In CUSAA 155/2022-DEL HC- Any preliminary exercise done by Officer of Customs to consider whether any question for consideration arises, would not preclude CAAR from giving its advance ruling on that question: Delhi HC 
Justices Vibhu Bakhru & Amit Mahajan [11-01-2023]

Read Order: DIRECTORATE OF REVENUE INTELLIGENCE (HQRS.) v. M/S SPRAYTEC INDIA LTD 

Mansimran Kaur

New Delhi, January 31, 2023:  Merely because an officer of customs contemplates that a question may arise, does not mean that the question is pending consideration. For a question to be stated to be pending, the concerned officer must formally set forth the same for the assessee to contest the same, the Delhi High Court has observed.

While dismissing  the appeal  preferred by the  appellant (Directorate of Revenue Intelligence ) under Section 28 KA of the Customs Act, 1962  impugning an order passed by the Customs Authority for Advance Ruling , whereby the representations made by DRI for treating the CAAR’s order as void ab initio, was rejected, the Division bench of Justice Vibhu Bakhru and Justice Amit Mahajan observed that in order for a question to be considered as pending before any officer of customs, it would be necessary for the question to be raised in any notice enabling the assessee to respond to the said issue. 

The DRI had made representations contending that the said order had been obtained by the respondent by fraud and misrepresentation of facts and therefore, was entitled to be declared as void ab initio in terms of Section 28K(1) of the Customs Act.

DRI claimed that it had not disclosed that the investigation in respect of the import of goods made by the respondent was being conducted by DRI. It claimed that if such disclosure was made by the respondent in its application, the application would be rejected in terms of the provision to Section 28-I of the Customs Act. 

The respondent had imported actuator and aerosol valves meant for perfumes and toilet sprays. It was stated that the office premises of the respondent were searched by DRI and various summons were issued by DRI between the period of January to June, 2019.

 According to the respondent, the last summon issued by DRI in the year 2019, was on May 16, 2019. It was material to note that the petitioner had imported certain goods against a Bill of Entry dated January 14, 2019. The said consignment was not released. Aggrieved by the same, the respondent had filed a writ petition before this Court.

The Coordinate Bench of this Court had disposed of the said writ petition by directing the Revenue to issue a provisional assessment order at the earliest and preferably, within a period of two weeks from that date.

Thereafter, the respondent filed an application before the Authority for Advance Ruling (AAR), seeking a ruling on the classification of goods in question under the Custom Tariff Act, 1975.

The CAAR issued a ruling in favour of the respondent, accepting its classification of the goods in question. DRI donce again issued the summons in March 2022. The respondent challenged the said summons by filing a writ petition. 

After considering the submissions, the Court noted that it cannot be disputed that the respondents statement, that clearance of its goods had been withheld at the instance of DRI, did indicate an investigation had been initiated by DRI. 

The reasons for so indicating may be erroneous but the factum that investigation had been initiated by DRI was disclosed. There was no reason to doubt that the respondent believed that the matter was closed as neither any pre-consultation notice nor any other show cause notice was issued by DRI at the material time, the Court noted. 

As per the Bench, since DRI had not issued any show cause notice, it couldnot be stated that the question of classification of goods was pending before any officer of customs, appellate tribunal, or any court.

It is relevant to note that the CAAR had also concluded to the effect that even if it was disclosed that there was an on-going investigation by DRI, the same would not be relevant to the outcome of the proceedings. Concededly, no pre-consultation notice or show cause notice had been issued by DRI or any other Authority and it would be erroneous to hold that the question of classification was pending before any Custom officer, Appellate Tribunal or any Court, the Court stated. 

Further Section 28-1 of the Customs Act was also taken into consideration.  In view of the same, the Court noted that in the present case, DRI had not issued any pre-consultation notice or show cause notice which would indicate that the question regarding classification of any goods was pending before DRI. Thus, even if it is accepted that an officer of DRI is an officer of Customs, it cannot be accepted that the question raised by the respondent in its application under Section 28H of the Customs Act was pending in the applicant's case before DRI.

“Any preliminary exercise done by an officer of customs, to consider whether any question for consideration arises, would not preclude the CAAR from giving its advance ruling on that question”, the Bench said while noting that the possibility that a question would arise for consideration of a customs officer, appellate tribunal or court, is not a ground contemplated under Clause (a) of the proviso to Section 28-I (2) of the Customs Act.

The Court thus observed that  a distinction must be made between that question pending consideration and a possibility of a question arising consideration. In light of the such observations, the Court failed to find any infirmity with the impugned order and dismissed the appeal.

In CUSAA 155/2022-DEL HC- Any preliminary exercise done by Officer of customs, to consider whether any question for consideration arises, would not preclude CAAR from giving its advance ruling on that question: Delhi HC 
Justices Vibhu Bakhru & Amit Mahajan [11-01-2023]

Read Order: DIRECTORATE OF REVENUE INTELLIGENCE (HQRS.) v. M/S SPRAYTEC INDIA LTD 

Mansimran Kaur

New Delhi, January 31, 2023:  Merely because an officer of customs contemplates that a question may arise, does not mean that the question is pending consideration. For a question to be stated to be pending, the concerned officer must formally set forth the same for the assessee to contest the same, the Delhi High Court has observed.

While dismissing  the appeal  preferred by the  appellant (Directorate of Revenue Intelligence ) under Section 28 KA of the Customs Act, 1962  impugning an order passed by the Customs Authority for Advance Ruling , whereby the representations made by DRI for treating the CAAR’s order as void ab initio, was rejected, the Division bench of Justice Vibhu Bakhru and Justice Amit Mahajan observed that in order for a question to be considered as pending before any officer of customs, it would be necessary for the question to be raised in any notice enabling the assessee to respond to the said issue. 

The DRI had made representations contending that the said order had been obtained by the respondent by fraud and misrepresentation of facts and therefore, was entitled to be declared as void ab initio in terms of Section 28K(1) of the Customs Act.

DRI claimed that it had not disclosed that the investigation in respect of the import of goods made by the respondent was being conducted by DRI. It claimed that if such disclosure was made by the respondent in its application, the application would be rejected in terms of the provision to Section 28-I of the Customs Act. 

The respondent had imported actuator and aerosol valves meant for perfumes and toilet sprays. It was stated that the office premises of the respondent were searched by DRI and various summons were issued by DRI between the period of January to June, 2019.

 According to the respondent, the last summon issued by DRI in the year 2019, was on May 16, 2019. It was material to note that the petitioner had imported certain goods against a Bill of Entry dated January 14, 2019. The said consignment was not released. Aggrieved by the same, the respondent had filed a writ petition before this Court.

The Coordinate Bench of this Court had disposed of the said writ petition by directing the Revenue to issue a provisional assessment order at the earliest and preferably, within a period of two weeks from that date.

Thereafter, the respondent filed an application before the Authority for Advance Ruling (AAR), seeking a ruling on the classification of goods in question under the Custom Tariff Act, 1975.

The CAAR issued a ruling in favour of the respondent, accepting its classification of the goods in question. DRI donce again issued the summons in March 2022. The respondent challenged the said summons by filing a writ petition. 

After considering the submissions, the Court noted that it cannot be disputed that the respondents statement, that clearance of its goods had been withheld at the instance of DRI, did indicate an investigation had been initiated by DRI. 

The reasons for so indicating may be erroneous but the factum that investigation had been initiated by DRI was disclosed. There was no reason to doubt that the respondent believed that the matter was closed as neither any pre-consultation notice nor any other show cause notice was issued by DRI at the material time, the Court noted. 

As per the Bench, since DRI had not issued any show cause notice, it couldnot be stated that the question of classification of goods was pending before any officer of customs, appellate tribunal, or any court.

It is relevant to note that the CAAR had also concluded to the effect that even if it was disclosed that there was an on-going investigation by DRI, the same would not be relevant to the outcome of the proceedings. Concededly, no pre-consultation notice or show cause notice had been issued by DRI or any other Authority and it would be erroneous to hold that the question of classification was pending before any Custom officer, Appellate Tribunal or any Court, the Court stated. 

Further Section 28-1 of the Customs Act was also taken into consideration.  In view of the same, the Court noted that in the present case, DRI had not issued any pre-consultation notice or show cause notice which would indicate that the question regarding classification of any goods was pending before DRI. Thus, even if it is accepted that an officer of DRI is an officer of Customs, it cannot be accepted that the question raised by the respondent in its application under Section 28H of the Customs Act was pending in the applicant's case before DRI.

“Any preliminary exercise done by an officer of customs, to consider whether any question for consideration arises, would not preclude the CAAR from giving its advance ruling on that question”, the Bench said while noting that the possibility that a question would arise for consideration of a customs officer, appellate tribunal or court, is not a ground contemplated under Clause (a) of the proviso to Section 28-I (2) of the Customs Act.

The Court thus observed that  a distinction must be made between that question pending consideration and a possibility of a question arising consideration. In light of the such observations, the Court failed to find any infirmity with the impugned order and dismissed the appeal.