The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi Bench ruled that the Officer of Directorate of Revenue Intelligence (DRI) is not the proper officer to issue Show Cause Notice for recovery of Customs duty.
The DRI got specific information that the appellants, M/s. Two-Step Trading Co. imported shoes by mis-declaring them with an intent to evade customs duty. Based upon the said information, the container was examined in presence of Customs Broker M/s. Evershine Customs (C&F) Pvt. Ltd.2 On examination, it was found to be stuffed with cartons of different sizes wrapped with HDPE bags. Inventory of the goods was prepared in the form of Panchnama. It was observed that on most of the shoes, MRP was not affixed and they were bearing brand names as Adidas, Nike, and Calidad, etc. In the Bill of Entry 435 cartons were declared but the actual number of cartons was short by 14 but the actual number of shoes was more than declared. The CB could not provide any details/ explanation for the said discrepancy. The goods were found to have been grossly mis- declared in terms of quantity, quality, description, and value and were accordingly detained by Customs officers at Inland Container Depot, Tughlakabad. The Special Intelligence and Investigation Branch (SIIB) of ICD TKD investigated the matter further, searched the shop of the importer at Karol Bagh, and seized another stock of shoes under a Panchnama.
The appellant submitted that show cause notice issued by the Additional Director, DRI, NOIDA is not valid in terms of the judgment of Hon’ble Supreme Court in the case of Canon India Pvt. Ltd. vs. Commissioner of Customs wherein it was held that ADG of DRI is not the proper officer to issue the show cause notice and that DRI has no authority to issue the same under section 28(4) of Customs Act for recovery of duty as this would amount to reviewing the earlier decision of assessment. It is submitted that findings are liable to be set aside on this score as well.
The coram of Judicial Member Rachna Gupta and Technical Member PV Subba Rao held that Additional Director General of Revenue Intelligence was not the ‘proper officer’ to examine the power conferred under section 28(4) and accordingly the initiation of recovery proceedings in the case of the appellant were held to be without any jurisdiction and were accordingly set aside. It has also been clarified in the decision that ADG of DRI can be considered as a proper officer only it is shown that he is Customs Officer under Customs Act.
“The demand of duty under section 28(4) on the goods which were seized from the shop (and hence already cleared for home consumption) cannot be sustained because only the proper officer, i.e., the officer who did the assessment under section 17 or his successor in the office can issue a demand and not officers of DRI as laid down by Supreme Court in Canon India,” the CESTAT said.
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