2016 (4) TMI 1106 - HC - Customs

Court quashes DRI's Corrigendum/Addendum on duty demand classification, allows revival of settlement applications

Amit Sirohi & Others Versus Directorate of Revenue Intelligence, New Delhi

The court quashed the Corrigendum/Addendum issued by the Directorate of Revenue Intelligence (DRI) after the Customs and Central Excise Settlement ... Whether in the light of the statutory power of CCESC to exclusively exercise the jurisdiction of the officer of Customs, the impugned Corrigendum could have been issued on a date subsequent to the CCESC deciding to proceed with the applications filed before it - Respondent submitted that the order passed by the CCESC deciding to proceed with the application under Section 127C of the Act was passed without hearing the DRI. Held that:- the Court notices that there was sufficient opportunity for the DRI, if aggrieved by the order passed by the CCESC, to have challenged that order in accordance with law. However, without adopting that course, it was not open to the DRI to have proceeded to issue a Corrigendum/Addendum to the SCN, since in terms of Section 127F(2) of the Act, the exclusive jurisdiction to deal with the matter vested with the CCESC. Hence, the DRI had, on the date it issued the Corrigendum, no jurisdiction to issue Corrigendum/Addendum which made a very significant change to the SCN whereby the classification of the imported goods was changed and the duty demand correspondingly increased. Therefore, the impugned Corrigendum/Addendum is plainly unsustainable in law as it contrary to Section 127F(2) of the Act. Validity of the Corrigendum/Addendum before the CCESC itself - Held that:- this submission appears to be misconceived since no such Corrigendum/Addendum could have been issued in the first place when the CCESC was seized of the matter. So, the question of the CCESC deciding the validity of such Corrigendum does not arise. Also the Court does not wish to comment on the submission except by noting that it is over two years since the CCESC passed the above order. If the DRI decides to challenge the said order, such petition will be decided on its merits by the appropriate forum. Therefore, the Court quashes the Corrigendum/Addendum to the SCN and the petitioner is permitted to revive its application before the CCESC in terms of the order passed by the CCESC in the matter. - Decided in favour of petitioner Issues:Challenge to Corrigendum/Addendum dated 12th August, 2014 issued by DRI to SCN dated 20th December, 2013.Analysis:1. Facts and Background: The petitioners challenged a Corrigendum/Addendum issued by the Directorate of Revenue Intelligence (DRI) to a Show Cause Notice (SCN) dated 20th December, 2013. The petitioners were accused of importing old photocopier machines by undervaluing them, resulting in customs duty evasion.2. Settlement Commission Proceedings: The petitioners filed applications for settlement before the Customs and Central Excise Settlement Commission (CCESC) in April 2014, which were allowed to proceed. However, during the settlement process, the DRI issued the impugned Corrigendum/Addendum in August 2014, changing the duty demand classification.3. Jurisdiction of Settlement Commission: The main contention was whether the CCESC, after deciding to proceed with the applications, had exclusive jurisdiction as per Section 127F(2) of the Customs Act, 1962, to deal with the case.4. Validity of Corrigendum/Addendum: The court held that the DRI had no jurisdiction to issue the Corrigendum after the CCESC decided to proceed with the applications. The Corrigendum changing the duty demand was deemed unsustainable and contrary to the Act.5. Misconceived Submission: The argument that the petitioners should have challenged the Corrigendum before the CCESC was dismissed, as the CCESC had exclusive jurisdiction at that stage, and the DRI should not have issued the Corrigendum.6. Granting Liberty to DRI: The court noted a submission by the respondent's counsel seeking liberty for the DRI to challenge the CCESC's order from 2014. The court refrained from commenting on this, leaving it to the appropriate forum if the DRI decides to challenge the order.7. Court's Decision: The court quashed the Corrigendum/Addendum dated 12th August, 2014, and allowed the petitioners to revive their application before the CCESC as per the CCESC's order from January 2015. The writ petition was allowed with no order as to costs.This detailed analysis covers the issues involved in the legal judgment, outlining the background, proceedings before the Settlement Commission, jurisdictional questions, validity of the Corrigendum, and the court's final decision.