Pankaj 
2 September 2023 
131 Views 
Considering the issue involving the validity of certain questions raised by the Respondent-Assessee before the Customs Authority for Advance Ruling (CAAR), the High Court of Delhi clarified that in order for a question to be pending before a Customs officer, it was necessary for such question to have been raised in any Show Cause Notice, enabling an assessee to respond to the same.
It is only after this stage, that it became necessary for a Customs officer to render a decision on the question, the Bench clarified.
Such observations were rendered in backdrop of the provisions of Section 28-I(2) of the Customs Act 1962, which proscribe the CAAR from entertaining any question which was pending consideration in the Applicant’s case, before a Customs officer, the Appellate Tribunal (CESTAT) or any Court.
A Division Bench of Justice Vibhu Bhakru and Justice Amit Mahajan, further observed that just because a Customs officer contemplated that a question could arise, this did not entail that such question was pending consideration.
The Appellant, the Directorate of Revenue Intelligence (DRI), was represented by Advocate Harpreet Singh, whereas the Respondent-Assessee was represented by Advocate Anjali Jha.
The Respondent-Assessee had a difference with the DRI with respect to perfumes and toilet spray items imported by the Respondent. The Respondent claimed that they were classifiable under Customs Tariff Heading (CTH) 84248990, whereas the DRI took the view that the items were classifiable under a different heading, namely CTH 9616 and proceeded to raise tax demands.
The Respondent, meanwhile, approached the CAAR, which resolved the issue in favour of the Respondent. The DRI contested the validity of the CAAR’s order, claiming that the Respondent had obtained the order by presenting incomplete and misrepresented facts and that the issue raised before the CAAR was also the subject of two writ petitions filed by the Respondent.
However, these objections of the DRI came to be dismissed by the CAAR.
On hearing the contentions of both sides, the Bench first observed from the facts on record that no pre-consultation notice or Show Cause Notice had been issued to the Respondent by the DRI. Hence the Respondent could not be faulted for assuming that the proceedings against it had been closed. (Para 10)
Moreover, the Bench observed that since the DRI had not issued any Show Cause Notice, it could not be stated that the question of classification of goods was pending before any officer of customs, appellate tribunal, or any court. (Para 11)
The Bench laid emphasis on the fact that no pre-consultation notice or Show Cause Notice was issued to indicate that the question regarding classification of any goods was pending before DRI. Keeping this in mind, the Bench rejected the Appellant’s contention 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.
The Bench further clarified that for a question to be stated to be pending, the concerned officer had to formally set forth the same for the Assessee to contest the same. Any preliminary exercise done by a Customs officer, to consider whether any question for consideration arises, would not preclude the CAAR from giving its advance ruling on that question.
Solely because a Customs Officer anticipated that a question could arise was not the same as deeming such question as pending consideration, the Bench stated. Clearly, a distinction must be made between that question pending consideration and a possibility of a question arising consideration, the Bench emphasized.
With these observations, the Bench sustained the order passed by the CAAR and found no reason to interfere with it.
Cause Title: Directorate of Revenue Intelligence (Hqrs.) Vs M/s Spraytec India Ltd [CUSAA 155/2022 / 2023-Enterslice-3-HC-Del-Customs]
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