2025 (3) TMI 752 - HC - Customs

Chartered Accountant advised to seek appellate remedy under Section 128 of Customs Act for duty drawback fraud claims.

Yogendra Singh Balyan Versus Union Of India & Ors.

The Court determined that the Petitioner, a Chartered Accountant accused of using false documents to claim duty drawbacks, should pursue an appellate ... Time limitation for issuance of SCN - SCN was issued beyond the prescribed period of limitation which is three years - HELD THAT:- The Petitioner is a Chartered Accountant who is stated to have assisted the main accused in producing false and fabricated documents in return for receiving 1% of the invoice value. The allegations being serious and factual in nature, this Court in writ jurisdiction would not be able to examine the said factual aspects. Secondly, insofar as the judgment of the Gujarat High Court is concerned, the challenge therein was to the belated issuance of the Show Cause Notice itself and the Show Cause Notices were quashed by the Gujarat High Court at the instance of the actual exporters. In the present case, Petitioner is not the actual exporter but a Chartered Accountant who is providing services to the actual exporter. Under these circumstances, this Court is of the opinion that the Petitioner deserves to be relegated to avail of the appellate remedy. Under Section 128 of the Customs Act, 1962, the order is appealable before the Commissioner (Appeals) - the Petitioner may file an appeal in accordance with law challenging the Order-in-Original before the appropriate Appellate Authority. Conclusion - i) The Petitioner should avail of the appellate remedy under Section 128 of the Customs Act, 1962, to challenge the Order-in-Original and raise all objections, including those related to limitation. ii) The Court did not examine the merits of the limitation issue or the procedural fairness of the Order-in-Original. Petition disposed off. ISSUES PRESENTED and CONSIDEREDThe Court considered two primary issues:1. Whether the Show Cause Notices were issued beyond the prescribed period of limitation, which is three years, and if so, whether this affects the validity of the impugned Order-in-Original.2. Whether the issue of limitation was adequately considered in the impugned Order-in-Original.ISSUE-WISE DETAILED ANALYSISIssue 1: Limitation Period for Issuance of Show Cause NoticesRelevant Legal Framework and Precedents: The Petitioner argued that the Show Cause Notices were issued beyond the three-year limitation period. The Petitioner relied on precedents from the Gujarat High Court, which quashed Show Cause Notices issued beyond the limitation period in cases involving actual exporters.Court's Interpretation and Reasoning: The Court noted that the Petitioner, a Chartered Accountant, was not the actual exporter but was providing services to the exporter. The Court distinguished the present case from the Gujarat High Court cases, as those involved actual exporters directly challenging the delay in issuance of Show Cause Notices.Key Evidence and Findings: The Department alleged that the Petitioner was involved in producing fraudulent documents to claim duty drawbacks, earning a commission of 1% of the invoice value. The impugned Order-in-Original found the Petitioner guilty under Section 114AA of the Customs Act, 1962, for knowingly using false documents.Application of Law to Facts: The Court determined that the factual nature of the allegations against the Petitioner, who was not the actual exporter, warranted a different approach. The Court emphasized that the Petitioner should pursue an appellate remedy where such factual and legal issues could be thoroughly examined.Treatment of Competing Arguments: The Court acknowledged the Petitioner's reliance on Gujarat High Court judgments but highlighted the distinction in the Petitioner's role as a service provider rather than an exporter. The Court suggested that the appellate process was more suitable for addressing these complex issues.Conclusions: The Court concluded that the Petitioner should be relegated to the appellate remedy under Section 128 of the Customs Act, 1962, where the limitation issue and other objections could be adequately addressed.Issue 2: Consideration of Limitation in the Impugned OrderRelevant Legal Framework and Precedents: The Petitioner contended that the limitation issue was not considered in the impugned Order-in-Original. The relevant legal framework involves procedural fairness and the requirement for orders to address all pertinent issues raised by the parties.Court's Interpretation and Reasoning: The Court did not delve into the merits of whether the limitation issue was considered in the Order-in-Original. Instead, it focused on the availability of an appellate remedy where such procedural concerns could be raised and adjudicated.Key Evidence and Findings: The Court did not make specific findings on this issue, as it deferred to the appellate process for a comprehensive examination of all procedural and substantive issues.Application of Law to Facts: The Court applied the principle that appellate bodies are well-suited to address procedural omissions or errors in initial orders. The availability of an appeal under Section 128 of the Customs Act was deemed sufficient to address the Petitioner's concerns.Treatment of Competing Arguments: The Court did not engage in detailed analysis of the competing arguments regarding procedural fairness, as it directed the Petitioner to pursue an appeal where such arguments could be fully explored.Conclusions: The Court concluded that the Petitioner should raise the issue of limitation and any related procedural concerns before the Appellate Authority, which is equipped to adjudicate such matters.SIGNIFICANT HOLDINGSCore Principles Established: The Court established that factual and procedural issues, particularly those involving allegations of fraud and the issuance of Show Cause Notices, are best addressed through the appellate process. The Court emphasized the importance of utilizing statutory remedies before seeking judicial intervention.Final Determinations on Each Issue: The Court determined that the Petitioner should avail of the appellate remedy under Section 128 of the Customs Act, 1962, to challenge the Order-in-Original and raise all objections, including those related to limitation. The Court did not examine the merits of the limitation issue or the procedural fairness of the Order-in-Original.The petition was disposed of with the liberty to the Petitioner to pursue appellate remedies, and all pending applications were accordingly disposed of.