Madras High Court
The Commissioner Of Customs vs Sree Rayalaseema Alkalies And on 7 April, 2022
CMA.No.536 of 2022 etc. batch
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 07.04.2022
CORAM
THE HONOURABLE MR. JUSTICE R. MAHADEVAN
and
THE HONOURABLE MR. JUSTICE J.SATHYA NARAYANA PRASAD
Civil Miscellaneous Appeal Nos.536, 507, 508, 509, 510, 511, 512,
513, 514, 515, 516, 517, 518, 519, 520, 521, 522, 523, 524, 525, 526,
527, 528, 529, 530, 531, 532, 533, 534, 535, 537, 538, 539, 540, 541,
542 of 2022 and 266, 267, 268, 269, 270, 271, 272, 273, 274, 275, 276,
277, 278, 279, 280, 281, 282, 283, 284, 285, 286, 287 and 202 of 2018
and
Civil Miscellaneous Petition Nos. 12823, 12806 and 12810 of 2021, 3004,
3005, 3006, 3007, 3008, 3009, 3010, 3011, 3012, 3013, 3014, 3015, 3016,
3017, 3018, 3019, 3020, 3021, 3022, 3023, 3024, 3025 and 2427 of 2018
&
Civil Miscellaneous Petition Nos. 3763, 3767, 3766, 3770, 3774, 3775,
3776, 3782, 3781, 3784, 3785, 3786, 3788, 3790, 3793, 3792, 3796,
3798, 3797, 3799, 3800, 3804, 3810, 3819, 3815, 3823 and 3832 of 2022
----
CMA.No.536 of 2022
The Commissioner of Customs,
Chennai - II Commissionerate,
Customs House,
No.60, Rajaji Salai,
Chennai - 600 001. .. Appellant
Versus
Sree Rayalaseema Alkalies and
Allied Chemicals Ltd.,
Gondiparla Village, Gondiparla,
Kurnool, Andhra Pradesh - 518 004. .. Respondent
https://www.mhc.tn.gov.in/judis
CMA.No.536 of 2022 etc. batch
CMA.No.536 of 2022:- Appeal filed under Section 130 of Customs Act,
1962 against the common order dated 15.11.2017 passed by the Customs,
Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai, in
Final Order No.42960 of 2017.
CMA.No.536 of 2022:-
For Appellant : Mr.A.P.Srinivas
For Respondent : Mrs. Asmita A Nayak
COMMON JUDGMENT
(Judgment of the court was delivered by R. MAHADEVAN, J.)
Since the issues involved in all the Civil Miscellaneous Appeals are one
and the same, they are taken up together for hearing and are disposed of by this
common judgment.
2.All these Civil Miscellaneous Appeals are filed by the appellant /
Revenue against a common order dated 15.11.2017 passed by the Customs,
Excise & Service Tax Appellate Tribunal (CESTAT) in Final Order
Nos.42960 to 42995 of 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
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CMA.No.536 of 2022 etc. batch
jurisdiction of the officer to issue show cause notice is under
dispute."
3.The respondent(s) herein approached the CESTAT, by filing appeals
as against the orders dated 20.05.2013 passed by the Commissioner of
Customs (Seaport-Import), 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.
4.The CESTAT, by the order dated 15.11.2017, which is impugned in
these Civil Miscellaneous Appeals, allowed the appeals and remanded the
matter to the original authority. The relevant portion of the same is usefully
extracted below:
"5.The fact of the case regarding the issue of show-cause
notices and adjudications are linked to preliminary objection with
reference to jurisdiction to initiate proceedings, is admitted. As
regards the objection of the Revenue, to list the appeals again for
some other day, we note that in the face of the admitted facts as
above, and the issue involved is one of preliminary legal point of
issue, we note the appeal themselves can be disposed of, as there
could be no submissions on merits of the case, from either side. In
view of the admitted position and pending legal dispute before the
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CMA.No.536 of 2022 etc. batch
Honourable Supreme Court, we find that all these appeals are to be
allowed by way remand by setting aside the impugned orders. The
matter has to go back to the original authority in line with the
decisions of the Tribunal in various similar cases. Some of these
decisions are listed below:-
(i) M/s.Guru Kirpa Impex & ors. Vs CC (Seaport-Export),
Chennai – CESTAT, Chennai Final Order No.42153 – 42158 / 2017 –
[DB],dated 19.09.2017;
(ii).......
6.In the case of Sl.No.(i) above, the Tribunal observed as
under:-
"During the course of arguments, the importer's
counsel has raised the preliminary plea that the show-cause
notice in these cases was issued by the DRI. The Hon'ble
High Court of Delhi in the case of Mangali Impex vs. UOI
dated 03.05.2016 has observed that the officers of DRI is not
competent as proper officers to initiate demand action under
Customs Act, 1962. Hence, the request is being made to set
aside the present proceedings where the notice was issued by
the DRI.
On the other hand, Authorised Representative for the
Department has justified the order passed by Commissioner
of Customs and made a request to decide the matter on merit.
We have heard both the parties and gone through the
material available on record.
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 assessee-Respondent 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.
It is also seen that after the declaration of law by the
Honourable 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.
It is also noticed that in order to overcome the
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situation created by the judgment of Hon'ble Supreme Court
CMA.No.536 of 2022 etc. batch
in the case of 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.
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.
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
8.4.11. 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.
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.
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 subjudice before the Hon'ble Supreme Court (2016-TIOL-
173-SC-CUS/2016 (339) ELT A 49 (SC).
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It may be mentioned that recently, the Hon'ble High
CMA.No.536 of 2022 etc. batch
Court of Delhi in the case of BSNL vs. UOI vide Writ
Petition 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."
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.
7. In view of the above discussion and analysis, all the appeals
are allowed by way of remand and for decision by the original
authority, in terms of the observation of the Tribunal. Consequently,
the stay applications also get disposed of."
Aggrieved over the same, the Revenue is before this court with these Civil
Miscellaneous Appeals.
5.Heard both sides and perused the materials placed before this court.
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CMA.No.536 of 2022 etc. batch
6.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 issue show cause notice to the Assessee in such cases is said
to be 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."
7.However, in the subsequent decision in the case of Commissioner of
Customs, Tuticorin v. Sanket Praful Tolia, decided on 04.06.2021 in
CMA.(MD)Nos.433 to 437 & 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
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CMA.No.536 of 2022 etc. batch
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.
6. In the case of the Commissioner of Customs, Tuticorin
v. 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.
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4. Identical orders were tested for its
CMA.No.536 of 2022 etc. batch
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."
7. We find that the above decision can be fully made
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."
8.Following the latest decision in Sanket Praful Tolia's case (supra),
which are squarely covered by the issue involved herein, all these Civil
Miscellaneous Appeals are allowed by setting aside the orders 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 shall not initiate any coercive action against the
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CMA.No.536 of 2022 etc. batch
respondent(s)/assessee(s) 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.] [J.S.N.P.,J.]
07.04.2022
Index : Yes/no
Internet:Yes/no
av/rsh
To
1. The Customs, Excise and Service Tax Appellate Tribunal,
South Zonal Bench, Chennai.
2. The Commissioner of Customs,
Chennai - II Commissionerate,
Customs House,
No.60, Rajaji Salai,
Chennai - 600 001.
https://www.mhc.tn.gov.in/judis
CMA.No.536 of 2022 etc. batch
R. MAHADEVAN, J.
and
J. SATHYA NARAYANA PRASAD, J.
rsh/av
CMA No. 536 of 2022 etc. batch
07.04.2022
https://www.mhc.tn.gov.in/judis
