The CESTAT, Allahabad bench, while quashing the customs proceedings, held that the “Proper Officer” who assessed the Bill of Entry has the jurisdiction to issue show cause notice under section 28 of the Customs Act, 1961.
The appellants, Jhoola Refineries Limited, is involved in import and has challenged the order confiscating the imported crude palmolein oil under Section 111(o), imposing a redemption fine under section 125 of the Customs Act, demanding duty under section 28 along with interest under section 28AB and imposing penalties.
The appellants contended that the Bills of Entry were assessed by the Customs officers giving the benefit of the exemption notification as claimed. Later, officers of Directorate of Revenue Intelligence 4 initiated investigations and came to the conclusion that Jhoola was not entitled to the benefit of the exemption.
Mr. P V Subba Rao, Member (Technical) and Ms. Rachna Gupta, Member (Judicial) observed that if the SCN itself was issued by an officer competent to do so. The SCN gets vitiated and so will any order deciding the proposals in such an SCN.
“Hon‟ble Supreme Court held that DRI officers were held to be not proper officers for issue of SCN demanding duty under Section 28 in the Canon India. Since the SCN itself was issued without authority of law, the entire proceedings get vitiated. The ratio of Canon India was followed in several cases and demands were set aside by the Supreme Court, various High Courts and this Tribunal only on the ground that the SCN was issued under Section 28 by the officers of DRI,” the Tribunal said.
Quashing the impugned order, the Tribunal held that “Undisputedly, the bills of entry in this case were not assessed by the officers of DRI but by the officers of the Custom house. Only that officer who has assessed the Bills of Entry in the first place or his successor in office was „the proper officer‟ who, if he was subjectively satisfied that some duty had escaped assessment, could have issued the SCN. As the SCN has been issued by officer of DRI who is not competent to issue it, the impugned order deciding such an SCN cannot be sustained and needs to be set aside and we do so.”
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