Legal principle

Where goods are imported at a concessional rate of duty for manufacture of excisable goods, the Central Excise officer is competent under Rule 8 of the 1996 Rules to verify end-use and recover the duty differential with interest, and an appeal against an order of the Commissioner of Central Excise lies under Section 35B of the Central Excise Act, 1944, not under Section 129A of the Customs Act, 1962.

Court decision

The writ petition was dismissed. The Division Bench held that the show cause notices issued by the Commissioner of Central Excise, Chennai III to recover customs duty with interest were 'within the four corners of law' and that he was the competent authority to adjudicate under Rule 8 of the 1996 Concessional Rate Rules; consequently, the Order-in-Original dropping the demand was not in accordance with Rule 8. However, since the order was passed by the Commissioner of Central Excise, the appeal lay only before the Tribunal in Form AE-3 under Section 35B of the Central Excise Act, 1944 and not under Section 129A of the Customs Act, so the Customs Appeal C/104/03/MAS was not proper. The court noted the Central Excise Appeal E/786/03/MAS stood dismissed, left the second respondent free to appeal under Section 35G of the Central Excise Act if advised, held that revenue leakage cannot be condoned and the third respondent cannot benefit from jurisdictional confusion, and expunged paragraph 6 of the Tribunal's order casting aspersions on the then Commissioner of Customs. No costs; connected miscellaneous petition closed.

Facts

Pan Electronics India Ltd. imported biaxially oriented polypropylene/polyester film through Chennai Port, availing a 5% concessional rate of customs duty under Notification No.64/95-Cus dated 16.03.1995 as amended. The Commissioner of Central Excise, Chennai III, in whose jurisdiction the importer was registered as a Central Excise assessee, issued two show cause notices (38/2001 for Rs.2,92,88,507 and 9/2002 for Rs.55,59,982) alleging the corona-treated film imported was not the eligible 'plain plastic film of thickness 12 microns or below'. The Commissioner of Central Excise, however, dropped the proceedings in Order-in-Original No.15/2002 dated 31.07.2002, holding he had no jurisdiction to demand customs duty and that only the Commissioner of Customs was competent. The Commissioner of Customs (Port-Exports), Chennai, on review under Section 129A(2) of the Customs Act, appealed to CESTAT with a condonation of delay petition, which the Tribunal dismissed on 23.01.2004, prompting this writ petition under Article 226.

Key provisions

• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Rule 8, Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 — Recovery of duty in certain case
• Section 2(34), Customs Act, 1962 — Definitions
• Section 129(a), Customs Act, 1962 — Appellate Tribunal
• Section 28AB, Customs Act, 1962 — [Omitted] ****
• Section 4(i), Customs Act, 1962 — Appointment of officers of customs
• Section 5, Customs Act, 1962 — Powers of officers of customs