The Delhi High Court ruled that Customs AAR is valid despite on-going investigation by Directorate of Revenue Intelligence (DRI).
The appellant, DRI, has filed the present appeal under Section 28KA of the Customs Act, 1962 impugning an order passed by the Customs Authority for Advance Ruling (CAAR), whereby the representations made by DRI for treating the CAAR’s order as void ab initio, was rejected. DRI had made representations contending that the said order had been obtained by the respondent by fraud and misrepresentation of facts” and therefore, was entitled to be declared as void ab initio in terms of Section 28K(1) of the Customs Act.
The DRI claims that it had not disclosed that the investigation in respect of the import of goods made by the respondent was being conducted by DRI. It claims that if such disclosure was made by the respondent in its application, the application would be rejected in terms of the proviso to Section 28-I of the Customs Act.
The respondent had imported actuator and aerosol valves meant for perfumes and toilet sprays. According to the respondent, the said goods were classified by the respondent under various sub-heads of Chapter 84 of HSN Code. According to DRI, the goods were required to be classified under CTH 9616 and were subject to higher rate of custom duty than the goods classified under CTH 84248990.
The CAAR issued a ruling dated 05.10.2021 in favour of the respondent, accepting its classification of the goods in question.
The proviso to Sub-Section (2) of 28-I of the Customs Act proscribes the CAAR from allowing any application filed for advance ruling, where question raised in the application is pending in the applicant’s case before “any officer of customs, the Appellate Tribunal or any Court” or if the said question has already been decided by the Appellate Tribunal or any Court.
The Bench comprising noted that “any preliminary exercise done by an officer of customs, to consider whether any question for consideration arises, would not preclude the CAAR from giving its advance ruling on that question.”
“The possibility that a question would arise for consideration of a customs officer, appellate tribunal or court, is not a ground contemplated under Clause (a) of the proviso to Section 28-I(2) of the Customs Act. Clearly, a distinction must be made between that question pending consideration and a possibility of a question arising consideration” the Court opined.
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