TaxTMI 
TaxTMI 
2025 (5) TMI 778
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....g duty, free goods intended for duty free retail shop premises at Adani Kattupalli Port, Chennai. The Special Bonded Warehouse, admittedly is a facility critical to the business of duty-free shop, in the absence of which The assessee could not commence its operations. It is the case of the assessee that its application for the above license did contain all the necessary annexure/documents. 2. Heard Shri Prakash Shah, Ld. Senior Advocate for the Appellant/Assessee and Shri Sanjay Kakkar, Ld. Deputy Commissioner for the Respondent/Revenue. 3. The background to the above dispute as we could gather from the documents on record, is that the appellant was subjected to a Customs adjudication, resulting in an Order-in-Original dated 27.06.2023, passed by the Deputy Commissioner of Customs, Mumbai. In the said order, exemption claimed on certain imported samples goods which were imported for its duty, free retail outlets at Mumbai International Airport under a Bill of Entry was denied and the differential duty with interest was confirmed, which was demanded and the goods were ordered to be confiscated. Consequently, a penalty of Rs.2,50,000/- was imposed on the appellant under Section....
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....by a Commissioner of Customs as an Adjudicating Authority within the meaning of Section 129A (1)(a). Further, Section 2 (1) of the Customs Act defines an "adjudicating authority" as any authority competent to pass any order or decision under this Act with the exclusion of the appellate authorities, namely Commissioner (Appeals), Board, Tribunal. But however, since the grant or denial of a license under Section 58, is a decision taken under the Authority of the Customs Act by the Principal Commissioner, the same would fall within the definition of Section 2(1). There is hence no exclusion for filing appeal is provided in this regulation. Regulation in fact does not provide any statutory appeal mechanism against such a decision and hence the only available to an aggrieved person used to file appeal before the CESTAT. The following judicial pronouncements would come support above appellant's above view; thus, the only recourse for the Appellant is to file appeal before this Tribunal. 7. In support of the aforesaid position, the Appellant has placed reliance on following precedents to contend that Tribunal in various cases have entertained appeals against orders of a Commissioner co....
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....ence" in the Customs Act is provided in Chapter XVI dealing with Offences and Prosecutions. The Appellant submits it has never been prosecuted or convicted for any offence under Chapter XVI; the penalty under Section 112(a) was imposed on the Appellant for claiming wrong exemption. This is not an offence under the Act. The Appellant has placed reliance on the principle laid down by the Hon'ble Supreme Court of India in Northern Plastics Ltd. v. CCE that an incorrect claim for exemption, even if disallowed, does not amount to misdeclaration or wrongdoing by the importer if the goods are truthfully described. 10. The Appellant further submits that the prior penalty of Rs.2,50,000/ imposed in the OIO arose from a bona fide interpretational dispute over exemption eligibility and there was no element of fraud or moral turpitude thereby inviting a penalty for any infraction of law. Therefore, the Appellant contended that Regulation 3(2)(c) cannot be mechanically applied to treat every person penalized under any provision of the Customs Act as ineligible. The term "offence" in the Regulation should be understood to refer to an offence in the sense of a prosecution-worthy act (e.g. ....
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....its appeals to the Tribunal against decisions or orders passed by Commissioners "as an adjudicating authority," which implies a decision rendered through an adjudication process (normally involving a show-cause notice, consideration of evidence, etc., under Section 122/122A of the Customs Act). 14. In the present case, no such adjudication procedure was followed - the application was processed and a rejection was communicated without any prior show cause or hearing. Therefore, according to learned AR, the absence of an adjudicatory process. The Principal Commissioner cannot be said to have acted as an "adjudicating authority, " in rejecting the application and thus the remedy, if any, lies elsewhere but not an appeal to CESTAT. He further contended that the Customs Act does not explicitly provide any appellate mechanism against a decision to grant or refuse a special warehouse license. He tried to contrast this with other situations where the law expressly provides for appeals (such as Section 129A for customs duty demands or penalties, or Section 129D for departmental review, etc.), and suggested that the silence of the Customs Act here indicates that the legislature perhaps in....
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....casioned. However, a different approach was consciously and rightly adopted by the legislature for a situation once the license was granted and the cancellation could only be done by following a due fact-finding inquiry and an adjudicatory process of law, probably because civil consequences of various kinds (effects on investments, loss of livelihood of employees, obsolescence of warehoused goods, defamatory character of the action of cancellation of license, etc.) would emanate from a process of cancellation of a license already granted through elaborate verifications. The refusal for grant of license could not have any such attributes as no prejudice appears to be caused to any Applicant at the stage of onset of any assignment and any license could not be claimed as a matter of right till all documentary requirements were met and the Statutory Authority was convinced of a blemish-less conduct, a total safety of taxes (public money) in the form of a bond, held as collateral by the Principal Commissioner stood guaranteed, free from any risk of escapement by the license-claimant. The learned AR submitted that the Appeal be dismissed as non-maintainable under Section 129A(1) of the C....
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....ut by the statute or case law. This Tribunal in the matter of Samrat Houseware Pvt. Ltd. versus Commissioner of Customs (Sea), Chennai-V reported in 2019 (368) E.L.T. 1089 (Tri. - Chennai), on the issue of an appeal filed against impugned letter/order whereby the decision of the Commissioner refusing to amend shipping bill was communicated to the appellant therein by the Assistant Commissioner, has categorically held that since the decision was in fact taken by the Commissioner, an appeal lie to the Tribunal. It was observed that even a seemingly informal communication, if it "decides the rights of an assessee finally," is to be treated as an appealable order. 21. Similarly, in the matter of CCE versus Maharashtra State Bureau Of Text Books Production & Curriculum Research reported in 2015 (39) S.T.R. 235 (Tri. - Mumbai), the Mumbai Bench of this Tribunal entertained an appeal in a case where a departmental letter had denied the assessee a centralized registration under service tax, implicitly recognizing such communication as an order susceptible to appeal. In this case also it was held that where the order impugned determines the rights of the party or is likely to affect its ....
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....9;s decision is final and determinative, leaving nothing further to be done at his end. It is therefore not a mere procedural step but, an outcome. Hence, the cases relied upon by the department do not help its cause. 24.2 In any case, we find that even the Hon'ble Apex Court has laid down binding precedents on similar issue, in the following decisions 1) Raj Kumar Shivhare vs. Assistant Director, Directorate of Enforcement (2010 4 Supreme Court case 772) 2) Jaswant Sugar Mills Ltd., Meerut vs. Lakshmichand And Others [1963 AIR 677, 1963 SCR SUPL. (1) 242 - 5 Judge Bench] 3) National Securities Depository Ltd. vs Securities and Exchange Board of India [2017 (348) ELT 601 (SC)] In view of the above decisions of the Hon'ble Apex Court, the Decisions/Orders of any other lower Courts will not be of any significance. 25. Thirdly, this Tribunal also needs to be guided by practical and legal necessity. If this CESTAT were to accept the Respondent's view, an odd situation would arise: a person whose license is granted would obviously be subject to this Tribunal's jurisdiction if later that license is cancelled (because Section 58B's cancellat....
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.... "the these, (c) reads: the Principal Commissioner or Commissioner shall not issue a license if the applicant has been penalized for an offence under the Customs Act, 1962, the Central Excise Act, 1944 or Chapter V of the Finance Act, 1994". 29. This clause is central to the dispute - the Principal Commissioner invoked it, taking the view that the Appellant, having been penalized under Section 112(a) of the Customs Act, fell foul of this condition. On a plain reading, Regulation 3(2)(c) indeed appears to bar grant of license to anyone who has been penalized for an offence under the Act. However, the crux of the matter lies in the interpretation of the phrase "penalized for an offence under the Customs Act." 30. The above phrase cannot be read in isolation or given an unduly literal meaning divorced from the context of the scheme of the parent Act, i.e. Customs Act. A holistic reading of the Customs Act reveals a clear distinction between contraventions that attract civil penalties and offences that attract criminal prosecution. This distinction has both textual and jurisprudential support. 31. The Act itself segregates the topics: Chapter XIV (Sections 111-127) is titled "....
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....e cancellation of the license was set aside. The salient point from Kundan Care (supra) is that the mere fact of a monetary penalty under Section 112 does not automatically trigger the disqualification in Regulation 3(2)(c), because that regulation's scope is confined to penalties for "'offences", which was understood to mean something other than every contravention. We find ourselves in full agreement with the rationale and are in fact bound to follow this decision. It aligns with the scheme of the Customs Act and avoids an overbroad result that Would treat minor/transgressions and serious crimes identically. 34. Applying that reasoning here, the Appellant's case is if anything more compelling than Kundan Care (supra). There is no allegation that the Appellant misled the authorities or suppressed information in its application. It simply became ineligible in the eyes of the Principal Commissioner because of Regulation 3(2)(c). Now, if we interpret Regulation 3(2)(c) in the restrictive sense as discussed above, the Appellant was not, in truth, penalized for an "offence" under the Customs Act: the penalty under Section 112(a) was for a wrong claim of exemption (a civi....