Madras High Court
M/S.Target Lubricants Pvt. Ltd vs The Commissioner Of Customs on 30 September, 2021
W.P.(MD)Nos.8574, 8579 & 8581 of 2021
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 30.09.2021
CORAM
THE HON'BLE MR.JUSTICE R.SURESH KUMAR
W.P.(MD)Nos.8574, 8579 & 8581 of 2021
and
W.M.P.(MD)Nos.6456, 6457, 6459 & 6460 of 2021
M/s.Target Lubricants Pvt. Ltd.,
Rep. by its Managing Director,
Abdul Majeed Salim,
No.186/4 Coimbatore Industrial Estate,
Kurichi, Coimbatore – 641 021. ... Petitioner in All Cases
Vs.
1.The Commissioner of Customs
Custom House,
Tuticorin - 628 004.
2.Additional Director General,
Directorate of Revenue Intelligence,
Chennai Zonal Unit, No.27, Adarsh Towers,
G.N (Chetty) Road, T.Nagar,
Chennai - 600 017. ... Respondents in All Cases
Common Prayer in W.P(MD)No.8574 & 8581 of 2021: Writ Petitions
filed under Article 226 of Constitution of India, to issue Writs of
Certiorari, calling for the records pertaining to the impugned show cause
notices dated 06.12.2012 issued in F.No.VIII/48/21/2010 DRI-TTN
issued by the 2nd respondent and quash the same.
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Prayer in W.P(MD)No.8579 of 2021: Writ Petition filed under Article
226 of Constitution of India, to issue a Writ of Mandamus, directing the
1st Respondent to return the Bank Guarantees Nos. LG No.7/2011 dated
07.02.2011 and LG No.8/2011 dated 21.02.2011 and refund the amount
of Rs.66,08,292/- deposited with the 1st Respondent.
For Petitioner : Mr.G.Derrick Sam
For Respondents : Mr.R.Aravindan,
Senior Standing Counsel
[In all Writ Petitions]
COMMON ORDER
Since the issue raised in these writ petitions is one and the same,
with the consent of the learned Counsel appearing for both sides, all
these writ petitions were heard together and are disposed of by this
common order.
2.For the sake of convenience, the facts as projected by the
petitioner in W.P.(MD)No.8574 of 2021 is traversed hereunder:
2.1.The Directorate of Revenue Intelligence, Regional Unit at
Coimbatore had seized mineral oil contained in 25 barrels, which were
imported vide Bill of Entry No.2247161 dated 12.10.2010, by their
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operation on 21.10.2010, on the suspicion that it was base oil and not
rubber processing oil as claimed by the petitioner.
2.2.In this regard, show cause notice was issued to the petitioner
on 06.12.2012, by the Additional Director General, DRI, Zonal Unit,
Chennai. That show cause notice, after adjudication, ended in an order-
in-original of the respondent dated 20.02.2014.
2.3.Felt aggrieved over the said order-in-original, the petitioner
preferred an appeal before the CESTAT, Chennai, which having
considered the appeal of the petitioner allowed to the extent to set aside
the order-in-original and remanded the matter back to the original
authority to have a denovo enquiry and to pass orders.
2.4.Pursuant to which, denovo enquiry was conducted and after
denovo, order-in-original was again passed by the respondent on
21.11.2014. Even this order once again was interjected by the petitioner
by way of appeal preferred before the CESTAT. This time also, the
CESTAT, of course, having considered the grounds raised by the
petitioner that, the petitioner was not given the chance of cross-
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examining the witnesses or persons concerned, set aside the order-in-
original ie., the order passed in denovo enquiry and once again remanded
the matter back to the original authority.
2.5.In this regard, it is to be noted that, while the CESTAT passed
orders on 03.01.2018, remanding the matter to the original authority, a
direction was given that the adjudication can be conducted by the
original authority after a decision is made by the Hon'ble Supreme Court
in Mangali Impex Ltd. & others Vs. Union of India, which was pending
before the Hon'ble Supreme Court.
3.It is to be noted that, after the 2011 amendment, under which,
Section 28 of the Customs Act underwent an amendment, Sub-Section 11
of Section 28 was inserted by which, power has been vested with the
DRI officials also to initiate adjudication proceedings by issuing show
cause notice and when that was questioned; the Delhi High Court in
Mangali Impex Case has taken a decision in favour of the noticees as
that insertion of Sub-Section 11 of Section 28 would only have a
prospective effect. Therefore, whatever proceedings initiated prior to the
amendment ie., prior to 2011 should be governed only by the then
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existing provisions of Section 28. As against the said view taken by the
Delhi High Court in Mangali Impex Case, the Revenue preferred an
appeal before the Hon'ble Supreme Court by way of Special Leave
Petition and that was the case pending before the Hon'ble Supreme Court
which was in fact referred by the CESTAT, while passing the order of
remand dated 03.01.2018.
4.When that was the position, since the Mangali Impex Case was
still pending before the Hon'ble Supreme Court, the original authority
either has to decide the issue after the Mangali Impex Case is decided or
can prefer an appeal against the order passed by the CESTAT.
5.In this context, it is to be noted that, as projected by the revenue
side that, as against the order passed by the CESTAT dated 03.01.2018,
though belatedly, appeal was filed in C.M.A. Sr.No.17943 of 2019 and
that is at the condone delay stage and the said appeal is pending before
this Court.
6.Be that as it may, subsequently, the issue had once again been
considered as to whether the DRI officials can be treated as proper
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officials within the meaning of Section 28(1) and 28(4) of the Customs
Act, in the case of M/s.Canon India Pvt. Ltd., Vs. Commissioner of
Customs reported in 2021 SCC Online SC 200, where the Hon'ble
Supreme Court by order dated 09.03.2021 has held that, the DRI officials
are not proper officers within the meaning of Section 21 and therefore,
whatever proceedings initiated by way of show cause notice towards
adjudication are vitiated on that ground itself.
7.In view of the law having been declared so by the Hon'ble
Supreme Court in the Canon India case, the petitioner has given
representations on 17.03.2021 and 25.03.2021 to the
respondent/Revenue to take the law declared by the Hon'ble Supreme
Court in Canon India case and accordingly, drop the proceedings at the
show cause notice stage and consequently, refund the amount and bank
guarantee deposited during the investigation, to the petitioner.
8.Since those requests made by the petitioner dated 17.03.2021
and 25.03.2021 have not been considered, the petitioner was triggered to
file these writ petitions with the respective prayers.
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9.Stating all these aforesaid findings, learned counsel appearing
for the petitioner would submit that, after 03.01.2018 CESTAT order, the
respondent/Revenue has to wait for the decision to be made by the
Hon'ble Supreme Court in Mangali Impex Case. But the fact remains
that the said case is still pending before the Supreme Court. However in
the meanwhile, the issue has been given a quietus and the law has been
declared in Canon India case by order dated 09.03.2021. By virtue of
that, the entire proceedings issued by the DRI officials against the
petitioner by issuance of show cause notice dated 06.12.2021, got
vitiated and therefore, they should drop the proceedings and refund the
amount and bank guarantee which has been deposited or paid by the
petitioner during the investigation and when these requests have been
made, since the said requests have not been considered by the
respondents, the petitioner having no other option has approached this
Court by invoking the extraordinary jurisdiction of this Court under
Article 226 of the Constitution.
10.In this context, learned Counsel for the petitioner would submit
that, the law declared by the Hon'ble Supreme Court in Canon India
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case has been followed in number of cases throughout the country and in
this regard, atleast two orders have been passed by this Court in the writ
jurisdiction and one more order has been passed by the High Court of
Karnataka, of course, strictly following the Supreme Court in Canon
India case. Learned Counsel appearing for the petitioner would seek
indulgence of this Court to pass necessary orders quashing the impugned
show cause notice dated 06.12.2012, on the ground of want of
jurisdiction and consequently, direct the respondent to refund the amount
deposited by the petitioner during investigation.
11.Per contra, Mr.R.Aravindan, learned Standing Counsel
appearing for the respondent/Revenue, on instructions would submit that,
as against the order of remand passed by the CESTAT dated 03.01.2018,
appeal has been filed, of course with condone delay petition in C.M.A.
Sr.No.17943 of 2019 and on that stage, it is still pending before this
Court. After having suffered with an order-in-original, the petitioner had
already approached the CESTAT and first time, though got a remand
order, a denovo order-in-original has been passed, as against which, once
again the petitioner preferred an appeal before the CESTAT, where
though he was able to get an order in his favour, he cannot now turn
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around and state that the show cause notice dated 06.12.2012 is vitiated
for want of jurisdiction.
12.In this context, learned Standing Counsel would further
contend that, the law declared in Canon India case dated 09.03.2021
may not be applicable to the facts of the present case, as the petitioner
having accepted the show cause notice had responded to the same and
after adjudication, suffered with order-in-original twice, of course, which
are subject matter before the CESTAT and both time, the petitioner was
able to succeed before the CESTAT, to get a remand order. Therefore, at
this eleventh hour, the benefit accrued on the basis of the law declared by
the Hon'ble Supreme Court in Canon India case cannot be enjoyed by
the petitioner as that ruling would apply to cases where the respective
noticees challenge the order-in-original or show cause notice without
going for regular appeal, to set aside the same, on the ground of want of
jurisdiction. Since, such a situation is not available to the petitioner, the
Canon India case cannot be availed by the petitioner and therefore, on
that ground, these writ petitions cannot be entertained by this Court.
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13.Learned Standing Counsel would also submit that the validity
of the order passed by the CESTAT dated 03.01.2018 itself is in question
in the regular appeal in C.M.A. Sr.No.17943 of 2019, before this Court.
At this stage, nullifying all these proceedings, the petitioner cannot seek
for quashment of the impugned show cause notice dated 06.12.2012, as
the said show cause notice having been accepted and acted upon.
Therefore, learned Standing Counsel for the respondents would submit
that, the petitioner cannot have a successful challenge of the show cause
notice dated 06.12.2012, at this stage in the present writ petition.
Consequently, they are not entitled to get back the amount and bank
guarantee. Therefore, the prayers in these writ petitions are liable to be
dismissed.
14.I have considered the submissions made by the learned Counsel
appearing for the parties and have perused the materials placed before
this Court.
15.Now the only controversy arising in these cases is that, whether
the principle laid down by the Hon'ble Supreme Court or the law
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declared by the Supreme Court in Canon India case dated 09.03.2021
can be made applicable to the petitioner's case and accordingly, the
prayers sought for in these writ petitions can be allowed or not.
16.The judgment of the Supreme Court in Canon India case has
already been considered by this Court two times. In earlier occasion, a
learned Judge of this Court in W.P.(MD)No.10186 and 10187 of 2014, in
the case of Quantum Coal Energy (P) Ltd., vs. the Commissioner, office
of the Commissioner of Customs, Tuticorin, by its order dated
16.03.2021 has considered the import of Canon India case, and allowed
those writ petitions. Thereafter, when similar writ petitions came up
before me in W.P.(MD)Nos.4032 to 4034 of 2018, I had an occasion to
consider all these aspects, including the import of the law declared by the
Canon India case, where, by order dated 08.09.2021, having
exhaustively considered these aspects, I passed the following orders:
“15. I have considered all these rival
submissions made by the learned counsel appearing
for both sides and have perused the materials placed
before this Court.
16. Section 28(1) of the Customs Act, after it
underwent amendment in 2011, reads thus:
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Where any duty has not been levied or not paid or has
been short-levied or short paid or erroneously
refunded, or any interest payable has not been paid,
part-paid or erroneously refunded for any reason
other than the rasons of collusion or any wilful mis-
statement or suppression of facts.
(a)The proper officer shall, within (two years) from
the relevant date, serve notice on the person
chargeable with the duty or interest which has not
been so levied (or paid) or which has been short-
levied or short-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 before issuing notice, the proper
officer shall hold pre-notice consultation with the
person chargeable with duty or interest in such
manner as may be prescribed.)
(b) The person chargeable with the duty or interest,
may pay, before service of notice under clause (a) on
the basis of
(i).His own ascertainment of such duty; or
(ii).The duty ascertained by the proper officer,
the amount of duty along with the interest
payable thereon under Section 28AA or the
amount of interest which has not been so paid
or part-paid:
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(PROVIDED) that the proper officer shall not
serve such show cause notice, where the amount
involved is less than rupees one hundred.
17. The word “The proper officer” has been
mentioned in Section 28(1)(a) of the Act, under
which, only the proper officer shall initiate the
proceedings by issuing Show Cause Notice. Here in
the case in hand, the Additional Director General
Directorate of Revenue Intelligence, Chennai
admittedly had issued Show Cause Notice dated
17.03.2009 which ultimately culminated in the order-
in-original dated 28.08.2014. Therefore, the fact
remains that, the initiation of the proceedings under
Section 28(1) of the Act is only by the Directorate of
Revenue Intelligence official.
18. If the Directorate of Revenue Intelligence
official initiated proceedings under Section 28(1) of
the Customs Act, whether that would stand in the
legal scrutiny or get vitiated was the prime question
posed before the Hon'ble Supreme Court in Canon
India case.
19. While considering the said issue, the
Hon'ble Supreme Court has held as follows:
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9. The question that arises is whether the
Directorate of Revenue Intelligence had authority in
law to issue a show cause notice under Section 28(4)
of the Act for recovery of duties allegedly not levied
or paid when the goods have been cleared for import
by a Deputy Commissioner of Customs who decided
that the goods are exempted. It is necessary that the
answer must flow from the power conferred by the
statute i.e. under Section 28(4) of the Act. This
Section empowers the recovery of duty not paid, part
paid or erroneously refunded by reason of collusion
or any wilful mis-statement or suppression of facts
and confers the power of recovery on “the proper
officer”. The obvious intention is to confer the power
to recover such duties not on any proper officer but
only on “the proper officer”. This Court in
Consolidated Coffee Ltd. And Another vs. Coffee
Board, Bangalore2 has held:-
“14. ...Secondly, and more importantly, the
user of the definite article ‘the’ before the word
‘agreement’ is, in our view, very significant.
Parliament has not said ‘an agreement’ or ‘any
agreement’ for or in relation to such export and in
the context the expression ‘the agreement’ would
refer to that agreement which is implicit in the sale
occasioning the export.” In Shri Ishar Alloy Steels
Ltd. vs. Jayaswals Neco Ltd. has held:-
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“9. ...’The’ is the word used before nouns, with
a specifying or particularising effect as opposed to
the indefinite or generalizing force of ‘a’ or ‘an’. It
determines what particular thing is meant; that is,
what particular thing we are to assume to be meant.
‘The’ is always mentioned to denote a particular
thing or a person.”
1. There are only two articles ‘a (or an)’ and
‘the’. `a (or an)’ is known as the Indefinite
Article because it does not specifically refer to
a particular person or thing. On the other
hand, ‘the’ is called the Definite Article
because it points out and refers to a particular
person or thing. There is no doubt that, if
Parliament intended that any proper officer
could have exercised power under Section 28
(4), it could have used the word ‘any’.
It is obvious that the re-assessment and
recovery of duties i.e. contemplated by Section
28(4) is by the same authority and not by any
superior authority such as Appellate or
Revisional Authority. It is, therefore, clear to us
that the Additional Director General of DRI
was not “the” proper officer to exercise the
power under Section 28(4) and the initiation of
the recovery proceedings in the present case is
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without any jurisdiction and liable to be set
aside. At this stage, we must also examine
whether the Additional Director General of the
DRI who issued the recovery notice under
Section 28(4) was even a proper officer. The
Additional Director General can be considered
to be a proper officer only if it is shown that he
was a Customs officer under the Customs Act.
In addition, that he was entrusted with the
functions of the proper officer under Section 6
of the Customs Act. The Additional Director
General of the DRI can be considered to be a
Customs officer only if he is shown to have
been appointed as Customs officer under the
Customs Act.
21. If it was intended that officers of the
Directorate of Revenue Intelligence who are officers
of Central Government should be entrusted with
functions of the Customs officers, it was imperative
that the Central Government should have done so in
exercise of its power under Section 6 of the Act. The
reason why such a power is conferred on the Central
Government is obvious and that is because the
Central Government is the authority which appoints
both the officers of the Directorate of Revenue
Intelligence which is set up under the Notification
dated 04.12.1957 issued by the Ministry of Finance
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and Customs officers who, till 11.5.2002, were
appointed by the Central Government. The
notification which purports to entrust functions as
proper officer under the Customs Act has been issued
by the Central Board of Excise and Customs in
exercise of non-existing power under Section 2 (34)
of the Customs Act. The notification is obviously
invalid having been issued by an authority which had
no power to do so in purported exercise of powers
under a section which does not confer any such
power.
23. We, therefore, hold that the entire
proceeding in the present case initiated by the
Additional Director General of the DRI by issuing
show cause notices in all the matters before us are
invalid without any authority of law and liable to be
set-aside and the ensuing demands are also set aside.
20. After having analyzed the fact whether the
Directorate of Revenue Intelligence officials are
proper officers under the provisions of the Customs
Act especially in the context of Section 28, the
Hon'ble Supreme Court has held that, the
proceedings in the said case initiated by the
Additional Director General Directorate of Revenue
Intelligence, by issuing the Show Cause Notice was
invalid and without any authority of law and the same
therefore was liable to be set aside.
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21. The subtle difference in this case is only the
provision. Here, the Show Cause Notice was issued
under Section 28(1) of the Customs Act and in that
case, since in 2011 Section 28 of the Customs Act
underwent amendment under which Sub-section(4)
was inserted by which extended limitation has been
made and therefore in that case, under Sub Section
(4) of Section 28 such notice was issued. However, in
the present case in hand, since it was in the year 2009
i.e pre-amendment, notice was issued under Section
28(1) of the Act itself under the unamended sub
section(1) of Section 28. Otherwise, the issue is one
and the same and factually the petitioners' case as
well as the Canon India case are similarly placed.
21. However when this decision of Canon India
case was brought to the notice of the learned Judge,
who dealt with the batch of cases in Sri Sathya
Jewellery cited supra, the learned Judge in
paragraph No.6 of the judgment has taken the
following view:
6.The respective learned Senior Standing
Counsels appearing on behalf of the respondents
objected the said contentions by stating that the
respondents have already filed review petitions in
Review Petition (Diary) Nos.9580, 9584, 9587, 9591
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of 2021 before the Hon'ble Supreme Court of India on
07.04.2021. Their contention is that, certain
notifications issued were not brought to the notice of
the Hon'ble Supreme Court of India and further, it is
a regular appeal filed after exhausting the statutory
remedies provided under the Act, and the writ
petitioners cannot rely on the said judgment in view
of the fact that the petitioners have not exhausted the
statutory appellate remedy provided under Sections
128 and 129 of the Customs Act. The case before the
Hon'ble Supreme Court of India was decided in
regular appeal, and thus, the appellants had
exhausted the appellate remedy provided under the
Act, whereas, the petitioners in these writ petitions
have not exhausted the alternate remedy and they
have filed the writ petitions in order to avoid the Pre-
Deposit as contemplated under the Statute. Therefore,
the petitioners are not entitled for any relief.
22. In fact this view expressed by the learned
Judge in Sathya Jewellery case, has been heavily
relied upon by the learned Standing Counsel
appearing for the respondent Customs.
23. The learned Judge in the said order has
taken the view that, in Canon India case the
petitioner/Appellants after having exhausted the
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appeal remedy had gone to the Supreme Court by
way of Special Leave Petition. However in the case in
hand before the learned Judge in Sathya Jewellery
case, the petitioners had come to the High Court as
against the order-in-original directly, therefore, the
parties could be relegated to approach the appellate
authorities.
24. However, the learned counsel for the
petitioner in this context has relied upon a judgment
of the Karnataka High Court which is a recent one
dated 14.07.2021 in the matter of Sri Mohan
C.Suvarna referred to above. In the said case
extensive consideration have been made by the
learned Judge of the Karnataka High Court, where,
under the heading ''applicability of judgment in
M/s.Canon India case'' the learned Judge has
discussed the following:
5) Applicability of judgment in M/s.Canon
India Private Limited: (i) It is to be noticed that the
starting point of the present proceedings relates to
the show cause notice dated 07.01.2008 which relates
to the period prior to 2011. Certain amendments were
made to the Customs Act, 1962 in 2011. Under
Section 28 of the Customs Act as was applicable
during the relevant period of time, the power is vested
in 'the proper officer' to take action where duty has
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not been levied or has been short-levied or
erroneously refunded and such proceedings was to be
taken by 'the proper officer.' Subsequent to the
amendment of Section 28, 'the proper officer' still
retains jurisdiction, though there are certain
procedural modifications.
(ii) The aspect of who is 'the proper officer' as
regards to Section 28 of the Customs Act prior to the
amendment was considered by the Apex Court in the
case of Commissioner of Customs v. Sayed Ali and
Another reported in (2011) 265 ELT . Subsequent to
the judgment of Apex Court in Sayed Ali's case
(supra), certain amendments were effected to the
Customs Act, including the introduction of Section
28(11) inserted by the Customs (Amendment and
Validation Act) 2011 with effect from 16.09.2011 to
the effect that "..... all persons appointed as officers of
Customs under sub-section (1) of Section 4 .....shall
be deemed to have been and always had been the
proper officers for the purposes of this Section." The
effect of such amendments was considered by High
Court of Delhi in the case of Mangali Impex Ltd. v.
Union of India reported in 2016 (335) E.L.T. 605
(Del.), which once again reiterated that the
amendment does not in any way alter the position
insofar as the law laid down in Sayed Ali's case
(supra). The judgment of the Delhi High Court, it is
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stated is pending consideration before the Apex Court
in S.L.P.(C) No.20453/2016, wherein the judgment in
Mangali's case has been stayed, by the Apex Court.
(iii) It ought to be noted that the present judgment of
Apex Court in the case of M/s.Canon India Private
Limited (supra) passed in Civil Appeal No.1827/2018
and connected matters is a judgment by a Bench
consisting of Three Judges and has referred to the
judgment in Sayed Ali's case (supra) in approval.
(iv) The Apex Court in the case of M/s.Canon India
Private Limited (supra) has specifically raised the
question at para-9 of its decision, which reads as
follows:-
"9. The question that arises is whether the
Directorate of Revenue Intelligence had authority in
law to issue a show cause notice under Section 28(4)
of the Act for recovery of duties allegedly not levied
or paid when the goods have been cleared for
import by a Deputy Commissioner of Customs who
decided that the goods are exempted. It is necessary
that the answer must flow from the power conferred
by the statute i.e. under Section 28(4) of the Act. This
Section empowers the recovery of duty not paid, part
paid or erroneously refunded by reason of collusion
or any wilful mis-statement or suppression of facts
and confers the power of recovery on “the proper
officer”. The obvious intention is to confer the power
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to recover such duties not on any proper officer but
only on “the proper officer”. This Court in
Consolidated Coffee Ltd. v. Coffee Board,
Bangalore2 has held:—
“14. …Secondly, and more importantly, the user of
the definite article ‘the’ before the word ‘agreement’
is, in our view, very significant. Parliament has not
said ‘an agreement’ or ‘any agreement’ for or in
relation to such export and in the context the
expression ‘the agreement’ would refer to that
agreement which is implicit in the sale occasioning
the export.”
The Apex Court while referring to ' the proper officer'
found in Section 28 has specifically recorded a
finding that it is only 'the proper officer', and 'that
proper officer' alone can adjudicate the matter.
Further Apex Court has clarified at para 15 as
follows:
"15. ...... We find it completely impermissible to allow
an officer, who has not passed the original order of
assessment, to re-open the assessment on the grounds
that the duty was not paid/not levied, by the original
officer who had decided to clear the goods and who
was competent and authorised to make the
assessment. The nature of the power conferred by
Section 28(4) to recover duties which have escaped
assessment is in the nature of an administrative
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review of an act. The section must therefore be
construed as conferring the power of such review on
the same officer or his successor or any other officer
who has been assigned the function of assessment. In
other words, an officer who did the assessment, could
only undertake re-assessment [which is involved in
Section 28(4)]."
Accordingly, the Apex Court has held that Section
must therefore be construed as conferring the power
of such review on the same officer or his successor or
any other officer who has been assigned the function
of assessment. In other words, an officer who did the
assessment could only undertake the re-assessment
[which is involved in Section 28(4)].
(v) The Apex Court has also considered the aspect as
to whether the Additional Director General of DRI
who has been appointed as an Officer of Customs has
been entrusted with the functions under Section 28 as
'the proper officer' under the Customs Act. The Court,
after referring to the notification dated 02.05.2012 at
paras-19 and 20 has concluded that the notification
issued by the Central Board of Excise and Customs in
exercise of power under Section 2(34) of the Customs
Act would not be sufficient, as the said Section does
not confer any power on the Authority to entrust any
functions of officer, and that Section 2(34) merely
defines who 'the proper officer' is.
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(vi) The Apex Court has specifically observed that it
is only Section 6 of the Customs Act which provides
for entrustment of functions of Customs Officer on
other officers of the Central or the State Government
or local authority. At para-21 of the decision, it is
specifically observed that the Central Government
ought to have passed necessary orders under Section
6, if it was intended that officers of the Directorate of
Revenue Intelligence were to be entrusted with the
functions of Customs Officer.
(vii) The Apex Court has further clarified that the
notification which purports to entrust the functions as
'proper officer' issued by the Central Board of Excise
and Customs in exercise of non-existing power under
Section 2(34) of the Customs Act is invalid as also
having been issued by the Authority which has no
power to do so.
(viii) Finally, the Apex Court after referring to the
observations in the case of Commissioner of Customs
v. Sayed Ali and Another reported in (2011) 3 SCC
537 has concluded at para-24 as follows:-
"24. We, therefore, hold that the entire proceeding in
the present case initiated by the Additional Director
General of the DRI by issuing show cause notices in
all the matters before us are invalid without any
authority of law and liable to be set-aside and the
ensuing demands are also set-aside".
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(ix) In the present case, applying the law laid down in
the case of M/s.Canon India Private Limited (supra)
clearly, the proceedings that have been initiated by
issuance of a show cause notice dated 07.01.2008 by
the Additional Director General, DRI is also liable to
be set aside in light of the law laid down by the Apex
Court as referred to above.
23. While judgment of High Court of Madras in the
case of Commissioner of Customs (Air) vs. M/s.
Premier Tours & Travels (Chennai) Pvt. Ltd. and
another, in C.M.A. No.2746/2009 and M.P. No.
1/2009 dated 04.02.2021 where identical contentions
were raised and the consideration of such aspect has
been relegated to be decided in the appeal, however
this Court does not find any reason to take the same
view, in light of the clear findings in the case of
M/s.Canon India Private Limited (supra) which does
not leave any scope for further adjudication and the
law laid down by the Apex Court ought to enure to
the benefit of the petitioners.
24. It needs to be noted that the High Court of
Madras (Madurai Bench) by order dated 16.03.2021
in the case of Quantum Coal Energy Pvt. Ltd. vs. The
Commissioner of Customs in W.P.(MD) Nos.10186 &
10187 of 2014 and M.P.(MD) Nos.1 & 1 of 2014 has
taken a different stand by setting aside the
proceedings initiated by the Customs Authority where
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the show cause notice was issued by the Additional
Director General of DRI while referring to the
judgment in the case of M/s.Canon India Private
Limited (supra) and this Court finds that, that would
be the only logical conclusion to be arrived at and to
take any other stand would only result in
overreaching the decision of Apex Court, which is
plainly impermissible.
25. It is the submission made by learned Additional
Solicitor General that Review Petition has been filed
which was the stand taken by the authorities in their
statement of objections filed on 07.04.2021. As the
matter was posted on numerous occasions thereafter,
there has been no further development in the review
proceedings and it is submitted that the matter is still
pending consideration. Needless to state that there
has to be finality once the law is laid down by a
judgment of the Apex Court and any further
deferment may not be justified. Further, if the Review
Petition is disposed, the legal consequences would
enure to the benefit of the parties involved.
26. Accordingly, the writ petitions are allowed. The
Order-in-original Sl.No.BLR-CUSTM-AIR-003/16-17
dated 27.02.2017 at Annexure-G in both the writ
petitions are set aside while holding specifically that
the show cause notice at Annexure-B dated
07.01.2008 is one that is not issued by 'the proper
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officer'. The Authorities are at liberty to take out
fresh proceedings as per law, in light of the
discussion as above.
27. The oral request made by learned counsel
appearing for respondent No.2 to keep the order in
abeyance is refused, as the Court has passed the
order on the basis of the judgment of Apex Court in
the case of M/s.Canon India Private Limited vs.
Commissioner of Customs reported in 2021 SCC
Online SC 200, which is the law as on date.
25. In the said decision, all the
queries/objections raised by the learned Standing
Counsel appearing for the respondent Customs
herein, including that, as against Canon India
judgment, review has been field and by virtue of the
amendment made in Section 28 by inserting Sub
Section (11) the Customs Authorities have every right
to issue Show Cause Notice by any official, who can
be treated as a proper officer, have been considered
and answered.
26. I am in respectful agreement with the view
taken by the learned Judge of the Karnataka High
Court in the said case in Sri Mohan C.Suvarna cited
supra.
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27. It is a settled preposition of law that,
normally in tax matters, as against the order-in-
original the writ petition would not be entertained
unless the appeal remedy is exhausted and the tax
payer/assessee has to approach the High Court only
through proper channel by filing an appeal against
the order passed by the appellate authority. However,
there are exceptions to the general rule, where, under
three circumstances the writ petitions are entertained.
In the first category, if the principle of natural justice
is violated and in the second category if there is any
statutory violation and in third category if for want of
jurisdiction the order passed by the authorities
concerned is vitiated.
28. Here in the case in hand, though the said
plea of want of jurisdiction was raised there was no
ground at the time of filing the writ petitions in the
year 2018, however during the pendency of the writ
petition law has developed and the Canon India
judgment has come in March 2021. After Canon
India's judgment atleast two decisions of this Court
as well as the Karnataka High Court on the same
point by the respective writ courts had been rendered,
where, in the judgment of the Karnata High Court
referred to above, this issue has been extensively
discussed and by applying the ratio of Canon India
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judgment the learned Judge allowed the writ petition
stating that the proceedings initiated under Section
28 of the Customs Act by any other officer other than
a proper officer shall be vitiated, therefore, the entire
proceedings was interfered with and set aside.
29. Therefore in this context, even though the
learned Standing Counsel appearing for the
respondent has raised the vehement contention that
the ground of want of jurisdiction now canvassed by
the petitioner in view of Canon India judgment was
not available to the petitioner either at the time of
issuing Show Cause Notice or at the time of
adjudication or passing of order-in-original even at
the time of filing writ petition in 2018, cannot have a
legal backing as the law declared by the Supreme
Court in Canon India case is only reiterating the law
which is already available in statute under Section 28
of the Customs Act long back.
30. More over the view expressed by the
learned Judge in Sathya Jewellery's case cited supra
is concerned, whether it is a direct writ petition
against order-in-original or writ petition or appeal
proceedings before this court after exhausting the
appellate remedy, would not make a difference. The
want of jurisdiction ground can very well be taken at
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W.P.(MD)Nos.8574, 8579 & 8581 of 2021
any stage either at the first instance directly before
this Court against the order-in-original or at final
stage after exhausting the appeal remedy. Therefore,
such distinction which was trying to be made by the
learned Judge in Sri Sathya Jewellery case in my
considered view, may not be available if we applying
the principles laid down by the Supreme Court in
Canon case. In this regard, the view expressed by the
Karnataka High Court in the said case of Shri Mohan
C.Suvarna cited supra can very well be pressed into
service in order to meet these circumstances.
31. Therefore, looking from any angle, since
admittedly the Show Cause Notice dated 17.03.2009
was issued by the Additional Director General of
Directorate of Revenue Intelligence, Chennai which
culminated in the impuged order-in-original dated
28.08.2014, the said proceedings would not stand in
the legal scrutiny and therefore, it is liable to be
interfered with.
32.In the result, this Court is inclined to order
these writ petitions with the following directions:
The respective impugned orders and the
consequential impugned order, in all these writ
petitions are quashed. In view of the same, it is open
to the respondents to act upon in the manner known
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to law, especially under the provisions of Customs
Act by taking into account the law laid down by the
Hon'ble Supreme Court in Canon India case cited
supra.
33. In fine, these writ petitions are ordered
accordingly. However, there shall be no order as to
costs. Consequently, connected miscellaneous
petitions are closed.”
17.Though a plea was raised by the Revenue side, that even in
Deepak Gopaldas Bajaj batch case cited supra, as against the Canon
India case dated 09.03.2021, the Revenue has filed review, that aspect
also has been considered by the learned Judge of the Karnataka High
Court in the judgment which has been taken note of in my order dated
08.09.2021. Also, it is to be noted that, subsequent to Canon India case
dated 09.03.2021, a similar issue came up before the Hon'ble Supreme
Court in the case of Commissioner of Customs, Kandla Vs. M/s.
Agarwal Metals and Alloys in Civil Appeal No.3411 of 2020, where the
Hon'ble Supreme Court by order dated 31.08.2021, has passed the
following order:
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“Delay condoned.
In view of decision dated 09.03.2021 of three
judge Bench of this Court in Civil Appeal No.1827 of
2018 titled as “M/s.Canon India Private Ltd. Vs
Commissioner of Customs” reported in 2021 (3)
SCALE 748, these appeals must fail as the show cause
notice(s) in the present cases was also issued by
Additional Director General (ADG), Directorate of
Revenue Intelligence (DRI), who is not a proper officer
within the meaning of section 28(4) read with section
2(34) of the Customs Act, 1962.
Hence , these appeals stand dismissed.
However, dismissal of these appeals will not
come in the way of the competent authority to proceed
in the matter in accordance with law.
Pending application(s), if any, stand disposed
of.”
18.Therefore, by the very latest order dated 31.08.2021, the
principle laid down by the Hon'ble Supreme Court in Canon India case
has once again been taken note of and followed, based on which the
appeal filed by the Customs was rejected in the said Civil Appeal.
Therefore, the consistent view taken by the Hon'ble Supreme Court
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insofar as the law having been declared in Canon India case makes it
very clear that, as on date, insofar as the proceedings initiated by any
other officer other than the proper officer is vitiated, especially, if those
proceedings were initiated prior to 2011 ie., pre-amendment of Section
19.When that being so, merely because the Revenue had filed
belated appeal as against the CESTAT order dated 03.01.2018, it would
not preclude the petitioner to raise the point of want of jurisdiction, as it
goes to the root of matter, when the jurisdiction itself is questioned and
the said point is to be answered in favour of the noticee, the question of
deciding the adjudicatory process on merits does not arise. Therefore, the
said objection as projected by the learned Standing Counsel for the
Customs stating that the appeal filed by it since is pending in SR stage,
the petitioner cannot file these writ petitions, taking the ground of want
of jurisdiction, cannot be countenanced.
20.In view of the aforesaid decisions and the reasons stated, this
Court has no hesitation to hold that the petitioner is entitled to succeed in
these writ petitions.
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W.P.(MD)Nos.8574, 8579 & 8581 of 2021
21.In the result, the following orders are passed in these writ
petitions:
“The impugned show cause notice dated
06.12.2012 is quashed. As a sequel, the petitioner
would be entitled to get back the amount and the bank
guarantee, if any deposited during the investigation.
However, it is made clear that the quashment of the
show casue notice dated 06.12.2012, will not
precluded the respondents to act in accordance with
law, if they are advised to do so.”
22.With the above observations and directions, these writ petitions
are allowed to the terms indicated above. However there shall be no
order as to costs. Consequently, connected miscellaneous petitions are
closed.
30.09.2021
Index : Yes/No
Internet : Yes/No
MR
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W.P.(MD)Nos.8574, 8579 & 8581 of 2021
Note : In view of the present lock down owing to COVID-19
pandemic, a web copy of the order may be utilized for
official purposes, but, ensuring that the copy of the order
that is presented is the correct copy, shall be the
responsibility of the advocate/litigant concerned.
To
1.The Commissioner of Customs
Custom House,
Tuticorin 628 004.
2.Additional Director General,
Directorate of Revenue Intelligence,
Chennai Zonal Unit, No.27, Adarsh Towers,
G.N. (Chetty) Road,
T.Nagar, Chennai-600 017.
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W.P.(MD)Nos.8574, 8579 & 8581 of 2021
R.SURESH KUMAR ,J.
MR
Common Order made in
W.P.(MD)Nos.8574, 8579 & 8581 of 2021
Dated:
30.09.2021
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