Reassessment should only be carried out by an officer or his successor and not by an officer of the same rank: High Court of Gujarat

the Gujarat High Court bench Judge Sonia Gokani and Judge Rajendra M. Saraen, while invalidating the reassessment initiated by the DRI, ruled that the officer who made the assessment could only undertake a reassessment.

The petitioner/reviewer is a limited liability company and is engaged in the trading and manufacturing of goods such as inkjet printers, laser printers and printer parts and accessories. The petitioner has imported goods such as continuous ink jet printers (CIJ printers), laser marking machines, parts and accessories for CIJ printers and other similar goods from foreign countries. They are imported from China during the period from 2014 to 2021.

The assessee challenged the action of the respondent/department in initiating proceedings and conducting an inquiry/investigation into the imports made by the applicant at various customs stations.

The petitioner argued that shipments cleared for domestic consumption were sold by the petitioner to their customers because the petitioner was in business. Sales were impacted by compliance with due process and appropriate taxes due on these business activities were also paid.

DRI’s office, Chennai Zonal Unit, discovered the imports made by the petitioner and the department initiated an investigation against the petitioner. DRI officials found that the goods imported by the petitioner could be classified under CTH numbers 84433910, 84433990 and 84439960 and that the rate of customs duty on goods falling under these classifications was higher than the rates applicable to the classifications declared by the applicant.

According to the DRI officers, the petitioner had misclassified CIJ printers, parts of CIJ printers and laser marking machines for receiving a lower rate of duty or full exemption and, on this notion, the investigation was carried out by the department at all levels. customs posts. The representative of the Claimant’s customs agent was also summoned to DRI’s Chennai area office and declarations were recorded by DRI officers with respect to imports of the goods imported by the Claimant.

It was alleged that during the investigation, the petitioner was coerced and coerced into making monetary deposits for allegedly overdue customs duties on imported goods. The petitioner had no alternative and deposited Rs. 50 lakhs during the investigation.

Following investigation and investigation by the Additional Managing Director, DRI, Chennai, he issued a show cause notice invoking the provisions of Section 28(4) of the Customs Act. The Additional General Manager, DRI, Chennai has offered to reassess the import transactions made by the Claimant at various customs posts and differential customs duty has also been proposed to be charged and collected from the Claimant for goods imported into customs posts, alleging that they had misclassified the imported goods and paid a reduced rate of duty or benefited from an exemption from customs duties by using the wrong classification for the goods in question.

The petitioner argued that the entire procedure for issuing the show cause notice under section 28 of the Customs Act was invalid and without authority of law since the DRI officer was not the relevant customs officer and even the action taken was likely to be set aside when the procedure itself was conducted by a DRI officer.

The petitioner relied on the decision of the Supreme Court in the M/s case. Canon India Pvt. Ltd., in which it was held that the law conferred the power to do an act on different agents, and where these agents belong to different departments, they cannot exercise their powers under the case. When an officer exercises his powers of assessment, the power to order a reassessment must be exercised by the same officer or his replacement officer and not by an officer of a department designated as an officer of the same rank.

The court noted that in analyzing Section 28A(4) of the Customs Act, the Supreme Court held that the provision should be interpreted as conferring the power of review on the same officer or his successor who entrusted with the evaluation function. After a thorough analysis, the Court ruled that the entire procedure initiated by the Deputy General Manager of DRI by issuing show cause notices in all cases was invalid, without any authority of law and subject to reversal, and therefore the ensuing claims were also set aside.

The court overruled the show cause notices issued in each case by the DRI based on the ratio established by the Supreme Court in the M/s case. Canon India.

Case title: Messrs. Aztec Fluids And Machinery Pvt. ltd. Versus UOI

Quote: R/Special Civil Request Number 5562 of 2021

Date: 01.04.2022

Applicant’s lawyer: Lawyer Paresh M. Dave

Counsel for the Respondent: Lawyer Devang Vyas

Click here to read/download the order

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