Show Cause Notice issued by Officers of DGCEI, who are not Proper Officers u/s28(1) of Customs Act: CESTAT holds SCN as bad in law [Read Order]

Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi held Show Cause Notice as bad in law on the ground that the show cause notice issued by the officers of Directorate General of Central Excise Intelligence (DGCEI), who are not proper officers under Section 28(1) of the Customs Act.

M/s New Tech Pipe Limited (NTPL in short) is a SEZ unit, Pithampur engaged in manufacture of M.S. Pipes. On the basis of intelligence that the said NTPL was engaged in evasion of duty by resorting to clandestineremoval of finished goods, simultaneous searches were carried out by the Officer of DGCEI. DhanaramChadokar, Accountant of M/s NTPL in his statement admitted that the invoices weresigned by him and another Accountantand that payments for these were received by cheques wereaccounted in the books of M/s NTPL. He further stated that the goods purchased by M/s Chamunda and M/s Siddhi were sold to different parties including M/s Fakhri Steel (Appellant) and the payment of the said material was directly received by Shri Dinesh Sharma in cash.

The Director, Marketing Executives of of M/s NTPL in their statements deposed that the major portion of the pipes removed without payment of Customs duty by New Tech Pipe Ltd. were sold and delivered to M/s Fakhri Steel (Appellant) and that Fakhri Steel & Iron was the larger buyer.It further appeared that M/s Fakhri Steel & Iron were receiving pipes from NTPL on which no custom duty was discharged. In the course of search in the premises of M/s Fakhri Steel & Iron 1,46,723 kgsof pipes valued at Rs. 50,62,013/- were found stored in their premises.

Revenue issued show cause notice dated 07.08.2013 to M/s NTPL, its directors and others, including appellant, alleging inter alia that M/s NTPL, a SEZ unit was engaged in clandestine clearance of part of their production and accordingly duty was demanded from them and penalty was proposed on others including this appellant for alleged clandestine receiving and storage of goods, on which appropriate custom duty was not paid, allegedly removed by M/s NTPL clandestinely.

Anil Chaudhury, Judicial Member held that” In the facts and circumstances, I also hold that the show cause notice is bad as the same has been issued by the Officers of DGCEI, who are not the proper officer as required under Section 28(1)/28(4) of the Customs Act.”

To Read the full text of the Order CLICK HERE

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