2024 (3) TMI 511
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....at prior to insertion of second proviso to Section 124 of the Customs Act, 1962 w.e.f 29.03.2018 the supplementary Show Cause Notice is not legally sustainable? (ii) Whether the supplementary Show Cause Notice issued on 18.05.2017 to the respondent in connection with Show Cause Notice on 26.08.2016 have any effect to the second proviso to Section 124 of the Customs Act, 1962 which is effective from 29.03.2018? (iii) Whether the second proviso to Section 124 of the Customs Act, 1962 w.e.f 29.03.2018 is to be considered as retrospective or prospective? (iv) Whether the supplementary Show Cause Notice dated 18.05.2017 can be treated as separate Show Cause Notice in terms of Section 124 of the Customs Act, 1962 as the same has been issued prior to insertion of second proviso to Section 124 of the Customs Act w.e.f 29.03.2018? (v) Whether the Learned Tribunal has failed to appreciate the scope and context of the Customs (Supplementary Notice) Regulation, 2019 which was notified in exercise of the powers conferred by clause (f) of Sub-Section (2) of Section 157 read with second proviso to Section 124 of the Customs Act, 1962? (vi) Whether the said Regulation of the Customs....
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....ted that documents prepared in the name of M/s. Srijita Export, M/s. Akash Ganga Enterprise, M/s. Gopal Associates, and M/s. Sayantika Enterprise which were found stored in the DVD were given to him by Shri Vikas Kumar, Deputy Commissioner who used to give him documents and DVD and he used to take print out of the same and give it back to the Deputy Commissioner and the respondent and at times gave the printed copies to the respondent through one Divakar, an employee of M/s. Spak Enterprise Private Limited. Jyoti Biswas further stated that he met the respondent at the residence of the Deputy Commissioner, Vikas Kumar and he worked as per the direction of the respondent and Vikas Kumar. He identified the photographs of the respondent and that of Vikas Kumar. It was further stated that the voice clips are that of the respondent and the files starting with KLS contained the voice clips of Kislay and the file with mark "NEZ" are the voice clips of the Deputy Commissioner, Vikas Kumar. Further statement was recorded from Sudhir Jha, who stated that he knew the respondent since April 2014 when he was posted at DRI office at Kolkata and met him many times in the ground floor of the office....
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....DRI had benefited from the sale proceeds of the illegal activities of the syndicate. 6. Further it is stated that the allegations made by Jyoti Biswas about the involvement of the department officers appeared to be corroborated by the voice recording found in the seized DVD and the call details analysis of the mobile number used by them. Further it is stated that the voice of the three officers in the recording matched with the voice of the officers when they appeared before the DRI under summons when statement was recorded from them. On completion of the investigation into role of the officers of the department in the case of smuggling of red sanders, a notice dated 18.05.2017 was issued to Jyoti Biswas and the three departmental officers including the respondent herein and others proposing to impose penalty under Section 115(i) and Section 114AA of the Act. The said show cause notice was titled as "Supplementary Show Cause Notice" and addendum to the said notice was issued on 22.09.2017 for incorporating certain developments that took place after issuance of the notice dated 18.05.2017 i.e. after receipt of oversees enquiry report from Singapore in respect of seized red sanders ....
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....019. The respondent contended that a harmonious reading of Section 124 prior to and subsequent to the amendment would clarify that till the amendment was carried out there was no specific provision to issue supplementary show cause notice and that there is nothing to indicate that the second proviso has been brought in with retrospective date and after addition of second proviso will clarify that only after 29.03.2018, department was empowered to issue supplementary show cause notice in respect of the show cause notice already issued and the department has to follow the guidelines given in the Regulations which was notified on 18.06.2019. This conclusion of the tribunal is being faulted by the appellant in this appeal. 9. It is further submitted that even prior to the insertion of the second proviso to Section 124 whenever necessary issuance of supplementary show cause notice and addendum has always been in practice. Therefore, the issuance of a supplementary show cause notice could not have been held to be without jurisdiction or illegal. In support of his contention that such practice of issuance of supplementary show cause notice was in vogue and also permitted by the courts, t....
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.... to granting a new power. Further it is contended that the three officers of the department including the respondent were the noticees for the first time in the notice dated 18.05.2017 and therefore the said notice cannot be considered supplementary in respect of the new set of three persons including the respondent. Therefore, the observations of the tribunal regarding the applicability of the 2019 Regulations are not applicable to the charges levelled against a new set of individuals including the respondent. Therefore, it is contended that mere use of the word "supplementary show cause notice" which was to indicate that it is in connection with the earlier notice dated 28.08.2016 cannot render to notice dated 18.05.2017 or the addendum dated 22.09.2017 as illegal. 11. The learned counsel appearing for the respondent referred to Section 124 of the Act and submitted that in clause (a) of Section 124 power has been given to issue notice in writing with the prior approval of the officer of Customs not below the rank of Assistant Commissioner of Customs informing the person the ground on which it should confiscate the goods for the imposition of penalty and such power vests with any....
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....e show cause notice dated 26.08.2016 which was issued under Section 124 of the Act. The notice dated 18.05.2017 is titled as supplementary notice to show cause notice dated 26.08.2016 and the facts of the show cause notice dated 26.08.2016 was annexed to the said notice. 14. Paragraph 1.1 of the notice dated 18.05.2017 states that acting on specific intelligence indicating that some persons are using IEC of other exporters for smuggling of prohibited goods through Kolkata Port, officers of the DRI, Kolkata Zonal Unit, collected relevant information and further investigation revealed that fraudulent exports in the guise of sanitary wear and other articles of the iron and steel were done. 15. Paragraph 1.4 of the notice dated 18.05.2017 states that the notice is supplementary to the show cause notice arising out of further investigation and findings. In para 2, it has been stated that after issuance of the show cause notice dated 26.08.2017 few more facts emerged and the same were investigated and hence the supplementary show cause notice (18.05.2017) is issued and need to be read along with the notice dated 26.08.2016 and to be adjudicated by the adjudicating authority taking into....
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.... appeared for personal hearing cross examination etc. which goes to show that he was aware that there was no infirmity in the issuance of the notice dated 18.05.2017. Further it was held that the respondent has not been able to point out any explicit provision in the Customs Act which had prohibited the issue of supplementary notice for the purpose of imposition of penalty. Further it was held that the Finance Act, 2018 did not bring a new Sub Section in Section 124 but only a proviso was added to the existing provisions and the amendment has only enabled the enactment of Regulation under the said Section which put the circumstances and the manner for issue of supplementary show cause notice in the framework. That the insertion of the second proviso is clear manifestation of the recognition that the power of issuing the supplementary show cause notice was already there in the provision and if it is not so, the legislature would have inserted a separate Sub Section to Section 124. With these reasoning, the contention raised by the respondent was rejected and it was held that there was no reason to set aside the show cause notice dated 18.05.2017. Section 124 of the Customs Act 1962 ....
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....) 1 SCC 591 the Hon'ble Supreme Court held that a proviso may serve four different purposes (i) qualify or excepting certain provisions from the main enactment; (ii) it may entirely change the very concept of the intendment of the enactment by insisting on certain mandatory conditions to be fulfilled in order to make the enactment workable; (iii) it may be so embedded in the Act itself as to become the integral of the enactment and thus acquire the tenor and colour of the substantive enactment itself and; (iv) it may be used merely to Act as an optional addenda to the enactment with the sole object of explaining the real intendment of the statutory provision. 18. In State of Rajasthan Versus Leela Jain AIR 1965 SC 1296 it was held that as a general construction of a proviso is concerned, it has been broadly stated that the function of a proviso is to limit the main part of the section and to carve out something which but for the proviso would have been within the operative part. In Shah Bhojraj Oil Mills and Ginning Factory Versus Subbash Chandra Yograj Sinha AIR 1961 Sc 1596 it was held that as a general rule, a proviso is added to an enactment to qualify or creat....
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....st instance. Reverting back to the facts of the case, the notice dated 18.05.2017 states that certain facts emerged after the issuance of the notice dated 26.08.2016 to which the respondent was not a noticee. It has been further stated that after issuance of the show cause notice dated 26.08.2016 few more facts emerged and the same were investigated and hence the notice dated 18.05.2017 was issued and the same has to be read along with the notice dated 26.08.2016 and will be adjudicated. Thus, the purport and purpose for using the word "supplementary" in the notice dated 18.05.2017 is to connote that it has to be read along and adjudicated along with the notice dated 26.08.2016 and nothing more. Admittedly, in the notice dated 18.05.2017 the first three noticees are the officers of the department and the respondent herein is the second noticee, the first noticee, being the Deputy Commissioner and the third noticee being the Inspector of Customs along with these three noticees who are the officers of the department one more person who has been included as a noticee who was not a noticee in the notice dated 26.08.2016 is Jyoti Biswas. The other noticees namely 5 to 10 are the noticee....