2017 (8) TMI 1087 - AT - Customs

Tribunal overturns DRI's notice under Customs Act due to jurisdictional ambiguity, awaits Supreme Court ruling.

The Tribunal set aside the show-cause notice issued by the Directorate of Revenue Intelligence (DRI) under the Customs Act based on conflicting judgments ... Jurisdiction - power of DRI to issue SCN - Held that: - the DRI is not a competent authority - I set aside the impugned orders and remand the matter to the original authority to decide the matter keeping in view the decision of Hon’ble Delhi High Court in the case of M/s Mangali Impex Ltd., M/s Pace International And Others Versus Union of India And Others [2016 (5) TMI 225 - DELHI HIGH COURT] - appeal allowed by way of remand. Issues: Jurisdiction of DRI to issue show-cause notice under Customs ActThe judgment deals with the issue of the jurisdiction of the Directorate of Revenue Intelligence (DRI) to issue show-cause notices under the Customs Act. The appellant argued that the show-cause notice issued by the DRI should be set aside based on a decision by the Hon'ble High Court of Delhi. The respondent, on the other hand, supported the order passed by the Commissioner of Customs. The Tribunal examined the jurisdictional issue in light of legal precedents and amendments to the Customs Act.The Tribunal noted that the appellant contended that DRI officers were not proper officers under the Customs Act, citing a Supreme Court decision. Subsequent amendments to the Customs Act and a notification by the Central Board of Excise and Customs (CBEC) were discussed. The notification appointed the Additional Director General of DRI as a proper officer for issuing demand notices under Section 28 of the Customs Act from a specified date. Additionally, a retrospective amendment was made to assign proper officer functions to DRI officers.The Tribunal highlighted a judgment by the Hon'ble Delhi High Court that favored the assessee, stating that the DRI officers did not have jurisdiction to issue show-cause notices or adjudicate before a certain date. However, conflicting views were presented by other High Courts, leading to the matter being brought before the Hon'ble Supreme Court. The Supreme Court granted a stay on the Delhi High Court's judgment, indicating that the issue was pending before the apex court.Furthermore, the Tribunal referenced a case where the Hon'ble High Court of Delhi granted liberty to the petitioner to challenge the jurisdiction issue based on the outcome of appeals filed by the Union of India in the Supreme Court. In light of these considerations and following the Delhi High Court's decision in a similar case, the Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority. The authority was directed to first decide on the jurisdiction issue after the Supreme Court's decision in a related case and then proceed to decide on the merits of the case, ensuring the assessee's right to be heard. Until a final decision, the status quo was to be maintained.In conclusion, the Tribunal allowed both appeals by way of remand, emphasizing the importance of resolving the jurisdictional issue in accordance with the upcoming Supreme Court decision and providing a fair opportunity for the assessee to present their case.