Honourable Madras High Court in “Quantum Coal Energy (P) Ltd. Vs Commissioner, Office of the Commissioner of Customs” quashed the imposition of Penalty under Section 112(a) or 114AA of the Customs Act, 1962 stating the reason that ‘Show Cause Notice’ was not issued by Proper Officer. The Honourable court held that an officer who did an assessment can only do a re-assessment.
The petitioner, Quantum Coal Energy (P) Ltd. is an importer — It imports coal from abroad. As per the petitioner, during the time span, from March 2012 to November 2012, he is an importer of steam coal. At the aforesaid time, the Government of India had declared concessions and exemptions on the import of steam coal. The coal imported by the petitioner was accepted as steam coal by the Customs authority as steam coal and consequently, concessions and exemptions were allowed to the petitioner.
While so, the Additional Director General, Directorate of Revenue Intelligence issued the show cause notice (as per section 28 of the Customs Act, 1962) to the petitioner asking why action “should not be taken against the petitioner for misrepresentation of Bituminous coal as steam coal.” In consequence, The petitioner submitted his reply. The Additional Director General Rejected the stand taken by the petitioner and finally, a penalty was imposed on the importer as well as the Managing Director of the importer company.
Thereafter The petitioner filed the writ petition in the court and pleaded before the honorable court to quash the Order of the Additional Director General of imposing a penalty of Rs.1,00,000 as per Section 112(a) or 114AA of the Customs Act, 1962. The single-judge bench of Justice G.R.Swaminathan noted the fact that the show-cause notice had been issued by the unconcerned/improper authority—Additional Director General of DRI who was improper/ not the proper officer to exercise the power as per Section 28(4).
The Madras High Court said that It is well-known that when a statute issues the directive to do things in a certain way, it should be done in that way alone. Here in this case, when the law directs that only the proper officer can fix the duty not levied/not paid, it does not indicate any proper officer but only officer alone.
The Honourable Judge held that in this case, the initiation of the recovery proceedings by the Additional Director General of DRI, in the present case, is without any jurisdiction. Consequently, it is liable to be set aside. The court allowed the petition of the petitioner and held that the entire proceedings began/ were initiated by an authority who did not have jurisdiction and so the order impugned in the aforesaid writ petitions is quashed.
