2017 (4) TMI 372 - AT - Customs

Tribunal Remands Appeals for Fair Hearing after Supreme Court Ruling. Upholds Natural Justice.

The Tribunal remanded all appeals back to the adjudicating authorities following the Supreme Court's decision in the Mangali Impex case. The Tribunal ... Proper Officer - jurisdiction to issue SCN - whether Customs officer can be treated as proper officer when he has already issued notice before 8.4.2011 as a measure of curing his defect section 28 of the Customs Act, 1962 - Revenue's case is that when a retrospective amendment was made to section 28, even SCNs issued before 8.4.2011 are the proper SCNs and liable to be adjudicated - Held that: - the case of Mangali Impex Ltd. Vs UOI [2016 (5) TMI 225 - DELHI HIGH COURT] referred where it was held that newly inserted Section 28 (11) does not empower officers of DRI and DGCEI to either proceed to adjudicate SCNs already issued by them for period prior to 08-04-2011 or to issue SCNs for period prior to 08-04-2011. Mangali Impex judgment [2016 (5) TMI 225 - DELHI HIGH COURT] has been stayed by the Supreme Court. It is well settled principle of law by Hon'ble Apex Court in UOI Vs West Coast Paper Mills Ltd. [2004 (2) TMI 344 - SUPREME COURT OF INDIA] that once the appeal been filed against a Judgment of lower court and entertained by the Supreme Court as well as operation thereof stayed, the judgment of lower court is in jeopardy. It would be proper to wait for decision of the Apex Court on the aforesaid jurisdiction issue. Therefore, all these appeals are remanded back to the concerned adjudicating authorities without keeping that pending in Tribunal to pass appropriate orders on the basis of the outcome of the Supreme Court in the Mangali Impex case following course of natural justice. Matter on remand. Issues Involved:1. Validity of Show Cause Notices (SCNs) issued by DRI officers prior to 08.04.2011.2. Interpretation and retrospective application of Section 28(11) of the Customs Act, 1962.3. Determination of the 'proper officer' under the Customs Act, 1962.4. Conflicting judgments from various High Courts on the validity of Section 28(11).Detailed Analysis:1. Validity of Show Cause Notices (SCNs) Issued by DRI Officers Prior to 08.04.2011:The appellants argued that the SCNs issued by DRI officers prior to 08.04.2011 were invalid as DRI officers were not 'proper officers' at that time. The amendment to Section 28 of the Customs Act, 1962, by the Finance Bill, 2011, which received presidential assent on 08.04.2011, introduced ten sub-sections, including sub-section (11). The appellants contended that sub-section (11) was not in force before the issuance of the SCNs and thus could not retrospectively validate the actions of DRI officers.2. Interpretation and Retrospective Application of Section 28(11) of the Customs Act, 1962:The appellants emphasized that sub-section (11) of Section 28, introduced on 16.09.2011, could not be applied retrospectively to cure the defect in the SCNs issued before 08.04.2011. They argued that Explanation-2 to Section 28, which was present before the introduction of sub-section (11), clarified that the law prior to 08.04.2011 should govern cases where SCNs were issued before that date. The Revenue, however, argued that sub-section (11) had a retrospective effect, validating the SCNs issued by DRI officers before 08.04.2011.3. Determination of the 'Proper Officer' Under the Customs Act, 1962:The appellants relied on the Supreme Court's judgment in Commissioner of Customs Vs Sayed Ali, which held that only officers specifically assigned the functions of assessment and reassessment of duty in the jurisdictional area where the import was effected were competent to issue notices under Section 28. They argued that DRI officers were not notified as 'proper officers' under Section 34(2) of the Customs Act, 1962, and thus lacked the authority to issue SCNs. The Revenue countered that the retrospective amendment to Section 28(11) validated the actions of DRI officers as 'proper officers.'4. Conflicting Judgments from Various High Courts on the Validity of Section 28(11):The Tribunal noted conflicting judgments from different High Courts on the validity of Section 28(11). The Bombay High Court in Sunil Gupta v. Union of India upheld the constitutional validity of Section 28(11), while the Delhi High Court in Mangali Impex Ltd. v. UOI held that Section 28(11) did not authorize DRI officers to issue SCNs for the period prior to 08.04.2011. The Telangana and Andhra Pradesh High Court in Vuppalamritha Magnetic Components Ltd. v. DRI dissented from the Delhi High Court's view and upheld the validity of Section 28(11). The Supreme Court stayed the operation of the Delhi High Court's judgment in Mangali Impex.Conclusion:The Tribunal decided to remand all the appeals back to the concerned adjudicating authorities to pass appropriate orders based on the outcome of the Supreme Court's decision in the Mangali Impex case. The Tribunal emphasized following the course of natural justice and granting a reasonable opportunity of hearing to the appellants to plead both on fact and law. All appeals and miscellaneous applications were disposed of accordingly.