Credence Commodities Exports vs. Union Of INDIA And Ors.

Held

The Court held that the Office Memorandum dated February 16, 2018, issued by the CBEC, was an impermissible executive trespass on the quasi-judicial domain and was quashed to the extent it opined on the classification and eligibility for exemption of the imported gold coins. The Court clarified that the Revenue could still canvass the stance reflected in the memorandum before the adjudicating authority, who would consider its justifiability on merits. The Circular dated May 31, 2019, was modified by a subsequent circular dated September 9, 2019, and the latter was quashed to the extent of its directions, limiting its effect to conveying information about appeals. The Court held that adjudicating authorities must independently examine the appeals and their effect. Paragraph 8 of the impugned Show Cause Notices was quashed and set aside, directing adjudication to proceed uninfluenced by it. The Court rejected the prayers for setting aside the SCNs, stating it had expressed no opinion on their merits, but the adjudication must abide by the judgment's findings. The Office Memorandum dated September 6, 2017, issued by the DGFT, was upheld to the extent of the legal position stated therein, with its applicability to be assessed on merits by the adjudicating authority.

Facts

The petitioner, Khandwala Enterprise Private Limited, imported gold coins from South Korea between August 9-23, 2017, declaring an assessable value of ₹163,30,51,803. The petitioner classified these goods under Sub-Heading 7114 1910 of the Customs Tariff, claiming complete exemption from customs duty under S. No. 526 of Notification 152/2009-Cus, as amended. The Revenue issued Show Cause Notices (SCNs) to the petitioner and M/s Mink Tradecom Private Limited (with whom the petitioner merged in 2018), proposing confiscation of goods, denial of exemption, and recovery of customs duty, interest, and penalty. The petitioner challenged several official communications, including an Office Memorandum dated February 16, 2018, a Circular dated May 31, 2019, and the SCNs themselves.

Key Issues

1. Whether the Office Memorandum dated February 16, 2018, issued by the Central Board of Excise and Customs (CBEC), which opined on the classification and eligibility for exemption of imported gold coins, is liable to be quashed as an impermissible executive trespass on quasi-judicial functions? The petitioner argued that this memorandum prejudged the issues raised in the SCNs and was an attempt to adjudicate by executive fiat. The Revenue contended that it merely stated the existing legal position. 2. Whether the Circular dated May 31, 2019, issued by the Central Board of Indirect Taxes and Customs (CBIC), which conveyed information about tribunal orders, should be quashed to the extent it directed adjudicating authorities to follow certain directions? The petitioner argued that this circular unduly influenced the adjudication process. The Revenue argued it was merely informational. 3. Whether the impugned Show Cause Notices, particularly para 8 thereof, which sought to deny the benefit of Notification 152/2009-Cus, are liable to be quashed? The petitioner argued that the basis for denial was flawed, while the Revenue sought to uphold the notices.