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1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 14TH DAY OF JULY 2021
BEFORE
THE HON'BLE MR.JUSTICE S. SUNIL DUTT YADAV
WRIT PETITION No.10773/2018 (T-CUS) C/W WRIT PETITION No.4628/2018 (T-CUS)
IN W.P. No.10773/2018
Between:
Shri Mohan C. Suvarna Director (Finance and Admin) M/s. Givaudan India Pvt. Ltd. (Formerly M/s. Vinarom Pvt. Ltd.) Plot No.26, 2nd Cross Jigani Industrial Area Anekal Taluk, Jigani Bangalore Rural - 562 106. (Aged about 59 years)
… Petitioner
(By Sri S.S. Naganand, Senior Advocate a/w Sriyuths B. Venugopal & Hariradhakrishnan, Advocates)
And:
The Principal Commissioner of Customs,
Air Commissionerate,
Airport & Air Cargo Complex,
AI SATS Cargo Terminal,
Kempegowda International Airport,
Devanahalli,
Bangalore - 560 300.
Additional Director General
Directorate of Revenue Intelligence,
Rajarajeshwari Krupa, No.503,
3rd A Main Road,
OMBR Layout,
Banaswadi,
Bangalore - 560 043.
... Respondents
(By Sri M.B. Nargund, Additional Solicitor General for R2; Sri Amit Deshpande, Advocate for R1)
This Writ Petition is filed under Articles 226 & 227 of the Constitution of India, praying to call for the records pertaining to the impugned order-in-original dated 27.02.2017 in Annexure-G passed by the respondent and to quash the same and direct the respondent to keep the adjudication proceedings arising out show cause notice dated 7.1.2008 vide Annexure-B in call book in terms of Master Circular dated 10.02.2017 in Annexure-K3 of the Central Board of Excise and Customs and etc.
IN W.P. No.4628/2018
Between:
M/s. Givaudan India Pvt. Ltd. (Formerly M/s. Vinarom Pvt. Ltd.) Plot No.26, 2nd Cross Jigani Industrial Area Anekal Taluk, Jigani Bangalore Rural - 562 106 Represented by its Director Sri Mohan C. Suvarna (Aged about 59 years)
… Petitioner
(By Sri S.S. Naganand, Senior Advocate a/w Sriyuths B. Venugopal & Hariradhakrishnan, Advocates)
And:
The Principal Commissioner of Customs,
Air Commissionerate,
Airport & Air Cargo Complex,
AI SATS Cargo Terminal,
Kempegowda International Airport,
Devanahalli,
Bangalore - 560 300.
Additional Director General
Directorate of Revenue Intelligence,
Rajarajeshwari Krupa, No.503,
3rd A Main Road,
OMBR Layout,
Banaswadi,
Bangalore - 560 043.
... Respondents
(By Sri M.B. Nargund, Additional Solicitor General for R2; Sri Amit Deshpande, Advocate for R1)
*****
This Writ Petition is filed under Articles 226 & 227 of the Constitution of India, praying to call for the records pertaining to the impugned order in original dated 27.02.2017 in Annexure-G passed by the respondent and to quash the same and direct the respondent to keep the adjudication proceedings arising out show cause notice dated 7.1.2008 vide Annexure-B in call book in terms of Master Circular dated 10.03.2017 vide Annexure-H3 of the Central Board of Excise and Customs and etc.
These Writ Petitions coming on for preliminary hearing in 'B' Group this day, the Court made the following:
4 ORDER
Writ Petition No.10773/2018 and Writ Petition No.4628/2018 are taken up together and disposed off by a common order in light of the prayer sought for in both the petitions being identical as the Order-in-original Sl.No.BLR- CUSTM-AIR-003/16-17 dated 27.02.2017 at Annexure-G passed by the first respondent has been called in question.
Further in both the petitions, a writ of mandamus is also sought to direct the respondent to keep the adjudication proceedings arising out of the show-cause notice dated 07.01.2008 at Annexure-B in call book in terms of the Master Circular bearing No.1053/02/2017-CX dated 10.03.2017 passed by the Central Board of Excise and Customs. The petitioner in W.P.No.4628/2018 is the Company, while the petitioner in W.P.No.10773/2018 is the Director of the Company.
The relevant facts are that the petitioner Company (in W.P.4628/2018) is stated to be engaged in the business of trading and manufacture of flavours and
5 fragrances and is stated to be 100% subsidiary of M/s.Givaudan India Private Limited, Bengaluru, which in turn is a 100% subsidiary of Givaudan SA, Switzerland.
It is submitted that the petitioner Company in the course of its business had made certain imports which were subjected to scrutiny by the Special Valuation Branch, Chennai and an Order-in-Original came to be passed on 05.10.2004 at the first instance.
The Directorate of Revenue Intelligence ('D.R.I.' for brevity), Bengaluru had issued a show cause notice dated 07.01.2008 to show-cause as to why the Order-in- Original dated 05.10.2004 accepting the declared value of aromatic chemicals (FIBU Items) should not be made inapplicable or treated as invalid and as to why the duty for an amount of Rs.1,57,86,220/- should not be demanded and recovered.
It comes out from the facts that subsequently the Adjudicating Authority has rejected the transaction
6 value and re-determined the assessable value as per the order dated 26.03.2009 as against which order, an appeal came to be filed before the CESTAT, Bangalore which by its order dated 20.01.2016 allowed the appeal and set aside the Order-in-Original on 26.03.2009 and remanded the case for fresh consideration.
Upon fresh consideration, the impugned Order-in-Original Sl.No.BLR-CUSTM-AIR-003/16-17, an order came to be passed on 27.02.2017 whereby the Order-in-Original bearing No.2959/2004 dated 05.10.2004 was declared to be invalid and the respondent rejected the declared assessable value and re-determined the same at Rs.12,11,71,513/- and the demand of differential duty of Rs.1,57,86,220/- was confirmed, while also levying the penalty and interest under Section 28AB of the Customs Act. This Order-in-Original has been challenged in Writ Petition No.4628/2018 by M/s.Givaudan India Pvt. Ltd., while in Writ Petition No.10773/2018 by Mr.Mohan C.
7 Suvarna, Director (Finance and Admin) of M/s.Givaudan India Pvt. Ltd.
It is to be noted that initially a writ petition came to be filed and as on the date of filing of the petition, the Tribunal was not functioning.
The learned Senior Counsel appearing on behalf of the petitioners has brought to the notice of the court that during the pendency of the said writ petition, the Apex Court in the case of M/s. Canon India Private Limited vs. Commissioner of Customs reported in 2021 SCC Online SC 200 (in Civil Appeal No.1827/2018 and connected matters) has laid down the law as regards to the aspect of who is 'the proper officer' for the purpose of Section 28 of 'The Customs Act, 1962' and wherein the proceedings initiated by the Additional Director General of DRI who had issued the show-cause notice was declared invalid as he was not a 'proper officer' as defined under the Act and that the said judgment would enure to the benefit of the petitioners also insofar as orders-in-original that were
8 passed which were the subject matter of litigation has commenced with show-cause notice dated 07.01.2008 which was issued by the Additional Director General of Directorate of Revenue Intelligence, Bengaluru ("DRI" for short) who has been held as not being 'the proper officer'. It is contended that in light of the said judgment in M/s. Canon India Private Limited (supra), the impugned Order-in-Original dated 27.02.2017 which was culmination of the proceedings starting with the show-cause notice issued by an incompetent authority is liable to be set aside.
Sri. M.B.Nargund, the learned Additional Solicitor General appearing for the second respondent has argued extensively and has contended that the present proceedings by the petitioners is barred by the principle of res judicata, that the petition by virtue of its conduct ought not to be entertained in the present proceedings, that there is a substantive remedy by way of an appeal against the order impugned before the Tribunal and accordingly, the
9 petitioners are to be relegated to such remedy before the Tribunal and that the judgment in M/s.Canon India Private Limited (supra), must be read in proper perspective as Section 28 (11) of the Customs Act, 1962 has not been adverted to and that further the court needs to take note of the fact that the judgment of the Delhi High Court in the case of Mangali Impex Ltd. & Others vs. Union of India & Others reported in 2016 (335) E.L.T. 605 (Del.) has been stayed by the Apex Court.
The learned Additional Solicitor General had contended that the petitioners herein had suffered an order before the Apex Court in the judgment in the case of Givaudan India Pvt. Ltd. vs. Commissioner of Customs, Bangalore dated 11.12.2009 in Appeal No.C/652-655 & 533/2008 reported in 2010 (261) E.L.T. 975 (Tri.-Bang) and this aspect of the matter has not been brought to the notice of this court. It is contended that the petitioner-company has made false declaration regarding the alcohol content which was revealed by the
10 investigative report of the Department leading to initiation of the proceedings against the petitioner-company and in light of such conduct, the discretionary remedy as invoked in the writ proceedings ought not to be permitted to be availed of. It was further contended that the present proceedings would have the effect of re-agitating the issue which is settled by the previous round which had culminated before the Apex Court. It was also contended that petitioners need to be relegated to the substantive remedy of appeal against the impugned order and that the writ petition was entertained in light of absence of Tribunal at the relevant date, which was the Forum to challenge the validity of the impugned order and the Tribunal having been subsequently constituted, the petitioners ought to be relegated to avail of such remedy. Attention is also drawn to the judgment of the Madras High Court in the case of M/s. Sri Sathya Jewellery vs. Principal Commissioner of Customs passed in W.P.No.3144/2016 and connected matters dated 15.04.2021 wherein, while noticing the identical contention raised regarding the definition of
11 'the proper officer' in the context of the judgment in M/s.Canon India Private Limited (supra), the court was of the view that as against the orders-in-original passed by the Authorities as there was a remedy by way of an appeal under Section 128 and 129 of the Customs Act, the petitioners having approached the court directly without exhausting such remedy ought to be relegated to avail of the substantive remedy of filing an appeal.
It was further contended that the case of M/s.Canon India Private Limited (supra) cannot be made applicable without examining the relevant facts and it was submitted that the court needs to keep in mind that Section 28(11) remains undisturbed and accordingly, the petitioners are not entitled for the relief sought for. It was further pointed out that the question of jurisdiction for issuance of show-cause notice and that the officer of the Directorate of Revenue Intelligence is not 'the proper officer', has not been taken note of at the first instance.
It was submitted on behalf of the petitioners while adverting to the contention of res judicata as putforth by the second respondent that the principle of resjudicata may not be applicable in taxation proceedings as the proceedings for every assessment year is a proceeding which could be construed to be a separate unit of adjudication and any order passed in the previous assessment years would not debar fresh consideration in a subsequent assessment year. Reliance is placed on the Constitution Bench judgment of the Apex Court in the case of Instalment Supply (Private) Ltd. vs. Union of India and Others reported in AIR 1962 SC 53.
Insofar as the contention of res judicata as raised by the Additional Solicitor General by placing reliance on the earlier round of litigation referred to supra, it is pointed out by the learned Senior counsel appearing on behalf of the petitioners that insofar as matters relating to taxation and assessment proceedings, the question of res judicata as a principle would not apply insofar as subsequent assessment
13 years are concerned and even otherwise, the issue that was the subject matter of consideration in Givaudan India Pvt. Ltd. vs. Commissioner of Customs, Bangalore reported in 2010 (261) E.L.T. 975 (Tri.-Bang) was a matter relating to classification while the present issue on hand relates to valuation and accordingly, the question of resjudicata would not arise. Even otherwise, it is pointed out that in light of pendency of litigation over a long period of time, the judgment of the Apex Court in the case of M/s.Canon India Private Limited (supra), having been rendered during the pendency of the proceedings ought to be taken note of as declaration of law which the petitioner Company is entitled to take benefit of.
The learned Senior Counsel appearing for the petitioners by way of reply to the points urged by the learned Additional Solicitor General appearing on behalf of the second respondent points out that the judgment in the case of M/s.Canon India Private Limited (supra), applies on all fours and that it would be impermissible for
14 this court to attempt to unsettle the law laid down in the said judgment and further submits that any effort to re- interpret the law laid down in the case of M/s.Canon India Private Limited (supra), is impermissible and refers to the judgment of the Apex Court in the case of South Central Railway Employees Co-operative Credit Society Employees Union vs. B. Yashodabai reported in (2015) 1 SCC (LS) 582 and has drawn attention to the observation of the Apex Court that it is not open for the High Court to go beyond the judgment of the Apex Court and hold that it is per-incurium. Attention is also drawn to the judgment of the Apex Court in the case of Suganthi Suresh Kumar vs. Jagdeeshan reported in AIR 2002 SC 681 to contend that it is a matter of discipline that in light of Article 141, the law declared by the Supreme Court is to be followed and the correctness of the said judgment cannot be gone into even if the point urged has not been considered by the Supreme Court.
It is also submitted that the proceedings in the present case relates to the period 2003-07 and that the law
15 that would be applicable would be that of the Apex Court in the case of Commissioner of Customs vs. Sayed Ali reported in 2011 (265) E.L.T. 17 (SC) and the subsequent amendment made to Section 28 including Section 28 (11) would only be prospective and this is made clear by virtue of Explanation 2 to Section 28 which clarifies that with respect to non-levy, short-levy or erroneous refund before coming into force of the Finance Bill 2011, the same would be continued to be governed by the provisions of Section 28 as it stood before the Finance Bill and if that were to be so, the contentions relating to the amendment made to Section 28 and specific reference to Section 28 (11) would not come to the aid of the Revenue.
It is also submitted that the Apex Court in the case of M/s.Canon India Private Limited (supra), has taken note of all the notifications made by the Government and while noticing that the notifications issued were under Section 2 (34) and that separate orders required to be made under Section 6 for entrustment of powers, has
16 categorically come to the finding that the Officers of the Directorate of Revenue Intelligence are not the proper Officers. Accordingly, it is submitted that nothing more remains to be considered in light of the judgment in M/s.Canon India Private Limited (supra), and the petition is required to be allowed.
Insofar as the contention regarding availability of alternate remedy, the learned Senior Counsel has placed reliance on the judgment in the case of Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai and Others reported in (1998) 8 SCC 1 and has contended that the principle of relegating a party to avail of alternate remedy is subject to exceptions where the question of jurisdiction is raised and submits that the Order-in-Original that has been passed is a culmination of the proceedings that has commenced by way of a show-cause notice which was one without jurisdiction and the order passed pursuant thereto would have to be set aside as one based on a notice issued by an incompetent officer without jurisdiction and
17 accordingly, the question of relegating the petitioner to avail the remedy of an appeal made at this stage of the proceedings cannot be accepted.
Insofar as the contention of suppression of material facts as contended, it is pointed out that the proceedings that has culminated in the judgment before the Apex court in the case of Givaudan India Pvt. Ltd. vs. Commissioner of Customs, Bangalore reported in 2010
(261) E.L.T. 975 (Tri.-Bang) is of no relevance to the present round of litigation and even otherwise, the declaration made by the petitioners regarding the value of goods even if reopened at the instance of the Revenue based on difference in valuation cannot amount to suppression in the sense as contended by the respondent.
Heard both sides.
The point for consideration is : "Whether the Order-in-Original dated 27.02.2017 is liable to be set aside as not being passed by a proper Officer in light of the judgment of the Apex Court in the case of M/s.Canon India Private Limited vs. Commissioner of Customs ?"
Prior to answering the aforesaid point for consideration, certain other objections raised regarding maintainability of the present petitions and calling upon the court to dismiss the petitions and bar the petitioners from availing the discretionary jurisdiction under Article 226 of the Constitution of India, due to suppression of facts and also on the ground of res judicata is required to be answered.
1) Objection to Jurisdiction raised at a belated stage:
(i) It was the contention raised on behalf of the second respondent that the petitioners had not raised the objection to jurisdiction at the first stage of adjudication.
(ii) It is not in dispute that the proceedings that were initiated at the first instance was remanded for fresh consideration to the authority as per the order dated 20.01.2016 and in such de novo enquiry, the contention regarding absence of jurisdiction has been raised. This comes out unequivocally on a perusal of the order dated 27.02.2017 enclosed at Annexure-'G' in W.P.No.4628/2018
19 wherein, at Para 40.1.1 the Principal Commissioner specifically considers the contention regarding jurisdiction while noticing the contention raised by the petitioners that DRI has no jurisdiction to issue show-cause notices. It is also to be noticed that the point of jurisdiction which goes to the root of the matter could be raised at any stage of the proceedings, which is a settled position of law. In fact, absence of jurisdiction to issue a show-cause notice if raised even after an assessment order is passed, such objection regarding jurisdiction of the authority if found in the affirmative would vitiate the whole proceedings including the assessment orders or orders passed on an appeal and other orders of the superior authorities. Accordingly, the contention regarding jurisdiction as raised by the second respondent is liable to be rejected.
2) Alternate Remedy :
(i) It is the contention of the respondents that as against the impugned order, there is a remedy of statutory appeal as per Section 129A of the Customs Act and that all
20 questions that have been raised in the present matter including that of the jurisdiction are matters that could be raised by availing remedy of statutory appeal. It is further submitted that if the petitions are disposed off relegating the petitioners to avail of the remedy of substantive appeal, the department would not raise any objection regarding limitation.
(ii) The learned Additional Solicitor General has placed reliance on the judgment of the Madras High Court in the case of M/s. Sri Sathya Jewellery vs. Principal Commissioner of Customs passed in W.P.No.3144/2016 and connected matters disposed off on 15.04.2021 and attention is drawn to the observations in Para 15 wherein, in the context of similar contentions raised including the issue of proper officer with reference to the judgment in M/s.Canon India Private Limited (supra), the Madras High Court has relegated the parties to avail of the statutory remedy while observing that all grounds including jurisdiction could be raised before such authority.
(iii) At the outset, it must be noted that entertaining of writ petition even where statutory right of appeal is available is a matter of discretion and restraint left to the court and the availability of statutory right of appeal by itself would not bar the court from entertaining the writ petition. It would be appropriate to refer to the judgment of the Apex Court in the case of Whirlpool Corporation (supra), wherein the Apex Court at Para 15 has observed that in case of three contingencies, a writ could be directly entertained viz., where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of principles of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. The said observation reflects a position of settled law with respect to which there is no dispute.
(iv) The Apex Court in the case of M/s.Canon India Private Limited (supra) has unequivocally dealt with the point of jurisdiction of the Officers of DRI in the context of proper officer and in light of the unequivocal findings made
22 there is no necessity for any re-adjudication of such an issue and accordingly, the question of relegating the party to avail of the statutory remedy would not arise.
3) Res judicata:
(i) As has been observed above, it is the contention putforth by the second respondent that the aspect in issue arising out of the show-cause notice dated 07.01.2008 cannot be relooked into in light of separate set of litigation culminating in the order of the Apex Court in the case of Givaudan India Pvt. Ltd. vs. Commissioner of Customs, Bangalore dated 11.12.2009 in Appeal No.C/652-655 & 533/2008 reported in 2010 (261) E.L.T. 975 (Tri.-Bang) wherein the present petitioner is also a party and certain findings were recorded between the same parties with respect to certain assessment years.
(ii) As regards to the said contention, at the outset it must be noticed that the learned Senior Counsel appearing for the petitioners has submitted that the assessment proceedings for each year constitute separate unit of
23 adjudication and any finding recorded as regards particular assessment year cannot come in the way of subsequent proceedings for different assessment years and he has relied on various authorities including the judgment of the Constitution Bench in the case of Instalment Supply (Private) Ltd. and Another vs. Union of India and Others reported in AIR 1962 SC 53 and the judgment in M/s. Radhasoami Satsang, Saomi Bagh, Agra vs. Commissioner of Income Tax reported in (1992) 1 SCC 659.
(iii) Without entering into the said legal aspect, which again appears to be a settled position, going further for the purpose of considering the aspect of res judicata, a necessary comparison between the subject matter of the dispute in the present round vis-a-vis the proceedings that has culminated in the judgment of the Apex Court dated 11.12.2009 in the case of Givaudan India Pvt. Ltd. vs. Commissioner of Customs, Bangalore 2010 reported in (261) E.L.T. 975 (Tri.-Bang) requires to be looked into.
(iv) A perusal of the show-cause notice at Annexure- 'B' would throw light on the said aspect of different identity of the dispute agitated in the previous round in contradistinction to the dispute on hand. Paragraph 2.2 and 3 of the show-cause notice dated 07.01.2008 is relevant to be noticed which is as follows:
"2.2 Based on the above, DRI booked an offence case against M/s.Givaudan India Pvt. Ltd.(GIPL), 13th Floor, Prestige Meridian 1, # 29, M.G.Road, Bangalore (a 100% subsidiary of M/s.Givaudan S.A., Switzerland) for suppression and mis declaration of alcohol content in thier imports of Mixtures of Odoriferous Substances imported from the group companies of Givaudan Switzerland and wrong availment of concession under Sl.No.119 of Customs Notification No.21/02 dtd. 01.03.02. This importer admitted the fact of suppression and misdeclaration of alcohol content and availment of ineligible concession under Customs notification No.21/02 dtd. 01.03.02 and paid Rs.2.10 Crores during the stage of investigation itself before the issue of Show Cause Notice No.S/IV/16/2006 dtd. 25.01.07.
During the course of investigation of the offence case mentioned in para 2.2 above, the
25 preliminary scrutiny of seized records/data downloaded by DRI revealed that the imports of aromatic chemicals [termed as Fragrance Ingredients Business Unit (FIBU) items] made by VPL were undervalued and the undervaluatoin was found to be in the range of 3% to 375% during the period 2002 to 2007. The said undervaluation has been witnessed from the following:
(i) The evidences such as the International price lists for FIBU items issued by Givaudan Suisse, S.A. Switzerland to VPL.
(ii) FIBU items price lists issued to various independent Indian importers, which were unearthed from the seized documents, computers and documents recovered from the independent importers.
(iii) Comparison of Imported Raw Material Prices with uncontrolled prices showing the percentage difference between FIBU prices sold to others and prices of FIBU products sold to VPL.
These evidences were suppressed from Customs, Chennai and Bangalore as well as to Special Valuation Branch, Custom House, Chennai."
(v) Clearly at the outset it comes out that the subject matter of the present dispute is relating to under valuation as referred to in Para 3 of the show-cause notice wherein it is asserted that scrutiny and investigation by the DRI reveal that imports of the petitioner company were stated to have been undervalued. It is specifically stated in Para 3 of the show-cause notice that during investigation of the offences of the case mentioned in Para 2.2 of the show-cause notice extracted above, the question of undervaluation came to the notice of the authorities and hence on 07.01.2008, show-cause notice was issued.
(vi) On the other hand, the previous round of litigation related to the applicability of a particular tariff in the context of the misdeclaration by the Company of wrong alcohol content to avail of concessional tariff under Sl.No.119 of the Customs Notification No.21/02 dated 01.03.2002, the Apex Court in the case of Givaudan India Pvt. Ltd. vs. Commissioner of Customs, Bangalore reported in 2010 (261) E.L.T. 975 (Tri.-Bang) was
27 dealing with the claim of the petitioner Company for the benefit of reduced tariff under Sl.No.119 under the tariff head 3302 wherein the petitioner was claiming rate of duty of 10% which was at rebate and the Apex Court while looking into the orders passed by the authorities has concluded that the petitioner was not entitled to the benefit of reduced tariff as claimed and was required to pay differential duty as there was misdeclaration of the contents.
(vii) The dispute on hand in the present case however is one that relates to valuation and not as regards to the tariff applicable and that comes out clearly from the contents of the show-cause notice dated 07.01.2008 and this position regarding distinct nature of dispute of the show-cause notice relating to the judgment of the Supreme Court in the case of Givaudan India Pvt. Ltd. vs. Commissioner of Customs, Bangalore reported in 2010 (261) E.L.T. 975 (Tri.-Bang) as well as the present dispute is clear even on a bare perusal of the material on
28 record and does not involve any complicated factual enquiry necessitating relegation of the parties to the remedy of appeal. Accordingly, the question of res judicata would not be a bar to the adjudication of the present proceedings nor does it necessitate the relegating authority to avail of the statutory remedy of appeal.
(viii) In fact, it ought to be noticed that during the previous round of litigation, the question of proper officer was not considered by the Apex Court nor raised and even otherwise, during the pendency of the present proceedings the judgment of the Apex Court in the case of M/s.Canon India Private Limited (supra) has clarified as to who is the proper officer, and it cannot be stated that the assessee is debarred from taking the benefit of law laid down by the Apex Court which goes to the root of the matter. In light of the law laid down by the Apex Court, the officer who has issued the show-cause notice clearly does not have jurisdiction and if that were to be so, the assessment orders are liable to be set aside on that sole ground.
(ix) It is also pointed out at the time of dictating the order that the Apex Court in the case of Givaudan India Pvt. Ltd. vs. Commissioner of Customs, Bangalore reported in 2016 (337) E.L.T. A42 had also passed a similar order regarding applicability of tariff under Sl.No.119. It is not in dispute as noticed above that the present case relates to an issue of valuation and not with respect to applicability of certain tariff schedule and the orders referred above could not come in the way of petitioners agitating the issue of jurisdiction in the present round.
4) Suppression of Material Fact :
(i) Though it is contended that the petitioners should not be permitted to avail of the equitable, discretionary jurisdiction under Article 226 of the Constitution of India in light of the conduct of the petitioners, it must be noted that the findings by the courts relating to wrong declaration or misleading declaration in the earlier rounds of litigation relating to a different show-
30 cause notice cannot have the effect of non-suiting the petitioners in the present litigation. In the present case, the question relates to the aspect of valuation which question being a question of fact, is a matter to be adjudicated before the authorities and at this stage to arrive at a conclusion that the declaration of the petitioners was false or misleading as regards valuation cannot be taken note of, as such adjudication has still not reached a finality.
(ii) The question of appropriateness of valuation is still to be adjudicated and the matter is now reopened by setting aside the impugned order reserving liberty to issue fresh notice. Accordingly, any finding regarding misleading declaration made would be impermissible as it would amount to prejudging the issue on hand. The other grounds made out by the respondent No.2 as regards the petitioner not revealing the other litigations pending with the Department is liable to be rejected, in light of the discussion made while dealing with the issue of res judicata.
(iii) It must be noted that the matter has been pending since 2018 and at this stage, when the petitioners seek to rely on the judgment of Apex Court in M/s.Canon India Private Limited (supra) which is directly applicable, the question of non-suiting the petitioners on the ground as made out at this stage would be wholly inappropriate.
5) Applicability of judgment in M/s.Canon India
Private Limited:
(i) It is to be noticed that the starting point of the present proceedings relates to the show cause notice dated 07.01.2008 which relates to the period prior to 2011. Certain amendments were made to the Customs Act, 1962 in 2011. Under Section 28 of the Customs Act as was applicable during the relevant period of time, the power is vested in 'the proper officer' to take action where duty has not been levied or has been short-levied or erroneously refunded and such proceedings was to be taken by 'the proper officer.' Subsequent to the amendment of Section
32 28, 'the proper officer' still retains jurisdiction, though there are certain procedural modifications.
(ii) The aspect of who is 'the proper officer' as regards to Section 28 of the Customs Act prior to the amendment was considered by the Apex Court in the case of Commissioner of Customs v. Sayed Ali and Another reported in (2011) 265 ELT 17. Subsequent to the judgment of Apex Court in Sayed Ali's case (supra), certain amendments were effected to the Customs Act, including the introduction of Section 28(11) inserted by the Customs (Amendment and Validation Act) 2011 with effect from 16.09.2011 to the effect that "..... all persons appointed as officers of Customs under sub-section (1) of Section 4 .....shall be deemed to have been and always had been the proper officers for the purposes of this Section." The effect of such amendments was considered by High Court of Delhi in the case of Mangali Impex Ltd. v. Union of India reported in 2016 (335) E.L.T. 605 (Del.), which once again reiterated that the amendment
33 does not in any way alter the position insofar as the law laid down in Sayed Ali's case (supra). The judgment of the Delhi High Court, it is stated is pending consideration before the Apex Court in S.L.P.(C) No.20453/2016, wherein the judgment in Mangali's case has been stayed, by the Apex Court.
(iii) It ought to be noted that the present judgment of Apex Court in the case of M/s.Canon India Private Limited (supra) passed in Civil Appeal No.1827/2018 and connected matters is a judgment by a Bench consisting of Three Judges and has referred to the judgment in Sayed Ali's case (supra) in approval.
(iv) The Apex Court in the case of M/s.Canon India Private Limited (supra) has specifically raised the question at para-9 of its decision, which reads as follows:-
"9. The question that arises is whether the Directorate of Revenue Intelligence had authority in law to issue a show cause notice under Section 28(4) of the Act for recovery of duties allegedly not levied or paid when the goods have been cleared for import
34 by a Deputy Commissioner of Customs who decided that the goods are exempted. It is necessary that the answer must flow from the power conferred by the statute i.e. under Section 28(4) of the Act. This Section empowers the recovery of duty not paid, part paid or erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts and confers the power of recovery on “the proper officer”. The obvious intention is to confer the power to recover such duties not on any proper officer but only on “the proper officer”. This Court in Consolidated Coffee Ltd. v. Coffee Board, Bangalore2 has held:—
“14. …Secondly, and more importantly, the user of the definite article ‘the’ before the word ‘agreement’ is, in our view, very significant. Parliament has not said ‘an agreement’ or ‘any agreement’ for or in relation to such export and in the context the expression ‘the agreement’ would refer to that agreement which is implicit in the sale occasioning the export.”
The Apex Court while referring to ' the proper officer' found in Section 28 has specifically recorded a finding that it is only 'the proper officer', and 'that proper officer' alone can adjudicate the matter.
35 Further Apex Court has clarified at para 15 as follows:
"15. ...... We find it completely impermissible to allow an officer, who has not passed the original order of assessment, to re-open the assessment on the grounds that the duty was not paid/not levied, by the original officer who had decided to clear the goods and who was competent and authorised to make the assessment. The nature of the power conferred by Section 28(4) to recover duties which have escaped assessment is in the nature of an administrative review of an act. The section must therefore be construed as conferring the power of such review on the same officer or his successor or any other officer who has been assigned the function of assessment. In other words, an officer who did the assessment, could only undertake re-assessment [which is involved in Section 28(4)]."
Accordingly, the Apex Court has held that Section must therefore be construed as conferring the power of such review on the same officer or his successor or any other officer who has been assigned the function of assessment. In other words, an officer who did the assessment could only undertake the re-assessment [which is involved in Section 28(4)].
(v) The Apex Court has also considered the aspect as to whether the Additional Director General of DRI who has been appointed as an Officer of Customs has been entrusted with the functions under Section 28 as 'the proper officer' under the Customs Act. The Court, after referring to the notification dated 02.05.2012 at paras-19 and 20 has concluded that the notification issued by the Central Board of Excise and Customs in exercise of power under Section 2(34) of the Customs Act would not be sufficient, as the said Section does not confer any power on the Authority to entrust any functions of officer, and that Section 2(34) merely defines who 'the proper officer' is.
(vi) The Apex Court has specifically observed that it is only Section 6 of the Customs Act which provides for entrustment of functions of Customs Officer on other officers of the Central or the State Government or local authority. At para-21 of the decision, it is specifically observed that the Central Government ought to have passed necessary orders under Section 6, if it was intended
37 that officers of the Directorate of Revenue Intelligence were to be entrusted with the functions of Customs Officer.
(vii) The Apex Court has further clarified that the notification which purports to entrust the functions as 'proper officer' issued by the Central Board of Excise and Customs in exercise of non-existing power under Section 2(34) of the Customs Act is invalid as also having been issued by the Authority which has no power to do so.
(viii) Finally, the Apex Court after referring to the observations in the case of Commissioner of Customs v. Sayed Ali and Another reported in (2011) 3 SCC 537 has concluded at para-24 as follows:-
"24. We, therefore, hold that the entire proceeding in the present case initiated by the Additional Director General of the DRI by issuing show cause notices in all the matters before us are invalid without any authority of law and liable to be set-aside and the ensuing demands are also set-aside".
(ix) In the present case, applying the law laid down in the case of M/s.Canon India Private Limited (supra) clearly, the proceedings that have been initiated by issuance of a show cause notice dated 07.01.2008 by the Additional Director General, DRI is also liable to be set aside in light of the law laid down by the Apex Court as referred to above.
While judgment of High Court of Madras in the case of Commissioner of Customs (Air) vs. M/s. Premier Tours & Travels (Chennai) Pvt. Ltd. and another, in C.M.A. No.2746/2009 and M.P. No.1/2009 dated 04.02.2021 where identical contentions were raised and the consideration of such aspect has been relegated to be decided in the appeal, however this Court does not find any reason to take the same view, in light of the clear findings in the case of M/s.Canon India Private Limited (supra) which does not leave any scope for further adjudication and the law laid down by the Apex Court ought to enure to the benefit of the petitioners.
It needs to be noted that the High Court of Madras (Madurai Bench) by order dated 16.03.2021 in the case of Quantum Coal Energy Pvt. Ltd. vs. The Commissioner of Customs in W.P.(MD) Nos.10186 & 10187 of 2014 and M.P.(MD) Nos.1 & 1 of 2014 has taken a different stand by setting aside the proceedings initiated by the Customs Authority where the show cause notice was issued by the Additional Director General of DRI while referring to the judgment in the case of M/s.Canon India Private Limited (supra) and this Court finds that, that would be the only logical conclusion to be arrived at and to take any other stand would only result in overreaching the decision of Apex Court, which is plainly impermissible.
It is the submission made by learned Additional Solicitor General that Review Petition has been filed which was the stand taken by the authorities in their statement of objections filed on 07.04.2021. As the matter was posted on numerous occasions thereafter, there has been no further development in the review proceedings and it is
40 submitted that the matter is still pending consideration. Needless to state that there has to be finality once the law is laid down by a judgment of the Apex Court and any further deferment may not be justified. Further, if the Review Petition is disposed, the legal consequences would enure to the benefit of the parties involved.
Accordingly, the writ petitions are allowed. The Order-in-original Sl.No.BLR-CUSTM-AIR-003/16-17 dated 27.02.2017 at Annexure-G in both the writ petitions are set aside while holding specifically that the show cause notice at Annexure-B dated 07.01.2008 is one that is not issued by 'the proper officer'. The Authorities are at liberty to take out fresh proceedings as per law, in light of the discussion as above.
The oral request made by learned counsel appearing for respondent No.2 to keep the order in abeyance is refused, as the Court has passed the order on the basis of the judgment of Apex Court in the case of M/s.Canon India Private Limited vs. Commissioner of
41 Customs reported in 2021 SCC Online SC 200, which is the law as on date.
Sd/- JUDGE
Np/VGR