Is Deputy Commissioner liable to issue SCN in case demand involved more than 5 lakhs and involves wilful misstatement?

PJ/Case Law/2020-2021/3642

M/s. New Pensia Industries Vs. Union of India Order No. C/SCA/7469/2020 Dated 18.08.2020
Brief Facts:The appellant has challenged Show Cause Notice on ground that the Deputy Commissioner was not the competent authority for adjudication in case demand is more than 5.0 lacs and allegation of wilful, misstatement or suppression as per Circular dated 31.05.2011.
Issue: Is Deputy Commissioner liable to issue SCN in case demand involved more than 5 lakhs and involves wilful misstatement?
Appellant Contention’s:The Show Cause Notice has alleged that the assessee has knowingly classified its goods in different category to avoid duty and misused the drawback claim amounting to more than Rs.5.0 lakhs. According to para 5(2) of circular, Additional/Joint Commissioner is competent authority for adjudicating the above matter. In the instant case, the department has initiated the proceeding according to serial 5(i) of said circular that is not tenable.
Respondent Contention’s:According to clause(i) of para-5 of the Circular, the Assistant Commissioner would be the adjudicating officer and as such the notice is valid. The contention by the counsel for the petitioner deserves to be rejected.
Decision: The case will be cover clause (ii) of Para-5 of circular because Show Cause Notice was alleged that the petitioner had knowingly classified its goods in a different category in order to avoid duty, it would amount to wilful misstatement and not a bonafide error. Secondly the involvement of drawback was more than Rs.5.0 lacs. Hence order will be adjudicated by authority not below the rank of additional/Joint Commissioner of Customs. The writ petition is allowed and Show Cause Notice is hereby quashed. It would be open to the respondent to issue fresh show cause notice under the signature of competent authority.
Comment:The instant case covers clause (ii) of Para 5 of circular due to involvement of duty drawback is more than 5.0 lakh and allegation of knowingly classifying the goods in different category would amount to wilful misstatement. Hence, the writ petition is rightly allowed by High Court on the basis of circular.

Prepared by- Vijay Singh

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PJ/Case Law/2020-2021/3642

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