Case Law Details
Principal Commissioner, Customs Vs Dish TV India Limited (CESTAT Delhi)
At the outset learned Counsel representing the appellant importer, Shri Dalmia and Shri Tagra, submitted that the SCN was issued by DRI in these matters under section 28(4) of the Customs Act demanding differential duty in respect of the goods which were assessed and thereafter cleared by ‘the proper officers’ of the respective Customs Houses. The differential duty was demanded under section 28(4). As per the judgment of Hon’ble Supreme Court in the case of Cannon India Ltd. vs. Commissioner of Customs officers of DRI are not proper officers to issue SCNs under section 28 and therefore, entire demand needs to be set aside and the appeal should be decided in favour of the importer. SCNs are issued under the Customs Act either under Section 28 (to recover duty not levied, not paid, short levied, short paid or erroneously refunded) or under Section 124 (before confiscation of goods or imposition of penalties). On a specific query from the bench, learned counsel fairly submits that some portion of the SCN is a notice under section 124 inasmuch as it proposed confiscation of the imported goods under section 111(m) and imposition of penalties but submits that the sole ground on which the confiscation and penalties were proposed is that the goods were mis-declared, mis-classified and undervalued resulting in short payment of duty. If the demand under section 28 fails on ground of lack of jurisdiction, that basis having gone, the confiscation and penalties also do not survive. Therefore, the impugned order needs to be set aside in its entirety.
Since both sides agree that the case is covered by Cannon India, and that the SCN was issued by DRI, the impugned order arising out of the SCN cannot be sustained as per Cannon India, Agarwal Metals judgments of the Hon’ble Supreme Court, Guvidivan judgment of the Hon’ble High Court of Karnataka and Quantum Coal judgment of the Hon’ble High Court of Madras (Madurai bench), we do not find it necessary to examine the merits of the case.
FULL TEXT OF THE CESTAT DELHI ORDER
These four appeals have been filed by the Revenue, M/s. Dish TV India Ltd.1, Shri Rajeev Dalmia2, Chief Financial officer of the importer and Shri Virender Kumar Targra3, Vice President of the importer assailing the same Order in Original4dated 27.4.2020 passed by the Additional Director General (Adjudication) of Directorate of Revenue Intelligence5. Hence all these four appealsare being disposed of together.
2. Appeal No. 50904/2020 is filed by the importer. Appeal no. 50891/2020 is filed by the Revenue. Appeal number 50916 /2020 is filed by Shri Dalmia while Appeal No. 50917 was filed by Shri Tagra.
3. A show cause notice dated 10.1.2019 was issued by DRI answerable to (a) Principal Commissioner of Customs (Air Cargo Complex), New Delhi; (b)Principal Commissioner of Customs, Inland Container Depot, Tughlakabad, New Delhi; (c) Principal Commissioner of Customs, Inland Container Depot,Kanakpura, Jaipur; and (d) Principal Commissioner of Customs, Nhava Sheva -V, Raigarh in respect of the goods imported through the respective ports. Central Board of Excise and Customs6has appointed Additional Director General (Adjudication), DRI as the common Adjudicating Authority to adjudicate upon the matters in the SCN by Notification No. 4/2009-Cus(NT) dated 1.2.2019 read with 11/2020 Cus (NT) dated 2.1.2020. Accordingly, the impugned order was passed.
4. The factual matrix which led to issue of the SCN is that the importer is in the business of providing Direct to Home7 television channel services to its subscribers for which purpose, it imported Set top boxes8and Transmission Dishes and viewing cards. DRI received information according to which,firstly, the importer imported Viewing Cards fortheir STBs mis-declaring them as “Smart Cards (CO22)U2.1” and misclassifying them under Customs Tariff Heading985235290 and wrongly availing ineligible duty exemption. Secondly,the royalty/licence fee paid on these cards was not included in the price declaredby the importer thereby undervaluing them. Thirdly, the importer was paying Licence fees in relation to the STBs but was not including it in the prices declared in their Bills of Entry resulting in under valuation of the STBs. In all these cases, the Bills of Entry were already filed, assessed by the jurisdictional officers and the goods were cleared. After conducting searches, seizures and recording statements, the SCN dated 10.2019 was issued by ADG DRI proposing to reclassify the Viewing Cards under CTH 85287100 (instead of 85235290), enhance the assessable value, consequently, recover the alleged short paid duty under Section 28(4) along with interest under section 28AA, confiscate the imported goods (which were not available) under section 111(m), impose penalty on the importer under section 112 and/or 114A, and 114AA and impose penalties upon Shri Dalmia and Shri Tagra under sections 112 and 114AA in respect of the imports made through each of the ports mentioned above.
5. Adjudicating upon the SCN, the ADG(Adjudication) DRI passed the impugned order:
i. Re-classifying the viewing Cards under CTH 85287100;
ii. Enhancing the assessable value of the viewing cards and STBs as proposed in the SCN;
iii. Confirming demand of differential duty under section 28(4);
iv. Ordering recovery of appropriate interest under section 28AA;
v. Confiscating the imported goods under section 111(m);
vi. Imposing penalty on the importer under 114A but not under 112 and 114AA; and
vii. Imposing penalty under section 112 on Shri Dalima and Shri Tagra but not under 114AA.
6. Revenue is aggrieved that no penalty was imposed under section 114AA either on the importer or on Shri Dalmia or Shri Tagra. The importer is aggrieved by the entire order of reclassification, revaluation, demand of duty, interest, confiscation of the goods and imposition of penalty on it. Shri Dalmia and Shri Tagra are aggrieved by the penalties imposed on them in person.
7. At the outset learned Counsel representing the appellant importer, Shri Dalmia and Shri Tagra, submitted that the SCN was issued by DRI in these matters under section 28(4) of the Customs Act demanding differential duty in respect of the goods which were assessed and thereafter cleared by ‘the proper officers’ of the respective Customs Houses. The differential duty was demanded under section 28(4). As per the judgment of Hon’ble Supreme Court in the case of Cannon India Ltd.vs.Commissioner of Customs10officers of DRI are not proper officers to issue SCNs under section 28 and therefore, entire demand needs to be set aside and the appeal should be decided in favour of the importer. SCNs are issued under the Customs Act either under Section 28 (to recover duty not levied, not paid, short levied, short paid or erroneously refunded) or under Section 124 (before confiscation of goods or imposition of penalties). On a specific query from the bench, learned counsel fairly submits that some portion of the SCN is a notice under section 124 inasmuch as it proposed confiscation of the imported goods under section 111(m) and imposition of penalties but submits that the sole ground on which the confiscation and penalties were proposed is that the goods were mis-declared, mis-classified and undervalued resulting in short payment of duty. If the demand under section 28 fails on ground of lack of jurisdiction, that basis having gone, the confiscation and penalties also do not survive. Therefore, the impugned order needs to be set aside in its entirety.
8. Learned Special Counsel for the Revenue agrees that the show cause notice was issued by the DRI in this case and the case is covered by the Cannon India. He submitted that a Review petition has been filed by the Revenue against the judgment of Hon’ble Supreme Court in Cannon India which is pending before the Hon’ble Supreme Court.
9. Learned Counsel for the appellant countered and argued that mere filing of review petition before the Hon’ble Supreme Court does not nullify the ratio of the judgment already passed by the Hon’ble Supreme Court. Therefore, the matter may be decided accordingly without awaiting for outcome of the review petition. In support of his contention, he submits that the Larger Bench of Hon’ble Supreme Court has, on 29/31.8.2021, in the matter of Agarwal Metals11followed the ratio of the judgment of Cannon India Ltd.and dismissed Revenue’s appeals holding as follows:
“Delay condoned.
In view of decision dated 09.03.2021 of three judge Bench of this Court in Civil Appeal No. 1827 of 2018 titled as “M/s. Canon India Private Ltd. vs. Commissioner of Customs reported in 2021 (3) SCALE 748. These appeals must fail as the show cause notice(s) in the present cases was also issued by Additional Director General (ADG), Directorate of Revenue Intelligence (DRI), who is not a proper officer within the meaning of Section 28 (4) read with Section 2(34) of the Customs Act, 1962.
Hence, these appeals stand dismissed.”
10. He further submits that the Hon’ble High Court of Karnataka has also followed the judgment of Cannon India Ltd. in the case of Guvidivan12and allowed the writ petition and quashed the impugned order as the show cause notice issued by officer of DRI demanding duty under section 28. He also submits that Hon’ble Madurai Bench of Madras High Court in the case of Quantum coal13likewise,followed Cannon India Ltd. and quashed the impugned order passed by the Commissionersince the Show Cause Notice was issued by the DRI.
11. Since both sides agree that the case is covered by Cannon India, and that the SCN was issued by DRI, the impugned order arising out of the SCN cannot be sustained as per Cannon India, Agarwal Metals judgments of the Hon’ble Supreme Court, Guvidivan judgment of the Hon’ble High Court of Karnataka and Quantum Coal judgment of the Hon’ble High Court of Madras (Madurai bench), we do not find it necessary to examine the merits of the case.
12. In view of the above, the impugned order is set aside and the appeals of the importer, Shri Dalmia and Shri Tagra are allowed. Revenue’s appeal is rejected.
(Pronounced in the open Court on 13.10. 2021 )
