.L.T. 821 (Tribunal) (4) Dhirendran N. Sheth v. CC, Kandla - 2000 (122) E.L.T. 625 (Tribunal) (5) Association for Dev. Youth India Pvt. Ltd. v. CC, Kandla - 2001 (130) E.L.T, 585 (Tribunal) (6) Pushpit Steels Pvt. Ltd. v. CC Kochi - 2001 (130) E.L.T. 520 (Tribunal) (7) CC, Mumbai v. Ramesh Nebhnani - 2001 (138) E.L.T. 232 (Tribunal -Mumbai) (8) CC, Mumbai v. A. Shankar Rao - 2002 (149) E.L.T. 387 (Tribunal -Mumbai) (9) CC, Mumbai v. Mahesh India - 2003 (151) E.L.T. 605 (10) Nath International Corporation v. CC Mumbai - 2003 (152) E.L.T. 430 (Tribunal - Mumbai) (11) Orient Arts & Crafts v. CC (Prev.), Mumbai - 2003 (155) E.L.T. 168 (Tri. - Mumbai)
6. In CC, Bombay v. Poona Roller the issue that came up for consideration was whether the show cause notice under Section 28(1) of the Customs Act by invoking extended period by the Assistant Director, DRI is maintainable in law. Tribunal took the view that Assistant Director, DRI is not a proper officer empowered to issue notice under Section 28(1). For the purpose of being designated as proper officer he must have been assigned those functions by Board or Collector of Customs. The Assistant Director, DRI has been designated as Assistant Collector of Customs by virtue of Notification No. 19/90, dated 26-4-90 which may entitle him to perform other functions which could be performed by the Assistant Collector. But going by the definition of the term 'proper officer' under Section 2(34) only such of the officers who are specifically assigned the work of levy and collection of duty, can issue show cause notice in their capacity of the proper officer. When no such specific assignment of such duty either by the Board or the Commissioner of Customs, the Assistant Director, DRI cannot issue notice contemplated under Section 28(1). It was also held that to issue show cause notice invoking extended period of limitation 28(1) the power is given only to the Collector of Customs (now Commissioner of Customs) by the Board under Circular dated 14-5-92. The subject notice having not been issued by the jurisdictional Commissioner but only by the Assistant Director, DRI. It has to be taken that the notice was not issued by proper officer designated by the Board to issue notice invoking extended period. On the above basis, the Tribunal took the view that notice under Section 28(1) by the Assistant Director, DRI is bad in law. In Bakeman's Home Products Pvt. Ltd. the show cause notice was issued invoking the proviso to Section 28(1) by the Assistant Director, DRI. Following the ratio in CC, Bombay v. Poona Roller the objection raised by the assessee on the issue of jurisdiction was sustained. In Manohar Bros. (Capacitors) a show cause notice issued under Section 28(1) by Collector of Customs and Central Excise, Bombay-III was adjudicated by Collector of Customs, Bombay-II. The show cause notice issued by Collector of Customs, Pune was adjudicated by Collector of Customs, Pune II. It was held that show cause notices issued by Collector of Customs and Central Excise, Bombay-III are without jurisdiction. The Collector of Central Excise, Bom-Bombay-III was designated as Collector of Customs under Notification No. 58/92-Cus., dated 31-7-92. He cannot issue a notice in respect of alleged contravention taken outside his jurisdiction. Referring to decision of Karnataka High Court in Devilog Systems India v. CC, Bangalore -1995 (76) E.L.T. 520 (Kar.) it was held that he was not a proper officer for the purpose of Section 28. The Tribunal also took the view that to be a proper officer under Section 28(1) the specific assigning of particular function has to be made. Only because the Collector of Central Excise, Bombay-III is equated as a Collector of Customs it will not ipso facto make him proper officer under Section 28(1).
7. In Association for Dev. Youth India Pvt. Ltd. show cause notice issued by Assistant Director, DRI was held without jurisdiction relying on CC, Bombay v. Poona Roller. So also in Dhirendra N. Sheth ratio of CC v. Poona Roller was applied and show cause notice issued by Assistant Director, DRI was held without jurisdiction. In Pushpit Steels Pvt. Ltd. four Bills of Entry had been filed in the Kochi Custom House for clearance of the imported goods. Thereafter show cause notice was issued by ADG, DRI under Section 28 of the Customs Act. An objection was raised by the importer that the show cause notice was issued by ADG, DRI who is not a proper officer empowered to issue notice under Section 28. Reliance was placed on CC v. Poona Roller and Bakemen's Home Products (Pvt.) Ltd. The Tribunal after observing that there is substantial force in the contention raised followed the decision in CC v. Poona Roller and Bakemen's Home Products (Pvt.) Ltd. Thereafter, it was held as follows :-
"6(c)......The theory of 'commity of courts' postulates that when there are two or more courts having parallel jurisdiction over the same matter, as in the present case i.e. the Commissioner of Customs and the ADG of the DRI exercising concurrent jurisdiction and powers of the Customs Officer, then the jurisdiction of the second and the other authorities are eclipsed when any one of the authorities has taken cognizance of a particular issue. In the present case, the four BEs have been filed in the Kochi Custom House for clearance of the imported goods and noted cognizance has therefore been taken by the proper officer of the Kochi Customs. Therefore, the jurisdiction of the DRI to take cognizance of the matter of issue of demand under Section 28 by issue of said show cause notice is automatically eclipsed till an order under Section 47 of the Customs Act, 1962 is passed in the matter by the assessing officer of Kochi Customs."
8. The above observation would apparently mean that Additional Director General, DRI also had power under Section 28(1) but he could not exercise the same as the Customs Collector was already in seizing of the matter. In CC, Mumbai v. Ramesh Nebhnani the show cause notice was issued by Assistant Director, DRI. In CC, Mumbai v. A. Shankar Rao extended period was invoked and notices were issued by the officers of DRI. On going through the judgment it is not clear what was the status of the officer of DRI who had issued the notice. In any view of the matter Tribunal followed in these two decisions ratio of C.C.E., Mumbai v. Poona Roller and Bakemen's Home Products (Pvt.) Ltd. Similar view was taken in CC, Mumbai v. Mahesh India and Nath International Corporation. In Orient Arts and Crafts the challenge was against the show cause notice issued by Commissioner of Customs (Prev.). It was held that Commissioner of Customs (Prev.) was not designated as the proper officer for demanding duty under Section 28, Reliance was placed on CCE, Mumbai v. Poona Roller and Bakemen's Home Products (Pvt.) Ltd. The challenge was upheld. It was also held that once assessment had been started by Commissioner of Customs, there is no jurisdiction for Commissioner of Customs (Prev.) to raise demands.
Revenue relies on the following decisions in support of its contention :
Durga Prasad v. H.R, Gomes -1983 (13) E.L.T. 1501 (S.C.) Union of India v. Sigma Electronics -1996 (87) E.L.T. 26 (Cal.) Porcelain Crafts & Components Exim P. Ltd. v. CC - 1998 (102) E.L.T. 11 South India Exports v. Jt. DGFT - 2003 (156) E.L.T. 632 (Mad.) = 2003 (88) ECC 679 (Mad) Devilog Systems India v. CC - 1995 (76) E.L.T. 520 (Kar.) CC v. Padma Nutrients Pvt. Ltd. - 2003 (152) E.L.T. 438 (Tri.) Kandla Clearing Agency P. Ltd. v. CC - 2003 (158) E.L.T. 86 (Tri.) = 2003 (59) RLT 240 (Tri.) Before we proceed to consider the decisions relied on by the Revenue, we may first quote the relevant portion of the Notification 19/90-Cus., dated 26th April, 1990.
Appointment of D.R.I. Officials as Customs Officers In exercise of the powers conferred by Sub-section (1) of Section 4 of the Customs Act, 1962 (52 of 1962), and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 186-Cus., dated 4th August, 1981 (as amended), the Central Government hereby appoints the officers mentioned in column (2) of the Table below to be the Collector of Customs, the officers mentioned in column (3) thereof to be Deputy Collectors of Customs, and officers mentioned in column (4) thereof to be Assistant Collectors of Customs for the areas mentioned in the corresponding entry in column (1) of the said Table :
TABLE Area /Jurisdiction Designation of the officer (1) (2) (3) (4) Whole of India Addl. Director General, Directorate of Revenue Intelligence, Headquarters, New Delhi.
All Dy, Directors, Directorate of Revenue, Intelligence posted at Headquarters.
All Assistant Collectors/ Asstt. Directors in Directorate of Revenue Intelligence posted at Headquarters. Investigating Officers (Police) /Asstt. Directors (Police) and Investigating Officer (Income Tax)/Asstt. Director (Income Tax)."
In Durga Prasad a contention was raised by the appellant that Collector of Customs is not a proper officer as contemplated by Sub-section (3) of Section 110 of the Customs Act and, therefore, he has no power to seize documents etc. Sub-section (3) of Section 110 reads as follows : "(3) The proper officer may seize any documents or things which, in his opinion, will be useful for, or relevant to, any proceeding under this Act."
According to the appellant Assistant Collector has not been notified as a proper officer as contemplated under Section 2(34) for the purpose of exercising jurisdiction under Section 110. The above contention was rejected by the Hon'ble Supreme Court. It was held as follows :
"The Collector of Customs would be a "proper officer" in relation to the functions to be performed by the Act because as the matter of principle the Collector of Customs who had assigned the powers of a "proper officer" to the subordinate officer must himself be deemed to have the powers of a "proper officer" under Section 110(3) of the Customs Act."
In Sigma Electronics and Porcelain Crafts & Components Kolkata High Court took the view that it is open to the Revenue Intelligence to make enquiry into import even when goods are released by the Customs authorities and that the officer of the DRI, Revenue Intelligence has the power to detain the goods. In South India Exports contention raised was that Senior Intelligence Officer of DRI is not empowered to issue notice under Section 108 of the Customs Act. The contention was that Section 110 invests power to issue of notice by a gazetted officer of Customs. Senior Intelligence Officer of DRI not being gazetted officer of Customs has no jurisdiction to issue notice. Revenue submitted that Notification No. 97-Cus. (N.T.), dated 7-7-97 clearly refers to appointment of all officers of DRI as officers of Customs. Such notification has been issued in exercise of the powers conferred under Section 4(1) of the Customs Act. Therefore, there cannot be any doubt that the Senior Intelligence Officer of DRI is also a gazetted officer of Customs. And can issue notice under Section 108. The above stand taken by the Revenue was accepted and the appellant's objection was rejected by the Hon'ble High Court.
Devilog Systems India has been relied on both by the appellant as well as the Revenue. In the above case the issue that came up for consideration was whether Asstt. Collector of Customs, IAD, Madras, even though assigned the function of audit of accounts and assessments of ICD, Bangalore was a proper officer for the purpose of issuing a valid notice under Section 28(1) of the Customs Act, 1962 in respect of imports at Bangalore. Notice was held issued without jurisdiction for the reason that proper officer must be an officer who must be functioning within the jurisdictional Collectorate where the import in question has been effected. The above would show that the issue was in respect of territorial jurisdiction of a 'proper officer'. In Padma Nutrients Pvt. Ltd., the Tribunal took the view that DRI had jurisdiction to seize the goods, carry out investigations and issue show cause notice under the Customs Act. The Bench noted that the show cause notice issued by DRI had directed the party to show cause to the Commissioner of Customs. In Kandla Clearing Agency P. Ltd., a Bench of this Tribunal took into consideration all the decisions where it has been held that show cause notice cannot be issued by DRI. It has been held as follows:-
"However, as pointed out by the ld. DR, all these cases relate to a situation where the show cause notices were issued by the Asstt. Director, DRI and the Tribunal has held that AD, DRI being not a proper officer of customs, had no jurisdiction to issue the said show cause notices. In the instant case, show cause notice was issued by the Addl. Director General, DRI (ADG, DRI). The Central Government in the Ministry of Finance under Notification No. 19/90-Cus. (N.T.), dated 26-4-90 has appointed the Addl. Director General, Directorate of Revenue, Intelligence to perform the functions of the Collector of Customs (and now Commissioner). In other words, it follows that if the Collector/Commissioner of Customs had the power under Section 124 of the Customs Act, the said powers are available to DRI in respect of jurisdiction notified in Notification No. 19/90-Cus. (NT.). It is not the appellant's case that Kandla is not covered under the said appointment order nor it is their case that the Commissioner of Customs has no jurisdiction to issue the show cause notices. Therefore, the objection relating to lack of jurisdiction is devoid of merits and is, therefore, rejected."
The Revenue has relied on a decision of Calcutta High Court in ITC Ltd. v. Union of India [1991 (53) E.L.T. 234 (Cal.)] where a question arose as to whether certain officers of the Directorate of Anti-Evasion (Central Excise) given the powers of officers of Central Excise can exercise such power throughout the territory of India. It was noted that the Director of Anti-Evasion (Central Excise) invested with all powers of a Collector under the Notification. A Central Excise Officer under Section 2(b) of the Central Excise Act means any officer of the Central Excise Department or any person invested by the Central Board of Excise & Customs with any of the powers of a Central Excise Officer under the Central Excise Act. Therefore, the powers of the Collector of Central Excise under the Central Excise Act may be exercised by the Director of Anti-Evasion when the Director has been authorised to exercise such power by the Notification. The Central Excise Act does not lay down that a Collector cannot exercise jurisdiction throughout India. There is nothing in the statutory provision which would stand in the way of the Collector being authorised to exercise powers throughout the country. Therefore, the Director of Anti-Evasion can also exercise such power. The ratio of the above decision has been followed subsequently in numbers of other decisions. These decisions are relied on by the Revenue to support its contention that when the Addl. Director General of DRI is equated to Collector of Customs, it is opened to him to exercise all powers invested with the Collector including the issue of show cause notice under Section 28(1) invoking the larger period.
The sheet anchor of the objection raised by the assessee regarding jurisdiction of Additional Director General, DRI in issuing show cause notice under Section 28(1) is that he is not a 'proper officer' as required under Section 28(1). According to the assessee it is not sufficient that the Additional Director General, DRI is appointed as Customs Officer equivalent to Collector of Customs. It is further required that by a separate notification he has to be declared as 'proper officer' for functioning under Section 28(1). In the absence of such specific assignment he cannot function as proper officer. We are not able to accept the above contention. An officer of the Customs who has been assigned certain functions which are to be performed under the Act is a 'proper officer'. Such assignment can be done by the Board or the Commissioner of Customs. It is not in dispute that under Notification 19/90 Additional Director General of DRI is appointed to be a Collector of Customs (presently Commissioner of Customs) for the whole of India. Once he is appointed as Collector of Customs, he will have jurisdiction to exercise all the functions which are to be exercised by the Collector of Customs. The notification does not contain any rider in the matter of exercising jurisdiction by the officers of DRI thus appointed as Customs Officers. The only limitation is with reference to the geographical area. In the case of ADG of DRI such limitation is also not there. He has jurisdiction all over India.
The ratio of the decision of the Hon'ble Supreme Court in Durga Prasad is directly against the contention raised by the assessee. In the present case, ADG of DRI having been appointed as Customs Collector shall have the powers of a Customs Collector and can discharge functions as 'proper officer' under Section 28(1). We are also of the view in all cases where the officers of DRI are appointed as Customs officers, they will have jurisdiction to discharge functions as a 'proper officer' in relation to matters where Customs officers are notified as 'proper officer'. The question referred is answered as above in favour of the Revenue and against the assessee. The appeals are returned to the regular bench for hearing.