Target Lubricants Pvt. Ltd. Vs Commissioner of Customs (Madras High Court)
Conclusion: Show cause notice dated 06-12-2012 issued by the Additional Director General, DRI, was quashed for lack of jurisdiction in view of the law laid down in Canon India Pvt. Ltd. v. Commissioner of Customs. Assessee was held entitled to refund of amounts and bank guarantees furnished during investigation.
Held: Assessee-company had imported mineral oil through a Bill of Entry dated 12-10-2010. Directorate of Revenue Intelligence (DRI) seized the goods on suspicion that the imported product was base oil and not rubber processing oil as declared. A show cause notice dated 06-12-2012 was issued by the Additional Director General, DRI. Pursuant thereto, adjudication resulted in an order-in-original. On appeal, CESTAT set aside the order and remanded the matter. While remanding the matter, CESTAT directed that adjudication could proceed after the Supreme Court rendered its decision in Mangali Impex Ltd. Meanwhile, the Supreme Court in Canon India Pvt. Ltd. v. Commissioner of Customs held that DRI officers were not “proper officers” empowered to issue notices under section 28 of the Customs Act. Relying upon the aforesaid decision, assessee requested the department to drop proceedings and refund the amount and bank guarantee furnished during investigation. As no action was taken, writ petitions were filed seeking quashing of the show cause notice and consequential refund. It was held that the Supreme Court in Canon India Pvt. Ltd. v. Commissioner of Customs categorically held that DRI officers are not “proper officers” empowered to issue notices under section 28 of the Customs Act. The said principle had subsequently been reiterated by the Supreme Court in Commissioner of Customs v. Agarwal Metals and Alloys. The impugned show cause notice had admittedly been issued by the Additional Director General, DRI. Therefore, the initiation of proceedings itself suffered from inherent lack of jurisdiction. A challenge based on want of jurisdiction can be raised at any stage and is an exception to the rule requiring exhaustion of alternate remedies. Mere participation in adjudication proceedings or appellate proceedings would not cure the inherent jurisdictional defect. Pendency of appeal against the CESTAT remand order would not preclude assessee from invoking writ jurisdiction on a pure jurisdictional issue. Consequently, the show cause notice issued by the DRI officer was liable to be quashed.
