Sri Meenakshi Apparels Pvt. Ltd. vs Commissioner of Cus.

N. Kumar, J.—These two appeals are preferred by the two Assessees, challenging the order of the Appellate Tribunal, which has upheld the order of the Commissioner, who has passed the impugned order-in-original as an Adjudicating Authority.

The Assessees exported goods under claim for draw back. The assessee in CSTA No. 4/2007 received a sum of Rs. 3,54,621/- as draw back, whereas the Assessee in CSTA No. 5/2007 received an amount of Rs. 4,58,708/-as draw back. DRI investigations revealed that the Assessees had not received the export proceeds within the period allowed. Therefore, show cause notices were issued under Rule 16/Rule 16-A of the Customs and Central Excise Draw Back Rules, 1995, (for short hereinafter referred to as the "Rules"), for recovery of the draw back amounts. Penalties u/s 117 of the Customs Act, 1962 (for short hereinafter referred to as the "Act") were also proposed. The Commissioner of Customs passed the impugned orders for recovery of the draw back amounts. However, he dropped the penal proceedings against the Assessees. Challenging the said orders, the Assessees preferred appeals before the Tribunal. They contended, though initiation of proceedings and issue of show cause notices by the Commissioner for Customs is proper, he had no jurisdiction to adjudicate the dispute in question as that is exclusively vested with the Assistant Commissioner of Customs under Rule 16/Rule 16-A of the Rules. They also challenged the impugned order, directing recovery of the draw back amounts on merits. The Tribunal, after considering the various provisions of the Act, the Notifications issued and also taking note of the Rules held, by a Notification dated 7th March 2002 in No. 17/2002, the Directorate of Revenue Intelligence (D.R.I) Officers are appointed as Customs Officers and therefore, by virtue of Section 5(2) of the Act, a superior Customs Officer has the power to discharge the duties conferred or imposed under the Act on any Officer of the Customs, who is subordinate to him and therefore, the Commissioner of Customs had the jurisdiction to investigate the dispute regarding duty draw back also and therefore, they held the question of jurisdiction in favour of the Revenue and against the Assessees. They also held that there is absolutely no merit in the claim of the Assessees is concerned and therefore on merits also, the appeals came to be dismissed. Aggrieved by the same, the Assessees are before this Court in these two appeals.

Learned Counsel for the Assessees contends, though the Notification conferred powers by virtue of Sub-section (1) of Section 4 of the Act to appoint the Director of Revenue Intelligence as the Commissioner of Customs and authorises him to investigate the matter by issuing show cause notice, that Notification cannot be read as conferring power on him to adjudicate the dispute. Adjudication of dispute should be in accordance with Rule 16/Rule 16-A of the Rules, which confer powers only on the Assistant Commissioner of Customs or the Deputy Commissioner of Customs as the case may be, and therefore, the order passed by the Commissioner of Customs is one without Jurisdiction and liable to be set aside. In support of his contention, he also relied on a circular dated 15th February 1999, issued clarifying the circular No. 4/1999, where it is stated, though the Directorate of Revenue Intelligence Officers are empowered to undertake investigation on cases detected by them and to issue show cause notices and to complete investigations, the adjudication has to be done by the concerned jurisdictional Additional Commissioners, Deputy Commissioners or Assistant Commissioners of Customs, as the case may be and therefore, he submitted that the adjudication done by the Commissioner, in the light of the aforesaid circular is one without jurisdiction. It was also contended, the dispute regarding duty draw back could not have been adjudicated by the Tribunal as no appeal lies against the same before the Tribunal, as is clear from the provision to Section 129A of the Act. For the aforesaid reasons, he wants the impugned orders to be set aside.

Per contra, learned Counsels appearing for the Revenue contended the circular relied on by the Assessees is no more in force as the Notification dated 7th March 2002 supercedes the Notification No. 19/1990 which is the cause for explanation by the Board in terms of Circular No. 4/1999. When the Notification No. 19/1990 stands superseded by Notification dated 7th March 2002, the explanation offered by the Board, explaining the said circular also vanishes. That apart, Section 5(2) of the Act confers power on the superior Customs Officers, unless they are prevented by express order by the Board, from discharging the functions of lower Customs Officers. Therefore, a reading of Section 4(1) read with Section 5(2) of the Act and the Notification issued confer not only the power to investigate and issue a show cause notice on the Director of Revenue Intelligence, bat also, confer powers to adjudicate the dispute regarding draw back and when a Commissioner adjudicates the dispute regarding draw back and passes the order-in original, against which an appeal lies to the Tribunal. Therefore, there is no merit in either of the contentions urged by the counsel for the Assessees.

In the light of the aforesaid facts and the rival contentions, the short point that arises for our consideration is,

Whether the Directorate of Revenue Intelligence had the jurisdiction to adjudicate the dispute regarding draw back and whether such order adjudicating the duty draw back is appealable to the Tribunal?

Rule 16-A of the Rules deals with Recovery of amount of draw back where export proceeds not realized. Section 75 of the Act supercedes for Draw back on imported materials used in the manufacture of goods which are exported. However, if the export value is not received, or received less than the value of the imported materials, then, the Revenue can recover the amount of draw back paid to the Assessee. Rule 16-A of the Rules provides for the manner in which it could be recovered. It provides that a show cause notice is to be issued to the exporter for production of evidence of realization of export proceeds within a period of thirty days from the date of receipt of such notice and where the exporter does not produce such evidence within the said period of thirty days, the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, shall pass an order to recover the amount of draw back paid to the claimant and the exporter shall repay the amount so demanded within sixty days of the receipt of the said order. Section 4 of the Act deals with the appointment of Officers of Customs. Section 4(1) empowers the Board to appoint such persons as it thinks fit to be Officers of Customs. Sub-section (2) of the said Section provides, without prejudice to the provisions of Sub-section (1), the Board may authorize a Chief Commissioner of Customs or a Commissioner of Customs or a Joint or Assistant Commissioner of Customs or Deputy Commissioner of Customs to appoint Officers of Customs below the rank of Assistant Commissioner of Customs or Deputy Commissioner of Customs. By virtue of the powers so conferred under Sub-sections (1) and (2) of Section 4 of the Act, the Board has issued the Notification No. 17/2002 No. Cus. (N.T.), dated 7th March 2002 which reads as under:

Directorate of Revenue Intelligence (D.R.I.) officers appointed as Customs Officers - Notification No. 19/90-Cus. (N.T.) superceded.

In exercise of the powers conferred by Sub-section (1) of Section 4 of the Customs Act, 1962 (52 of 1962) and in supersession of notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 19/90/90-Customs (N.T.), dated the 26th April 1990, the Central Government appoints the officers mentioned in column (12) of the Table below to be the Commissioner of Customs, tire Officers mentioned in column (3) thereof to be the Additional Commissioners or Joint commissioners of Customs and Officers mentioned in column (4) thereof to be the Deputy Commissioners or Assistant Commissioners of Customs for the areas mentioned to the corresponding entry in column (1) of the said Table with effect from the dare to be notified by the Central Government in the Official Gazette:

TABLE

-------------------------------------------------------------------------------- Area of Designation of the Officers Jurisdiction -------------------------------------------------------------------------------- (1) (2) (3) (4) -------------------------------------------------------------------------------- Whole of Additional Direc- Additional Direc- Deputy Directors, or India tor General of tors, or Joint Direc- Assistant Directors, Revenue Intelli- tors, of Directorate of Directorate of gence posted at of Revenue Intelli- Revenue Intelli- Headquarters and gence posted at gence posted at Zonal/regional Headquarters and Headquarters and units. Zonal/regional Zonal/regional units. units. -------------------------------------------------------------------------------- [Notification No. 17/2002-Cus. (N.T.), dated 7-3-2002]

Therefore, the Director of Revenue Intelligence has been conferred with the power of the Commissioner of Customs. The power of such Officer to investigate and issue show cause notice calling upon the Assessee to pay back the draw back is not disputed. What is disputed is the power of the said authority to adjudicate the dispute. Relying on the circular dated 15th February 1999, which is issued in pursuance of the Notification No. 19/90 conferring the similar power where it has been held, though they have been conferred the power to investigate and issue show cause notice, adjudication is to be done as per Rule 16-A by the jurisdictional Commissioners, Additional Commissioners, Deputy Commissioners or Assistant Commissioners of Customs. The said circular which is issued to explain the effect of the Notification No. 19/1990 has no legs to stand because the Notification No. 19/1990 is superceded by Notification No. 17/2002. Section 5 of the Act deals with powers of Officers of Customs. Sub-section (2) of Section 5 provides, an Officer of Customs may exercise the powers and discharge the duties conferred or imposed under this Act on any other Officer of Customs who is subordinate to him.

Therefore, statutorily, it is provided that a higher Officer can perform the functions and duties of a subordinate Officer. It is by virtue of the statutory provision, the Director of Revenue Intelligence, who was appointed as Commissioner of Customs to investigate and issue show cause notice, has adjudicated the dispute regarding payment of duty draw back also. The Rule on which reliance is placed is attracted in the absence of a Notification. Once a Notification is issued in pursuance of Section 4(1) of the Act, then, person so appointed has all the powers conferred u/s 5(2) of the Act. That is precisely what the Tribunal has said and therefore, it is not possible to accept the contention that the Director of Revenue Intelligence had no jurisdiction to adjudicate the dispute regarding duty draw back. Reliance is also placed on the judgment of the Apex Court which has held that when a statute specifically states who should exercise the power, how power should be exercised and the same fashion is concerned, there is no quarrel with the legal proposition. Section 5(2) of the Act specifically provides that, a higher Officer of the Customs also has the power to perform functions and duties of a lower Officer. Therefore, a person appointed u/s 4(1) of the Act. by virtue of Section 5(2) of the Act, has the jurisdiction to exercise the power of a subordinate or a lower authority and therefore, the power exercised by the Director of Revenue Intelligence is as stipulated under the Act and therefore, be cannot be found fault with and therefore, he has the jurisdiction to adjudicate and he has adjudicated the said dispute.

In so far as the contention that the order passed by the Commissioner of Customs, adjudicating payment of duty draw back cannot be the subject matter of an appeal by the Tribunal is concerned, it is misconceived. The appeal provisions are contained in Section 129A of the Act, which reads as under:

129A. Appeals to the Appellate Tribunal:

(1) Any person aggrieved by any of the following orders may appeal to the Appellate Tribunal against such order.

Clause (a) of Sub-section (1) deals with a decision or order passed by the Commissioner of Customs as an Adjudicating Authority; Clause (b) of Sub-section (1) of Section 129A deals with an order passed by the Commissioner of Appeals u/s 128A of the Act. The proviso to the said Section makes it clear, an order passed in appeal by the Commissioner of Appeals u/s 128A is not appealable to the Appellate Tribunal, that is, a second appeal is not maintainable. Only a revision to the Central Government is provided for. In the circumstances of the case, the impugned order passed by the Commissioner of Customs is not in his appellate jurisdiction, but has passed the said order as an Adjudicating Authority, that is, order-in-original. Against the said order, Clause (a) of Sub-section (1) of Section 129A provides appeal to the Appellate Tribunal. Therefore, we do not see any merit in the said contention also. In the view we have taken, we do not see any merit in both the appeals and accordingly, both the appeals are dismissed.