M/S Sultan Tanneries And Leather Products vs. Union Of INDIA And 3 Othes

Facts

The petitioners, M/s Sultan Tanneries and Leather Products, M/s Homera Tanning Industries Pvt Ltd, and M/s Homera Tanners Pvt Ltd, are challenging the jurisdiction of the Commissioner, CGST and Central Excise, Kanpur (Respondent No. 4) to adjudicate a show cause notice dated 22.06.2011. This notice was issued by the Commissioner of Customs (Expert), Jawahar Lal Nehru Customs House, Nhava Sheva (Respondent No. 2) under the Customs Act, 1962. The petitioners argue that Respondent No. 4 is not a proper officer appointed under Section 4(1) of the Customs Act and that the CGST/Central Excise Commissioner is a non-existent designation post-GST enactment. The show cause notice pertains to alleged misclassification of exported finished leather as semi-finished leather, leading to the claim of inadmissible export duty exemption and incentives during the period 01.04.2006 to 30.11.2009. The notice proposed confiscation of goods, recovery of export duty, denial of DFIA benefits, demand of import duty, and imposition of penalties.

Held

The Court held that Respondent No. 2 had the jurisdiction to issue the impugned show cause notice and Respondent No. 4 had the jurisdiction to adjudicate it. This conclusion was based on the interpretation of notifications and circulars, including the Board's order dated 20.11.2012 and Circular No. 18/2018-Customs, which clarified that the Commissioner of Customs, Central Excise & Service Tax, Kanpur, appointed to adjudicate cases, continues to possess that authority. The Court found that a 'Proper Officer' under Section 2(34) of the Customs Act is one assigned specific functions by the Board or Commissioner of Customs. The Court's decision was supported by the Gujarat High Court's ruling in Swati Menthol and Allied Chemical Ltd. Vs. Joint Director, Directorate of Revenue Intelligence. Regarding the alternative relief, the Court held that the petitioners were not entitled to a direction for making documents available and affording cross-examination before adjudication commences. Relying on the Division Bench's decision in Commissioner of Central Excise, Meerut-I and another Vs. M/s Parmarth Iron Pvt. Ltd., Bijnor, the Court stated that the right to cross-examination arises only after adjudication proceedings have commenced, not before the reply to the show cause notice is filed or before adjudication begins. Therefore, the petitioners were not entitled to the relief sought.

Key Issues

1. Whether Respondent No. 4, the Commissioner, CGST and Central Excise, Kanpur, has the legal authority to adjudicate the show cause notice dated 22.06.2011 issued under the Customs Act, 1962, and whether Respondent No. 2 had the authority to issue it? (Question of law turning on Sections 2(34), 4(1), and 28 of the Customs Act, 1962). Petitioner's arguments: Respondent No. 4 is neither a proper officer nor competent to pass orders under the Customs Act, as jurisdiction was assigned by a Board order dated 20.11.2012, not by appointment under Section 4(1). Post-GST, the designation "Commissioner of Customs, Central Excise and Service Tax, Kanpur" is non-existent. Therefore, Respondent No. 4 lacks jurisdiction to adjudicate under Section 28 of the Customs Act. Respondent's arguments: Notifications and circulars, including a Board order dated 20.11.2012 and a Circular dated 17.10.2018, clarify that the Commissioner of Customs, Central Excise & Service Tax, Kanpur, appointed as an officer of Customs to adjudicate cases, continues to hold such authority. The definition of 'Proper Officer' under Section 2(34) includes officers assigned specific functions by the Board or Commissioner of Customs. The Gujarat High Court in Swati Menthol and Allied Chemical Ltd. Vs. Joint Director, Directorate of Revenue Intelligence, reported in 2014 (304) ELT 21 (Gujarat) supports this view. 2. Whether the petitioners are entitled to a direction in the nature of mandamus to make available documents/evidence and afford an opportunity for cross-examination of witnesses before adjudication commences? (Question of mixed law and fact turning on principles of natural justice and procedural fairness).