2021 (11) TMI 560 - AT - Customs

Tribunal sets aside proceedings due to lack of jurisdiction.

The Tribunal allowed the appeal, setting aside the proceedings initiated by the Additional Director General, DRI, due to lack of jurisdiction to issue the ... Jurisdiction of Additional Director General, DRI to issue show cause notice - proper officer under Section 2(34) of the Customs Act - issue of notice under Section 28 of the Customs Act - entrustment of functions under Section 6 of the Customs Act - validity of notification purporting to assign customs functionsJurisdiction of Additional Director General, DRI to issue show cause notice - proper officer under Section 2(34) of the Customs Act - issue of notice under Section 28 of the Customs Act - validity of notification purporting to assign customs functions - entrustment of functions under Section 6 of the Customs Act - Validity of show cause proceedings initiated by Additional Director General, DRI by issuing notice under Section 28(4) read with Section 124 of the Customs Act, 1962. - HELD THAT: - The Tribunal held that only an officer who qualifies as a 'proper officer' under Section 2(34) - i.e., an officer of customs to whom specific functions have been assigned by the Board or the Commissioner of Customs - is competent to issue a notice under Section 28. A notification issued by the Board purporting to assign functions under the definition provision (Section 2(34)) is ultra vires because that provision is definitional and does not confer power to entrust functions. Entrustment of functions to officers of the Directorate of Revenue Intelligence, if intended, must be effected by the Central Government under Section 6. Following the decision of the Supreme Court in Canon India Pvt. Ltd. and its reasoning construing Sections 2(34), 6 and 28 (and the antecedent decision in Commissioner of Customs v. Sayed Ali), the Tribunal concluded that proceedings initiated by the Additional Director General, DRI are without authority of law. The Tribunal therefore set aside the impugned proceedings and allowed the appeal on this ground. [Paras 10]Proceedings initiated by the Additional Director General, DRI, Lucknow by issuing the Show Cause Notice under Section 28(4) read with Section 124 of the Customs Act are invalid for lack of jurisdiction; the impugned proceedings are set aside and the appeal is allowed with consequential relief.Final Conclusion: The Appeal is allowed on the ground that the Additional Director General, DRI is not a 'proper officer' competent to issue the Show Cause Notice under Section 28(4) read with Section 124 of the Customs Act, 1962; the impugned proceedings are set aside and consequent relief is granted. Issues Involved:1. Jurisdiction of Additional Director General, Directorate of Revenue Intelligence (DRI) to issue Show Cause Notice under Section 28(4) read with Section 124 of the Customs Act, 1962.2. Inclusion of licensing fee, advertising and marketing expenses, and corporate marketing fee in the assessable value of imported goods.Issue-wise Detailed Analysis:1. Jurisdiction of Additional Director General, Directorate of Revenue Intelligence (DRI):The primary issue addressed in the judgment is whether the Additional Director General, DRI, Lucknow, has the jurisdiction to issue a Show Cause Notice under Section 28(4) read with Section 124 of the Customs Act, 1962. The Appellant challenged the jurisdiction of the Additional Director General, DRI, citing the Supreme Court's decision in Canon India Pvt. Ltd. Vs. Commissioner of Customs (2021 (376) E.L.T. 3 (SC)), which held that the Additional Director General, DRI, is not a competent authority to issue Show Cause Notices.The Tribunal noted that the Supreme Court, in the Canon India case, determined that the Additional Director General, DRI, cannot be considered a 'proper officer' under Section 2(34) of the Customs Act, 1962. The Supreme Court's judgment emphasized that only officers specifically assigned functions by the Board or the Commissioner of Customs can be deemed proper officers. Consequently, any proceedings initiated by the Additional Director General, DRI, are invalid without legal authority.The Tribunal also referenced several other judgments where Show Cause Notices issued by the DRI were quashed based on the Canon India decision. These judgments include:- Commissioner of Customs, Kandla Vs. Agarwal Metals And Alloys [2021 (378) E.L.T. 7 (S.C.)]- Givaudan India Pvt. Ltd. Vs. Pr.CC, ADG, DRI, Bangalore [2021 (8) TMI 178 – Karnataka High Court]- Quantum Coal Energy (P) Ltd. Vs. CC, Tuticorin [2021-VII-229-MAD-CU]- CC Vs. Dish TV India Limited [2021 (10) EMI 771-CESTAT New Delhi]- Baburam Premchand Vs. Commissioner of Customs, Chennai [2021 (10) TMI 820 – CESTAT CHENNAI]- Hi-Tec Corporation Vs. Commissioner of Customs, Chennai [2021 (8) TMI 1214 – CESTAT CHENNAI]- Evershine Customs (C & F) Pvt. Ltd. And The Two Step Trading Co. Vs. Commissioner of Customs, New Delhi [2021 (8) TMI 906 – CESTAT New Delhi]- Modern Insecticides Ltd. Vs. Commissioner of Customs, Ludhiana [2021 (10) TMI 598 – CESTAT CHANDIGARH]- Shri Rajendra Sekaria, Balaji Solutions Pvt. Ltd. Vs. CC(ACC & Import), Mumbai [2021 (6) TMI 628 – CESTAT MUMBAI]The Tribunal concluded that the Show Cause Notice issued by the Additional Director General, DRI, in the present case is without any authority of law, following the Supreme Court's decision in Canon India and subsequent judgments. Thus, the proceedings initiated by the DRI were set aside, and the appeal was allowed on this ground alone.2. Inclusion of Licensing Fee, Advertising and Marketing Expenses, and Corporate Marketing Fee in Assessable Value:Although the issue of including licensing fees, advertising and marketing expenses, and corporate marketing fees in the assessable value of imported goods was raised, the Tribunal decided not to delve into the merits of this issue. Instead, the Tribunal focused on the jurisdictional challenge, which was sufficient to resolve the appeal in favor of the Appellant.Conclusion:The Tribunal allowed the appeal, setting aside the impugned proceedings initiated by the Additional Director General, DRI, due to the lack of jurisdiction to issue the Show Cause Notice. The decision was based on the Supreme Court's judgment in Canon India Pvt. Ltd. and subsequent supporting judgments. The Tribunal did not address the merits of the issue regarding the inclusion of various fees in the assessable value of imported goods, as the jurisdictional issue was dispositive.