Legal principle

Since the Customs Act, 1962 contains no machinery provision for proceeding against a deceased assessee's legal representatives, a demand of duty, interest or penalty cannot be pursued and the appeal abates under Rule 22 of the CESTAT (Procedure) Rules, 1982 upon the death of all partners of the noticee-firm.

Court decision

The Tribunal upheld the demand's validity on the proper-officer issue: DGCEI officers, having been appointed as officers of Customs under section 4(1) read with section 5(1) of the Customs Act before 06.07.2011, had authority to demand differential duty under section 28 during the material period, section 28(11) being constitutionally valid after the Supreme Court's review judgment in Canon India (2024 INSC 854) upheld section 97 of the Finance Act, 2022. However, on the appellant's plea, the Tribunal ordered the appeal to abate under Rule 22 of the CESTAT (Procedure) Rules, 1982 upon the death of all partners and closure of the firm, as the Customs Act contains no enabling provision to continue recovery against legal representatives — effectively favouring the appellant on abatement and recovery.

Facts

M/s. Raja Metal Corporation, a manufacturer-exporter of stainless steel utensils, imported SS coils/sheets duty-free under the Advance Licence Scheme but, on intelligence of diversion, DGCEI (Chennai Zonal Unit) searched its premises and found the imported goods had been diverted to the local market with no manufacture or export of SS utensils. The Commissioner of Customs (Seaport-Export), Chennai, by Order-in-Original No. 9745/2009 dated 6.10.2009, confirmed the Show Cause Notice proposals, confirming duty of Rs.56,94,794/- and appropriating Rs.7 lakhs voluntarily paid. The firm's three partners died between 2007 and 2024, the firm closed its business and its commercial tax registration surrender was accepted on 11.04.2017, after which the revenue recovery unit sought recovery from the surviving partner through section 142 notices, prompting restoration of the appeal that had been dismissed for non-prosecution.

Key provisions

• Section 142, Customs Act, 1962 — Recovery of sums due to Government
• Section 5, Customs Act, 1962 — Powers of officers of customs
• Section 28(1), Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 4, Customs Act, 1962 — Appointment of officers of customs
• Section 2, Customs Act, 1962 — Definitions
• Section 3, Customs Act, 1962 — Classes of officers of customs
• Section 110AA, Customs Act, 1962 — Action subsequent to inquiry, investigation or audit or any other specified purpose