The Customs, Central Excise and Service Tax Appellate Tribunal (CESTAT), Chennai bench has held that the show cause notice issued by the Directorate of Revenue Intelligence (DRI) shall be void ab-initio.
The appellants, M/s. Sree Krishna Enterprises is a proprietary firm and importers of Tungsten Carbide Tips and TC Rock Drill Bits from China. On specific intelligence gathered by the Directorate of Revenue Intelligence (DRI), Hyderabad Regional Unit that M/s. Sree Krishna Enterprises was resorting to gross undervaluation of the goods and thereby evading payment of appropriate duties of customs, simultaneous, searches were conducted by the officers on 15.5.2013, at the office premises of M/s. Sree Krishna Enterprises and Mining and Machinery Services. Certain documents were recovered and statements were recorded. After investigations, Show Cause Notice dated 20.2.2014 was issued by the DRI. After due process of law, the adjudicating authority passed an order rejecting the assessable value and confirmed the demand of duty after reassessment. Also, there was order of confiscation of goods, imposition of redemption fine as well as penalties.
The bench comprising Judicial Member Ms. Sulekha Beevi and Technical Member Mr. Anjani Kumar relied on the decision of the High Court in the case of Quantum Coal Energy P. Ltd. wherein the High Court has applied the decision of the Hon’ble Supreme Court to hold that the Show Cause Notice issued by DRI is invalid and the proceedings initiated cannot sustain.
“The Tribunal in the case of Nitin Jatania vs. Commissioner of Customs (Adjudication), Mumbai reported in 2022-TIOL-61-CESTAT-MUM had occasion to analyse the very same issue as to whether DRI has jurisdiction to issue Show Cause Notice. Applying the decision of the Hon’ble Supreme Court in Canon India Pvt. Ltd. (supra), the Tribunal held that the Show Cause Notice issued by DRI is invalid,” the Tribunal said.
Relying on the above decisions, the Tribunal held that “be that as it may, following the above decisions discussed above, we hold that the Show Cause Notice having been issued by DRI are ab initio void. The impugned orders cannot sustain and requires to be set aside.”
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