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Sanco Trans Ltd V/S CC & CCE, Salem and Others.


Company & Directors' Information:- SANCO TRANS LIMITED [Active] CIN = L60220TN1979PLC007970

Company & Directors' Information:- M-TRANS INDIA PRIVATE LIMITED [Active] CIN = U60231MH2006PTC163211

Company & Directors' Information:- U-TRANS INDIA PRIVATE LIMITED [Active] CIN = U35111MH2006PTC161283

Company & Directors' Information:- SANCO PVT LTD [Under Liquidation] CIN = U51900WB1960PTC024866

    C/93/2011 (Arising out of Order-in-Original No. 01/2010 (Commissioner) dt. 30.11.2010 passed by Commissioner of Customs & Central Excise, Salem), C/94/2011 (Arising out of Order-in-Original No. 02/2010 (Commissioner) dt. 30.11.2010 passed by Commissioner of Customs & Central Excise, Salem), C/40659/2014 (Arising out of Order-in-Original No. 02/2013-Commissioner dt. 31.12.2013 passed by Commissioner of Customs, Central Excise, Service Tax, Coimbatore), C/40690/2014 (Arising out of Order-in-Original No. 03/2013-Commissioner dt. 31.12.2013 passed by Commissioner of Customs, Central Excise, Service Tax, Coimbatore), C/41050/2014 (Arising out of Order-in-Original No. 01/2014 (CUS) Commissioner dt. 14.02.2014 passed by Commissioner of Customs & Central Excise, Salem), C/41051/2014 (Arising out of Order-in-Original No. 02/2014 (CUS) Commissioner dt. 14.02.2014 passed by Commissioner of Customs & Central Excise, Salem) and Final Order Nos. 40143-40148/2018

    Decided On, 19 January 2018

    At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Chennai

    By, THE HONORABLE JUSTICE: SULEKHA BEEVI C.S MEMBER AND THE HONORABLE JUSTICE: MADHU MOHAN DAMODHAR
    By, MEMBER

    For Petitioner: T. Sundaranathan, Advocate And For Respondents: K. Veerabhadra Reddy, JC (AR)



Judgment Text


1. The present appeals have been filed against the order passed by Commissioner of Customs & Central Excise, Salem and Coimbatore.

2. During the course of arguments, the importers counsels have raised the preliminary plea that the show-cause notice in these cases was issued by the DRI. The Hon'ble High Court of Delhi in the case of Mangli Impex Vs. UOI dated 03.05.2016 has observed that the officers of DRI is not competent as proper officers to initiate demand action under Customs Act, 1962. Hence, the request is being made to set aside the present proceedings where the notice was issued by the DRI.

3. On the other hand, Authorised Representative for the Department has justified the order passed by Commissioner of Customs and made a request to decide the matter on merit.

4. We have heard both the parties and gone through the material available on record.

5. From the record, it appears that the preliminary issue which emerges in the present appeal is regarding the jurisdiction of the DRI Officers to issue notice under the Customs Act. The assessee-appellant had taken a stand that in terms of the Hon'ble Apex Court decision in the case of Commissioner of Customs vs. Sayed Ali, : 2011 (265) 17 (SC)], the DRI officers were not proper officers in terms of section 2(34) of the Customs Act, 1962.

6. It is also seen that after the declaration of law by the Hon'ble Supreme Court (Supra), the provisions of section 28 of the Customs Act, 1962 were amended with effect from 08.04.2011 vide Finance Act, 2011.

7. It is also noticed that in order to overcome the situation created by the judgment of Hon'ble Supreme Court in the case of Sayed Ali (supra), Notification No. 44/2011-Cus (NT), dated July 6, 2011 was issued by the CBEC, assigning the functions of the proper officer to various officers (including Additional Director General, DRI) mentioned in the notification, for the purposes of Section 28 of the Act. Thus, w.e.f. July 6, 2011, the Additional Director General, DRI was prospectively appointed as proper officer for the purpose of Section 28 of the Customs Act. Hence, from 06.07.2011 ADG-DRI has been empowered to issue demand notice under Section 28.

8. Subsequently, sub-section 11 was inserted under section 28 of the Customs (Amendment and Validation) Act, 2011 dated 16.9.2011, assigning the functions of proper officers to various DRI officers with retrospective effect.

9. Later on, i.e. for the period subsequent to the amendment, the matter i.e. the DRI officers having the proper jurisdiction to issue the SCN or not had came up before the Hon'ble Delhi High Court in the case of Mangali Impex vs. Union of India : 2016 335 ELT 605 Del], and the High Court inter alia, held that even the new inserted section 28(11) does not empower either the officers of DRI or the DGCEI to issue the SCN or adjudicate for the period prior to 8.4.11. Thus, it is seen that the said order of the Hon'ble Delhi High Court is in favour of the assessee and against the Revenue.

10. In the appeals before us drawback amounts allegedly availed fraudulently have been sought to be recovered under Rules 16 & 16A of the Customs and Central Excise Duty Drawback Rules, 1995 read with Section 75(1)/147 of the Customs Act, 1962 along with interest in terms of Section 75A(2) of the Customs Act, 1962. We find that identical issue has also been considered in Mangali Impex judgment in para-97 thereof as follows:

"97. The challenge in Writ Petition (C) No. 211/2014 by M/s. K.S. Traders is to a SCN dated 30th January 2004 issued by the ADG, DRI to the Petitioner alleging over invoicing and recovery of draw back under Rules 16 and 16-A of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 read with Sections 75(1), 76(1)(b) and 75-A(2) of the Act."
11. However, it is further noticed that the said issue was also the subject matter of Hon'ble Mumbai High Court in the case of Sunil Gupta vs. Union of India : 2015 (315) ELT 167 (Bom) as also of the Hon'ble High Court of Telangana and Andhra Pradesh in the case of Vuppalamritha Magnetic Components Ltd. vs. DRI (Zonal Unit), Chennai : 2017 (345) ELT 161 AP], taking a view contrary to the one taken by the Hon'ble Delhi High Court.

12. Being conflicting decisions of various High Courts (Supra), finally the matter reached to Hon'ble Supreme Court who on 07.10.2016 granted the stay of operation of the judgment passed by the High Court of Delhi. Thus the issue is sub-judice before the Hon'ble Supreme Court [2016-TIOL-173-SC-CUS : 2016 (339) ELT A 49 (SC)].

13. It may be mentioned that recently, the Hon'ble High Court of Delhi in the case of BSNL Vs. UOI vide writ petition No. C/4438/2017 and CM No. 19387/2017 has dealt with the identical issue where the notice was also issued by DRI. The Hon'ble High Court of Delhi has considered the judgment in the case of Mangli Impex Vs. UOI which is stayed by the Hon'ble Supreme Court reported as 2016 (339) ELT A 49 (SC). Finally the Hon'ble High Court has granted liberty to the petitioner by observing that petitioner is permitted to review the challenge depending on the outcome of the appeals filed by the UOI in the Supreme Court against the judgment of the Court in the case of Mangli Impex Ltd.

14. In the circumstances, we find that the show cause notices involved in these appeals are also in jeopardy in view of the fact of Mangali Impex judgment as also the fact that the same has been stayed by the Hon'ble Supreme Co

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urt. 15. By following the ratio laid down by the Hon'ble High Court of Delhi in the case of BSNL (Supra) as well as by considering totality of facts and circumstances, we set aside the impugned order and remand the matter to the original adjudicating authority to first decide the issue of jurisdiction after the availability of Hon'ble Supreme Court decision in the case of Mangli Impex and then on merits of the case but by providing an opportunity to the assessee of being heard. Till the final decision, the status quo will be maintained. 16. In the result, the appeals are allowed by way of remand.
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