Reassessment Should Only Be Done By Officer Or His Successor And Not By Any Officer Of The Same Rank : Gujarat High Court

The petitioner/assessee is a private limited company and is in the business of trading and manufacturing goods like inkjet printers, laser printers, and parts as well as accessories for printers. The petitioner has been importing goods like Continuous Inkjet Printers (CIJ Printers), Laser Marking Machines, parts and accessories for CIJ Printers, and other such goods from foreign countries. They are being imported from China during the period from 2014 to 2021.

The assessee has challenged the action of the respondent/department which has initiated the proceedings and conducted an inquiry/investigation into the imports made by the petitioner at various Customs Stations.

The petitioner submitted that the consignments which had been allowed to be cleared for home consumption had been sold by the petitioner to their customers, as the petitioner was engaged in a trading business. The sales have been affected by following due procedure, and the appropriate taxes leviable on such trading business have also been paid.

The office of DRI, Chennai Zonal Unit, came across the imports made by the petitioner and the department initiated an investigation against the petitioner. The DRI Officers formed a belief that the goods imported by the petitioner were classifiable under CTH 84433910, 84433990, and 84439960 and the rate of custom duties on the goods under these classifications was higher than the rates applicable to the classifications declared by the petitioner.

According to the DRI Officers, the petitioner had misclassified the CIJ Printers, parts of CIJ Printers, and Laser Marking Machines for availing of a lower rate of duty or full exemption and, on that notion, the investigation was conducted by the department at all the customs stations. The representative of the petitioner's Customs House Agent was also called at the Chennai Zonal Office of DRI and the statements were recorded by the DRI Officers in respect of the imports of the goods imported by the petitioner.

It was alleged that during the investigation, the petitioner was forced and pressured to make monetary deposits towards the customs duties allegedly short paid on the imported goods. The petitioner was left with no alternative and has deposited Rs. 50 lakhs during the investigation.

As a result of an inquiry and investigation by the Additional Director General, DRI, Chennai, it has issued a Show Cause Notice invoking the provisions of Section 28(4) of the Customs Act. The Additional Director General, DRI, Chennai, has proposed to reassess transactions of imports made by the petitioner at various customs stations and differential custom duties were also proposed to be demanded and recovered from the petitioner for the goods imported at customs stations, alleging that they had misclassified the imported goods and paid a reduced rate of duty or availed exemption from customs duties by resorting to the wrong classification for the goods in question.

The petitioner contended that the entire proceedings of the issuance of the show cause notice under Section 28 of the Customs Act were invalid and without authority of law since the DRI officer was not the proper officer of Customs and even the action taken was liable to be set aside when the proceedings itself were by a DRI officer.

The petitioner relied on the decision of the Supreme Court in the case of M/s. Canon India Pvt. Ltd. in which it was held that the statute conferred the power to perform an act on different officers, and when those officers belong to different departments, they cannot exercise their powers under the case. When one officer exercises his powers of assessment, the power to order reassessment must be exercised by the same officer or his successor officer and not by any officer in any department designated to be an officer of the same rank.

The court noted that while analysing Section 28A (4) of the Customs Act, the Apex Court held that the provision must be construed as conferring the power of review on the same officer or his successor who has been assigned the function of assessment. After extensive analysis, the Court held that the entire proceeding initiated by the Additional Director General of DRI by issuing show cause notices in all the matters were invalid, without any authority of law and liable to be set aside, and accordingly, the ensuing demands have also been set aside.

The court quashed the show cause notices issued in each case by the DRI on the basis of the ratio laid down by the Supreme Court in the case of M/s. Canon India.

Case Title: Messrs Aztec Fluids And Machinery Pvt. Ltd. Versus UOI

Citation: 2022 LiveLaw (Guj) 145

Dated: 01.04.2022

Counsel For Petitioner: Advocate Paresh M.Dave

Counsel For Respondent: Advocate devang Vyas

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