Messrs Aztec Fluids And Machinery Pvt. Ltd. Vs Union of India (Gujarat High Court)
Facts- M/s. Aztec Fluids & Machinery Pvt. Ltd. is a Private Limited Company engaged in the business of trading and manufacturing of goods like Inkjet Printers, Laser Printers and parts as well as accessories of such printers.
In the present case, the Customs Officer assessed the import documents filed by the Petitioner for the imported goods. Custom duties leviable on the imported goods in accordance with the rates applicable have also been finally assessed by the Customs Officers and the duties so assessed have been fully paid by the petitioner.
However, the Directorate of Revenue Intelligence (DRI) Officers believed that the petitioner had misclassified the CIJ Printers, parts of CIJ Printers and Laser Marking Machines for availing lower rate of duty or full exemption and on those notions, the investigation was conducted. Accordingly, post inquiry and investigation by the Additional Director General, DRI, has issued Show Cause Notice invoking the provisions of Section 28(4) of the Customs Act. The Additional Director General, DRI, Chennai, has proposed to reassess transactions of imports made by the petitioner at various Customs Stations.
The petitioner challenged the action of the respondent on the basis that the proceedings initiated by the respondent are wholly illegal and without jurisdiction because the DRI Officer is not the proper officer who can invoke Section 28 of the Customs Act and therefore, the notice issued by the respondent under Section 28 of the Customs Act is ex-facie illegal and without any authority or jurisdiction.
Conclusion- While analyzing Section 28A(4) of the Customs Act, the Apex Court in the case of M/s. Canon India Pvt. Ltd., has held that the provision must be construed as conferring the power of such review on the same officer or his successor who has been assigned the function of assessment. An officer who did the assessment could only undertake reassessment and after extensive analysis, the Court held that the entire proceeding initiated by the Additional Director, General of DRI by issuing show cause notices in all the matters are invalid, without any authority of law and liable to be set aside and accordingly, ensuing demands also have been set aside.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. These are the group of petitions which are being disposed of by a common order for the reason that they all contain identical question of law and the facts are largely similar, however, they may differ.
2. The lead matter is Special Civil Application No. 5562 of 2021 and the facts are drawn from the said matter for the purpose of adjudication.
3. M/s. Aztec Fluids & Machinery Pvt. Ltd. – petitioner herein is a Private Limited Company engaged in the business of trading and manufacturing of goods like Inkjet Printers, Laser Printers and parts as well as accessories of such printers. The petitioner no.2 is the Managing Director and also a member of the petitioner. He is a citizen of this Country and is entitled to the constitutional guarantees enshrined under the Constitution of India.
3.1. The respondent no.1 is the Union of India whereas the respondent nos. 2 to 7 are the officers of the Union of India. The respondent nos. 2 and 3 are the officers of Customs having jurisdiction over the imports made by the petitioner under Ahmedabad Customs Commissionerate including Ahmedabad Air Cargo Complex as well Khodiyar ICD. The respondent No.4 is the Commissioner of Customs in charge of Nhava Sheva Port where the petitioner has imported certain consignments of the goods. The respondent no.5 is the Additional Commissioner of Customs in charge of Air Cargo Complex at Sahar Customs Station where also the petitioner has imported certain consignments of the goods. The respondent no.6 is the Deputy Commissioner of Customs in charge of ACC, New Delhi and the respondent no.7 is the Additional Director General of Directorate of Revenue Intelligence, Chennai Zonal Unit which is an agency for conducting inquiry and investigation in respect of imports and exports made in the country and also for causing inquiry and investigation with regard to provisions of the Customs Act, 1962 for imports and exports made in the country.
3.2. The challenge is made to the action of the respondent no.7 which has initiated the proceedings and conducted inquiry/investigation for the imports made by the petitioner at various Customs Stations under jurisdiction of respondent nos. 2 to 6 and those proceedings are under challenge.
3.3. The petitioner is a Company registered and incorporated in year 2010 and thus, it is conducting trading business for last 11 years. The petitioner has been importing goods like Continuous Inkjet Printers (CIJ Printers), Laser Marking Machine, parts and accessories of CIJ Printer and such goods from foreign countries. They are being imported from China during the period from 2014 to 2021.
3.4. Chapter 84 of the Customs Tariff is for machinery and mechanical appliances and various goods like Nuclear Reactors, Boilers, machinery and mechanical appliances and parts thereof classified under Chapter 84 of the Customs Tariff. Under Heading 8443 of the Tariff, the goods covered are like Printing machinery used for printing by means of plates, cylinders and other printing components, other printers, copying machines and Facsimile machines, whether or not combined and parts and accessories thereof.
3.5. The Petitioner has declared classification of the goods imported by them under Customs Tariff Heading Nos. 84433250/40, 84433290, 84439951/59 and 84718000. All the consignments of the goods imported by the Petitioner at the Customs Stations under jurisdiction of Respondent Nos. 2 to 6 have been classified by the proper Customs Officers in charge of such Custom Stations under the above referred classifications and the proper officers of Customs in charge of these Customs Stations have finally assessed the import documents like Bills of Entry and Airway Bills filed by the Petitioner for the imported goods under the said classifications. Custom duties leviable on the imported goods in accordance with the rates applicable under the above referred Customs Tariff Headings have also been finally assessed by such Customs Officers and the duties so assessed have been fully paid by the petitioner for the said period. In absence of any kind of dispute on such facts, the petitioner has chosen not to produce any documents in respect of such assessment and collection of such duties.
3.6. It is the case of the petitioner that this petition involves consignments which had been allowed to be cleared for home consumption which have been sold by the petitioner to their customers as the petitioner is engaged in trading business. The sales has been effected by following due procedure and appropriate taxes leviable on such trading business also have been paid.
3.7. Around February, 2020, the office of DRI, Chennai Zonal Unit came across the imports made by the petitioner and thereupon, the respondent no.7 initiated investigation against the petitioner. The DRI Officers formed a belief that the goods imported by the petitioner were classifiable under CTH 84433910, 84433990 and 84439960 and the rate of custom duties on the goods under these classifications was higher than the rates applicable for the classifications declared by the petitioner. According to the DRI Officers, the petitioner had misclassified the CIJ Printers, parts of CIJ Printers and Laser Marking Machines for availing lower rate of duty or full exemption and on those notion, the investigation was conducted by respondent no.7 at all the Customs Stations under jurisdiction of respondent nos. 2 to 6. The representative of the petitioner’s Customs House Agent and the 2nd petitioner were also called at Chennai Zonal Office of DRI and the statements were recorded by the DRI Officers in respect of the imports of the goods imported by the petitioner. It is also alleged that during the investigation, the petitioner was forced and pressurized to make monetary deposits towards the custom duties allegedly short paid on the imported goods and it is also further stated that the petitioner left with no alternative and has deposited Rs. 50 lakhs during investigation. Two TR-6 Challans bearing No.1846 dated 17.3.2020 and No.1 dated 20.4.2020 prepared for deposit of such sum of Rs.50 lakhs and the 7th respondent has transferred the same to the credit of the Central Government at Ahmedabad in the account of the Principal Commissioner of Customs, Ahmedabad – respondent no.2 herein.
3.8. As a result of inquiry and investigation by the Additional Director General, DRI, Chennai, it has issued Show Cause Notice being F.No.DRI/CZU/VIII/26/17/2020 dated 24.02.2021 invoking the provisions of Section 28(4) of the Customs Act. The Additional Director General, DRI, Chennai, has proposed to reassess transactions of imports made by the petitioner at various Customs Stations and differential custom duties were also proposed to be demanded and recovered from the petitioner for the goods imported at such Customs Stations alleging that they have misclassified the imported goods and paid a reduced rate of duty or availed exemption from custom duties by resorting to the wrong classification for the goods in question.
3.9. The petitioner has to show cause to the respondent nos. 2 to 6 as to why the reassessment and recovery should not be made as proposed along with the interest, penalty and confiscation of the goods, etc. It is alleged by the petitioner that the proceedings initiated by the respondent no.7 are wholly illegal and without jurisdiction because the DRI Officer is not the proper officer who can invoke Section 28 of the Customs Act and therefore, the notice issued by the respondent no.7 under Section 28 of the Customs Act is ex-facie illegal and without any authority or jurisdiction.
3.10. It has heavily relied upon the decision in case of M/s. Canon India Pvt. Ltd. vs. Commissioner of Customs [2021(3) SCALE 748].
3.11. It is urged that the entire proceedings of issuance of the show cause notice under Section 28 of the Customs Act is invalid and without authority of law since the DRI Officer is not the proper officer of the Customs and even the action taken is liable to be set aside when the proceedings itself is by DRI officer. It is also further the grievance of the petitioner that all concluded transactions are proposed to be reassessed for which the DRI Officer has initiated proceeding for recovery of duty allegedly not paid on the goods imported by the petitioner and such proceeding is initiated under Section 28(4) of the Customs Act however, such reassessment resulting in recovery of short paid customs duties could be initiated only by “the proper Officer” because only the proper officer has conferred power of review and reassessment under Section 28 of the Act. The reassessment under Section 28 of the Act is permissible only by the Officer who has carried out the assessment in the first place and not by any officer who is not involved in the assessment when the goods were imported and allowed to be cleared for the home consumption.
3.12. As held by the Hon’ble Supreme Court in M/s. Canon India Pct. Ltd. (supra) the Additional Director General of DRI is not “the proper officer to exercise the power under Section 28(4). Therefore, a serious challenge is made to the said show cause notice dated 24.02.2021.
3.13. It is further the case of the petitioner that the amount of Rs. 50 lakhs deposited by the petitioner under pressure and force during the investigation is also required to be returned and the same is to be construed as only deposit and without following due procedure of assessment, such amount cannot be retained by the authority and the same is in violation of Article 265 of the Constitution of India. He has sought to rely on some of the decisions for the said purpose.
3.14. In the said premises, the following prayers are sought: –
(A) That Your Lordships may be pleased to issue a Writ of Prohibition or any other appropriate writ, direction of order completely and permanently prohibiting all the Respondents herein from taking any actions against the Petitioner pursuant to proceeding by way of Show Cause Notice F.No.DRI/CZU/VIII/26/17/2020 dated 24.02.2021(Annexure-“A”);
(B) That Your Lordships may be pleased to issue a Writ of Mandamus or any other appropriate writ, order or direction quashing and setting aside Show Cause Notice: F.No.DRI/CZU/VIII/26/17/2020 dated 24.02.2021 (Annexure “A”) issued by the DRI Officer i.e. Additional Director General of DRI, with a direction in the Petitioner’s favour to return, restitute and refund Rs.50 lakhs deposited by the Petitioner during investigation;
(C) Pending hearing and final disposal of the present petition. Your Lordships may be pleased to stay all actions including adjudication of Show Cause Notice F.No.DRI/CZU/VIII/26/17/2020 dated 24.02.2021 (Annexure “A”);
(D) An ex-parte ad-interim relief in terms of para 20(C) above may be kindly be granted;
(E) Any other further relief as may be deemed fit in the facts and circumstances of the case may also please be granted.”
4. This Court (Coram:- Mr. Vikram Nath, the Then Hon’ble The Chief Justice as his Lordship then was and Mr. Bhargav D. Karia, J.) admitted this matter and issued notice on 26.03.2021 with the following order: –
“Heard Shri Paresh M. Dave, learned counsel for the petitioner.
Admit. Issue Notice.
By means of this petition under Article 226 of the Constitution, the petitioner has prayed for quashing of a show cause notice dated 24.02.2021 issued by the Additional Director General, Directorate of Revenue Intelligence, Chennai Zonal Unit, on the ground that the said officer cannot fall within the definition of a proper officer and as such could not have issued the notice under Sections 28 and 124 of the Customs Act, 1962. Reliance has been placed upon a recent judgment of the Supreme Court dated 09.03.2021 passed in Civil Appeal No.1827 of 2018, M/s.Canon India Private Limited vs. Commissioner of Customs, wherein it has been held that officers of Directorate of Revenue Intelligence would not fall within the domain of proper officer for initiating proceedings under Section 28 of the Customs Act, 1962. Prima facie case for interim relief is made out. As an interim measure, we provide that further proceedings pursuant to the impugned show cause notice shall remain stayed. However, any proper officer duly authorized may initiate appropriate proceedings, if deems fit and permissible in law.”
4.1. The interim relief granted by the Court has continued till date.
5. In response to the said notice, learned Additional Solicitor General Mr. Devang Vyas has appeared and resisted these petitions strenuously.
5.1. The affidavit-in-reply is filed for and on behalf of respondent nos. 1,2, 3 and 7. The Additional Director General, Directorate of Revenue Intelligence, Chennai Zonal Unit has denied all the allegations and contentions. According to the respondents, the petition itself is not maintainable and deserves to be dismissed in limini.
5.2. It is further urged that the intelligence gathered indicated that the petitioners were importing CIJ printers, Laser Marking Machines, Parts and accessories of CIJ printers used for product marking and coding by misdeclaring them as Inkjet printers, Laser printers and parts and accessories of printing machinery and misclassifying them under 84433240/84433250 and 84433290/84439951/84439959 respectively of the Customs Tariff Act, 1975 and it wrongly availed exemption Notification No. 24/2005 SI No. 2E which pertains to goods of CTH 84433250 in order to evade and pay lower Basic Customs Duties (BCD) and other applicable duties. The investigation therefore was initiated under summons proceedings.
5.3. The statements were recorded of Shri Pulin Vaidhya, Managing Director on 20.02.2020. It is being revealed from the statement that they were classifying the CIJ printers under 84433250 since September, 2016. No reason was attributed for the same and they also frequently changing the ports and adopting different classification for parts of CIJ printers. They have changed the port of import from ICD Sabarmati once the classification issue was raised by Customs and the duty payment under protest was not informed to the other ports.
5.4. In the statement of Shri Pratik Shukla, CHA, M/s. CNG Logistics Pvt. Ltd. on 03.11.2020 revealed that the importer informed that the imported product is classifiable under 84433250 by showing them the catalogue that they have claimed NIL rate of duty exemption under Notification No. 24/2005 SI. No. 2E and the Managing Director – petitioner no.2 had informed that his competitors were clearing similar products with NIL rate of duty by claiming Notification No. 24/2005 SI. No. 2E as Inkjet Printers and hence, they started filing the documents by claiming the notification exemption and they were asked to clear parts under 84439959 but the customs did not allow the classification and hence, they started classifying the parts under 84439990, which the company also accepted.
5.5. According to the statement of the petitioner no.2 on 15.12.2020, these printers were used for coding and marking of details such as batch no., expiry date, QR code, logo and he along with his Custom House Agent arrived at the HSN based on the classification being adopted by other companies importing these printers, whereas the version of the CHA is that they were filing the BoE classifying the CIJ printers under 84433250 after getting approval from the company.
5.6. According to the respondents, the investigation further revealed that description of these machines is different in the website of the importer/brochure submitted by the importer as well as on the website of supplier than the description given in the invoices and bills of entry. This terms not only the misdeclaration of goods as “Inkjet Printer” in Bills of Entry in order to misclassify them and evade custom duty, but the petitioners have willfully misstated the facts to the department by wrongly classifying the subject goods under CTH 84433250 instead of actual classification under CTH 84433910.
5.7. According to the respondents, the declared classification for CIJ printers and Laser marking machines and their parts during the period from 01.02.2016 to 15.02.2020 under CTH Nos. 84433240 and 84433250 is wrong and liable for rejection. For Laser Making Machines re-classification under CTH No.84433990 for CIJ printers 84433910 and for parts of CIJ printers 84439960 would be necessary and thus, the duty short paid by the petitioner in respect of import of such goods during the period from 01.02.2016 to 15.02.2020 in respect of goods imported through Ahmedabad Air Cargo, Nhava Sheva Port, Air Cargo Mumbai, ICD Khodiyar, Delhi Air Cargo, amounts to Rs. 2,58,79,376/- (Rupees two crore fifty eight lakhs seventy nine thousand three hundred and seventy six only) and the same is liable to be recovered in terms of Section 28 (4) of the Customs Act, 1962, along with applicable interest in terms of Section 28 (AA) and hence, the same was demanded by way of show cause notice.
5.8. It is denied that the power of issuance of show cause notice and the power of adjudication is not with the respondent no. 7 as he is not ‘proper officer’ under Section 28(4) of the Customs Act, 1962 as, as per the decision of M/s. Canon India Pvt. Ltd. (supra) the authorities appointed in the Directorate of Revenue Intelligence (DRI) are not the proper officer under Section 28(4) of the Customs Act and not empowered in law to issue and adjudicate Show cause notice under Section 28(4) of the Customs Act, 1962.
5.9. It is urged that 09.03.2021 order is not final and the review is filed on 07.04.2021 before the Apex Court, therefore the matter cannot be decided.
5.10. Reliance is placed on the decision of Calcutta High Court in case of of Directorate of Revenue vs. Navneet Kumar [(2020) 371 ELT 270] that the Directorate of Revenue Intelligence is only an arm of the Customs department and not alien to the Customs department. It has further explained that the DRI was set up under the Notification dated 04.12.1957 issued by the Ministry of Finance. Various Notifications were issued from time to time under Section 2(34) read with Section 4 of the Customs Act, 1962, according to the respondents, have not been placed before the Apex Court which resulted into the order dated 09.03.2021. They have tabulated the notifications right from 1990 to 2015.
5.11. It is further contended that the Apex Court in case of Commissioner of Customs vs. Sayed Ali [265 ELT 17] vide judgment dated 18.02.2011 held that unless and until the officers are appointed as proper officer under Section 2(34) read with Section 4 & 5 of the Customs Act 1962, assigning the function of adjudication under Section 28, it is not possible to conclude that the officers are empowered to discharge the function of issuing Show Cause Notice. Thereafter, the Finance Act, 2011 inserted sub-section (11) in Section 28 of the Act and also simultaneously issued Notification No. 44/2011-Cus. (N.T.) dated 06.07.2011 under Section 2(34) of the Customs Act, 1962 assigning the function of proper officer under Section 17 & 28 of the Customs Act, 1962 to the DRI officers. This amendment in the Act in light of Apex Court decision in Sayed Ali (supra), a bill was placed before the Parliament of India and it was clarified that true legislative intent is that the show cause notices issued by Customs Officers, i.e., officers of the Commissionerates of Customs (Preventive), Directorate General of Revenue Intelligence (DRI), Directorate of Central Excise Intelligence (DGCEI) and Central Excise Commissionerates for demanding customs duty not levied or short levied or erroneously refunded in respect of goods imported are valid, irrespective of the fact that any specific assignment as proper officer was issued or not. It was therefore urged that the Parliament has validated the true legislative intent for empowering DRI officers in addition for investigating cases of short levy, non levy and erroneous refunds.
5.12. It is further the say of the respondent that the decision of the Supreme Court has to be read in light of the facts and provision of the Act which came into consideration. The Apex Court, upon arguments placed by the petitioner in case of M/s. Canon India Pvt. Ltd. (supra) has held that there is no entrustment of powers on officers of DRI for issuing show cause notice under section 6 of the Customs when in fact a very officer of the DRI notified as proper officer under Section 2(34) of the Customs Act and is assigned the functions of adjudication under Section 17 and 28 of the Act, the plea raised by the petitioner loses significance. Moreover, when the Apex Court in case of Sayed Ali (supra) held that the Government had to issue notification under Section 2(34) of the Customs Act, 1962 by specifically assigning the functions specified for adjudication which has been done in the Notification No.44/2011-Cus (N.T) on 06.07.2011.
5.13. It is further argued that the Apex Court in the case of Sayed Ali (supra) has stated that the source of power to act as a “proper officer” is Section 2(34) of the Customs Act and not Sections 4 and 5 of the Customs Act. Sections 4 & 5 of the Customs Act, 1962 merely authorizes the Board to appoint officers of Customs and confer on them the powers and duties to be exercised for the purpose of Section 28 of the Act. An officer of customs has to be designated as “proper officer” under Section 2(34) of the Act by assigning the function of levy and collection of duty by the Board or the Commissioner of Customs.
5.14. It is also contended by the respondents that in light of the judgment of the Apex Court in case of Sayed Ali (supra) the notifications as tabulated in the said affidavit-in-reply were issued by the Central Government under Sections 4 & 5 read with Section 2(34) of the Customs Act appointing the DRI officers as proper officers. It is emphasized that the Apex Court in M/s. Canon India Pvt. Ltd. (supra) observed that unless the authorities are notified as proper officers under Section 6 (which applies to officers of other department appointed as customs officers) they are not considered as “proper officers”. The attention of the Apex Court in the case of Canon India had not been invited to the Notifications referred to in the table in para 12 of the said affidavit and also to the decisions of the Division Benches of various High Courts detailed in para 15 of the affidavit.
5.15. It is urged that the attention of the Apex Court was not invited to the amendment made to Section 28 of Finance Act, 2011 and when the Notifications and decisions are not considered while passing the order, then such decision is only persuasive. In such circumstances, it is urged that the Court may consider this notifications.
5.16. It is further stated that as against the order of the Canon India dated 09.03.2021 the department had filed review petitions on 07.04.2021 and the same are pending. The mention was made on 06.07.2021 through video conference and request was made to Hon’ble the Chief Justice by learned Solicitor General of India and the matters are still pending so also the Canon India decision is not final which is contested by the department in view of the difference of reasoning rendered in Sayed Ali and various notifications tabulated in the affidavit.
5.17. Reliance is placed on the decision of Madras High Court in the case of Sri Sathya Jewellery vs. the Principal Commissioner of Customs [WP. No.3144 of 2016 and allied matters, decided on 15.04.2021], where the Court declined to apply the said decision of the Canon India and relegated the petitioners to appellate remedy since the facts were to be investigated and the Canon India was a decision which was a Civil Appeal against the order of the High Court and the said decision was not accepted and not final in view of the review petition filed.
5.18. The respondents have also replied on the decisions of Karnataka High Court in case of The Commissioner of Customs vs. M/s. Rajesh Exports Ltd. [CSTAT 04/2009, decided on 25.08.2021] and The Commissioner of Customs Vs M/s. Bank of Nova Scotia [CSTA 5/2009], wherein the hearing of the appeal was deferred and the parties were given liberty to mention the matters as and when the proceedings in review petition is concluded before the Supreme Court.
5.19. It is further urged that various High Courts have considered the contentions and either stayed the adjudication of the show cause notice where the adjudication is pending till the outcome of the review petition filed in the Apex Court or directed the adjudicating authority to decide the issue of jurisdiction in accordance with law or directed to exhaust the remedies available under the law where already an adjudication order had been passed.
5.20. The High Court of Bombay in WP No. 1088/2021 disposed of the matter with a direction to the adjudicating authority to decide the issue of jurisdiction in accordance with law. Likewise, Delhi High Court in WP(C) No. 6044/2021 also did the same. The Calcutta High Court in WPO No. 592/2021 also firstly directed the adjudication on the jurisdictional issue and pass the final order. High Court of Madras in WP No. 12502/2021 directed the parties to approach the appellate authority whereas the Telangana High Court at Hyderabad in IA No. 01/2021 in WP No. 8460/2021 gave interim stay.
5.21. According to the respondent, the review application is submitted under Section 27 of the Customs Act, therefore, the refund of duty of Rs. 50 Lakhs is a process to be followed. It is further urged that the Court may not consider the demand of the petitioner for refund of duty as there is an alternative remedy available to the petitioner.
5.22. The respondent has attempted to further highlight the issue which fall for consideration before the Apex Court at para 4 of the decision. The framing of the issue by the Apex Court in para 6, 9 and 12 also have been heavily relied upon. It is further submitted by the respondents that the Finance Act, 2011 (Act No.08 of 2011) dated 08.04.2011 has introduced the concept “Self Assessment of Customs” duty with effect from 08.04.2011 and the Central Board of Excise and Customs has issued Circular No. 17/2011- Customs dated 08.04.2011 regarding implementation of Self Assessment in Customs which states that “the responsibility for assessment would be shifted to the importer / exporter, the Customs officers would have the power to verify such assessments and make re-assessment where warranted. The importer or exporter at the time of self assessment will ensure that he declares the correct classification, applicable rate of duty, value, and benefit of exemption notifications claimed, if any, in respect of the imported/export goods while presenting Bill of Entry or Shipping Bill.”
5.23. According to the respondents, in the present case, the investigation was brought to light the misclassification of import products resorted to by the petitioner for evasion of appropriate customs duty. Thus, it is urged to dismiss the petition as the same is not maintainable.
6. The written submissions given by the respondent reiterates what has been contended in the affidavit-in-reply. It also tries to emphasize that certain statutory provisions such as Section 28(11), as also, applicable notifications have skipped the attention of the Apex Court which was crucial statutory provision and which can be said to be distinguishing factor so far as M/s. Canon India judgment is concerned. It is further urged that Section 28(11) begins with non-obstantive clause and it refers to ‘proper officer’ as also use of word ‘officers’. Such use of plural indicates that the parliament was conscious with regard to the scheme of the Act and exercise of powers by various officers as proper officers under different sections. No infirmity is found in appointment of DRI Officers to act as Customs Officers under Notification No. 17/2002 dated 07.03.2002. It is further submitted that in the Canon India, the Apex Court has relied on Section 6 which is for entrustment of functions of the officers of Customs on certain other officers which are any officers of Central of State Government or of a local body. It is therefore urged that by conjoint reading of Section 4, notifications issued and Section 6, it becomes clear that Section 6 is only for the purposes of those officers who are not specifically appointed under Section 4. It is further submitted that subsequent notifications entrusting specific functions being assigned to officers of DRI to function as proper officers, is a consequence of Sections 4 and 5 and the appointments made thereunder. The law is clear so far as the powers of review are concerned and even at the stage of Section 28, the proper officer does not exercise the powers of review. However, the proper officers exercise independent powers as proper officers subject to provisions and conditions laid in Section 28. Therefore, “in that view of the matter also it cannot be said that the show cause notices will have to be issued by the same officer who has done assessment or reassessment of the duties under Section 17.”
6.1. It is emphasized that Section 28(11) refers to the proper officer and officers in plural is very significant as it clearly reflects the legislative intent to recover the duty short paid, not paid or erroneously refunded by assigning powers under Section 28 to multiple officers. “By not noticing this difference of singular word ‘officer’ in Section 17(4) and plural word ‘officers’ in Section 28(11) as apparent from the order dated 09.03.2021, this crucial aspect has been lost sight of and has caused the fatal error therein. Without striking 28(11) of the statute, the Hon’ble Court cannot take away the powers vested in officers other than the assessing officer and his successor in office.”
6.2. In short, it has questioned the decision of the Apex Court by stating that “there is an error apparent on the face of the record in para 21 as Hon’ble Supreme Court has held that officers of DRI should have been entrusted with functions of customs officers under Section 6 of the Customs Act by the Central Government. This error has crept in as DRI has been considered as a separate department in this order dated 09.03.2021, which it is not. The administrative structure of CBIC, under which DRI has been assigned the enforcement function under the Customs Act, has not been considered by the Hon’ble Supreme Court. Entrustment under Section 6 is done only to those officers of Central Government, State Government and Local Bodies who are not the officers of Customs and who are not under the administrative control of CBIC.”
6.3. The heading of Section 6 itself specifies that it is meant for “entrustment of functions of Board and Customs Officers to certain other officers.” DRI officers are fully under the administrative control of CBIC and have been appointed as officers of Customs under Section 4(1) of the Act, as mentioned in the Act.
6.4. It is therefore urged that the Court may decide these matters on their independent individual facts instead of merely relying on the decision of Canon India.
7. The petitioners have also submitted their written submissions which urges that it is impermissible for a subordinate Court to independently consider an issue that has been finally decided by the Apex Court and even though certain provisions of law were not considered by the Apex Court, a subordinate Court cannot examine the same issue again on the basis that the relevant provisions were not brought to the notice of the Court.
7.1. The reliance is placed on the decision of Apex Court in case of Ambica Prasad Mishra [AIR 1980 SC 1762] and the decision of the Full Bench of this Court in case of Sarjubhaiya Mathurbhaiya Kahar [1984 GHL 198].
7.2. It is urged that since it is conclusively held by the Apex Court in case of M/s. Canon India that a DRI officer is not a proper officer of Customs for initiating recovery proceedings under Section 24(4) of the Customs Act and proceedings initiated by a DRI officer by issuing show cause notices is invalid, without any authority of law and liable to be set aside along with ensuing demands.
7.3. This Court in case of CMR Chiho Industries India Pvt. Ltd. vs. Union of India [SCA 10521/2020, decided on 06.04.2021] has also rejected the review application rendered on 10.08.2021, therefore, the Court cannot take any other decision than that. Moreover, the final orders in cases like Commissioner vs. Agarwal Metals & Alloys also has been passed after the decision of Canon India. Therefore, in the instant case, the Court needs to hold that the reassessment cannot be undertaken by the DRI.
8. We have also heard extensively learned advocates appearing for both the sides.
9. Learned advocates appearing for the petitioners have relied upon following authorities in support of their arguments: –
(i) Judgment of Hon’ble Supreme Court in case of M/s. Canon India Pvt. Ltd. vs. Commissioner of Customs [2021 (3) SCALE 748];
(ii) Copy of the status of Review Application filed in Commissioner of Customs vs. Sony India Pvt. Ltd. [Diary No. 9584/2021];
(iii) Judgment of Hon’ble Supreme Court in case of Commissioner of Customs, Kandla vs. M/s. Agarwal Metals and Alloys [Civil Appeal No. 3411/2020, dated 31.08.2021];
(iv) Judgment of this Court in case of M/s. CMR CHIHO Industries India Pvt. Ltd. vs. Union of India [SCA 10521/2020, dated 06.04.2021];
(v) Judgment of Madras High Court in case of M/s. Quantum Coal Energy (P) Ltd. vs. the Commissioner of Customs [W.P.(MD) Nos. 10186 & 10187/2014 and M.P. (MD) Nos. 1&1 of 2014, dated 16.03.2021];
(vi) Judgment of Madras High Court in case of Deepak Gopaldas Bajaj vs. The Commissioner of Customs [W.P. (MD) Nos. 4032 to 4034/2018, dated 08.09.2021];
(vii) Shree Chamundi Mopeds Ltd. vs. Church of South India Trust Association CSI Cinod Secretariat, Madras [(1992) 3 SCC 1];
(viii) Notification No. 96/2009- Cus. dated 11.09.2009;
(ix) Notification No. 64/2008- Cus. dated 09.05.2008;
(x) Notification No. 102/2009-Cus. Dated 11.09.2009;
(xi) Collector of Customs, Calcutta vs. Tin Plate Co.of India Ltd. [1996(87) ELT 589(S.C.)];
(xii) Metal Forgings vs. Union of India [2002 (146) ELT 241 (S.C.)];
(xiii) Assistant Collector, CE, Bombay vs. The Elphinstone Spinning and Weaving Mills Co.Ltd. [1978(2) ELT (J399) (S.C.)];
(xiv) Collector of C.Ex., Calcutta vs. Pradyumna Steel Ltd. [1996(82) ELT 441 (S.C.)];
(xv) CCE, Vadodara vs. Gujarat Container Ltd. [2016(43) str 90 (Guj.)].
10. Learned advocates appearing for the respondents have relied upon following decisions in support of their arguments:
(i) Judgment of Calcutta High Court in case of of Directorate of Revenue vs. Navneet Kumar [(2020) 371 ELT 270];
(ii) Judgment of Apex Court in case of Commissioner of Customs vs. Sayed Ali [265 ELT 17];
(iii) Judgment of Madras High Court in the case of Sri Sathya Jewellery vs. the Principal Commissioner of Customs [WP. No.3144 of 2016 and allied matters, decided on 15.04.2021];
(iv) Judgment of Karnataka High Court in case of The Commissioner of Customs vs. M/s. Rajesh Exports Ltd. [CSTA 04/2009, decided on 25.08.2021];
(v) Judgment of Karnataka High Court in case of The Commissioner of Customs Vs M/s. Bank of Nova Scotia [CSTA 5/2009];
(vi) Order of the Apex Court in case of Union of India vs. Godrej and Boyce Manufacturing Co. Ltd. [Special Leave to Appeal No. 1513/2022, dated 11.02.2022];
(viii) Order of Delhi High Court in the case of Shri Rajesh Vedprakash Gupta and Others vs. Additional Director General (Adj.) and Others [W.P. (C) No. 6044/2021, dated 8.07.2021];
(ix) Order of Bombay High Court in the case of Om Drishian International Ltd. vs. Additional Director, Directorate of Revenue Intelligence and Anr. [W.P. No. 1088/2021, dated 24.09.2021];
(x) Judgment of Madras High Court in the case of M/s. R.K.K.R. Steel vs. The Central Board of Excise and Customs [W.P. Nos. 10276 to 10281/2011, dated 09.07.2021];
(xi) Order of Bombay High Court in case of Coastal Energy Pvt. Ltd. and another vs. Union of India [WP (L) No. 10206/2021, dated 230.09.2021];
(xii) Order of Punjab and Haryana High Court in case of Gautam Spinners vs. Deputy Director, Directorate of Revenue Intelligence [WP 16799/2021, dated 15.11.2021];
(xiii) Judgment of this Court in case of Swari Menthol and Allied Chem. Ltd. vs. Jt. DIR, DRI [(2014) 304 ELT 21].
11. This Court at the outset needs to consider the decision of the Apex Court rendered in case of M/s. Canon India Pvt. Ltd.
11.1. In case of M/s. Canon India Pvt. Ltd. on 19.08.2014, a show cause notice was issued under Section 28(4) of the Customs Act, 1962 alleging that the Customs Authorities had been induced to clear the cameras by willful misstatement and suppression of facts about the cameras. While the decision to clear the goods for import because they were exempted from customs duties under notification was taken by the Deputy Commissioner, Appraisal Group, Delhi Air Cargo, a show cause notice has been issued by the Additional Director General, Directorate of Revenue Intelligence.
11.2. The question that arose was whether the Directorate of Revenue Intelligence had authority in law to issue show cause notice under Section 28(4) for recovery of duties allegedly not levied or paid when the goods have been cleared for import by the Deputy Commissioner of Customs who decided that the goods are exempted. According to the Apex Court, the redressal of the same was to look into the powers conferred under Section 28(4) of the Act. The Court held that the section empowers the recovery of duties not paid, part paid or erroneously refunded by collusion or any willful misstatement and conferred the power of recovery of proper officer. So who can be called the proper officer? The Court also said that the statute where conferred the said power to perform an act on different officers, the two officers specifically when they belong to different departments, cannot exercise their powers under same case. When one officer exercised his powers of assessment, the power to order reassessment must be exercised by the same officer or his successor officer and not by any officer in any department as designated to be an officer of the same rank.
11.3. While analyzing Section 28A(4) of the Customs Act, the Apex Court held that the provision must be construed as conferring the power of such review on the same officer or his successor who has been assigned the function of assessment. An officer who did the assessment could only undertake reassessment and after extensive analysis, the Court held that the entire proceeding initiated by the Additional Director, General of DRI by issuing show cause notices in all the matters are invalid, without any authority of law and liable to be set aside and accordingly, ensuing demands also have been set aside.
11.4. Apt would be to reproduce the relevant finding, discussion and the ratio: –
“9. The question that arises is whether the Directorate of Revenue Intelligence had authority in law to issue a show cause notice under Section 28(4) of the Act for recovery of duties allegedly not levied or paid when the goods have been cleared for import by a Deputy Commissioner of Customs who decided that the goods are exempted. It is necessary that the answer must flow from the power conferred by the statute i.e. under Section 28(4) of the Act. This Section empowers the recovery of duty not paid, part paid or erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts and confers the power of recovery on “the proper officer”. The obvious intention is to confer the power to recover such duties not on any proper officer but only on “the proper officer”. This Court in Consolidated Coffee Ltd. and Another vs. Coffee Board, Bangalore2 has held:-
“14. …Secondly, and more importantly, the user of the definite article ‘the’ before the word ‘agreement’ is, in our view, very significant.
Parliament has not said ‘an agreement’ or ‘any 2 (1980) 3 SCC 358 agreement’ for or in relation to such export and in the context the expression ‘the agreement’ would refer to that agreement which is implicit in the sale occasioning the export.” In Shri Ishar Alloy Steels Ltd. vs. Jayaswals Neco Ltd.3 has held:-
“9. …’The’ is the word used before nouns, with a specifying or particularising effect as opposed to the indefinite or generalizing force of ‘a’ or ‘an’. It determines what particular thing is meant; that is, what particular thing we are to assume to be meant. ‘The’ is always mentioned to denote a particular thing or a person.”
10. There are only two articles ‘a (or an)’ and ‘the’. `A (or an)’ is known as the Indefinite Article because it does not specifically refer to a particular person or thing. On the other hand, ‘the’ is called the Definite Article because it points out and refers to a particular person or thing. There is no doubt that, if Parliament intended that any proper officer could have exercised power under Section 28 (4), it could have used the word ‘any’.
11. Parliament has employed the article “the” not accidently but with the intention to designate the proper officer who had assessed the goods at the time of 3 (2001) 3 SCC 609 clearance. It must be clarified that the proper officer need not be the very officer who cleared the goods but may be his successor in office or any other officer authorised to exercise the powers within the same office. In this case, anyone authorised from the Appraisal Group. Assessment is a term which includes determination of the dutiability of any goods and the amount of duty payable with reference to, inter alia, exemption or concession of customs duty vide Section 2 (2) (c) of the Customs Act, 1962 4.
12. The nature of the power to recover the duty, not paid or short paid after the goods have been assessed and cleared for import, is broadly a power to review the earlier decision of assessment. Such a power is not inherent in any authority. Indeed, it has been conferred by Section 28 and other related provisions. The power has been so conferred specifically on “the proper officer” which must necessarily mean the proper officer who, in the first 4 Section 2. Definitions – In this Act, unless the context otherwise requires, –
… (2) “assessment” means determination of the dutiability of any goods and the amount of duty, tax, cess or any other sum so payable, if any, under this Act or under the Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as the Customs Tariff Act) or under any other law for the time being in force, with reference to –
(a) …
(b) …
(c) exemption or concession of duty, tax, cess or any other sum, consequent upon any notification issued therefor under this Act or under the Customs Tariff Act or under any other law for the time being in force; instance, assessed and cleared the goods i.e. the Deputy Commissioner Appraisal Group. Indeed, this must be so because no fiscal statute has been shown to us where the power to re-open assessment or recover duties which have escaped assessment has been conferred on an officer other than the officer of the rank of the officer who initially took the decision to assess the goods.
13. Where the statute confers the same power to perform an act on different officers, as in this case, the two officers, especially when they belong to different departments, cannot exercise their powers in the same case. Where one officer has exercised his powers of assessment, the power to order reassessment must also be exercised by the same officer or his successor and not by another officer of another department though he is designated to be an officer of the same rank. In our view, this would result into an anarchical and unruly operation of a statute which is not contemplated by any canon of construction of statute.
14. It is well known that when a statute directs that the things be done in a certain way, it must be done in that way alone. As in this case, when the statute directs that “the proper officer” can determine duty not levied/not paid, it does not mean any proper officer but that proper officer alone. We find it completely impermissible to allow an officer, who has not passed the original order of assessment, to reopen the assessment on the grounds that the duty was not paid/not levied, by the original officer who had decided to clear the goods and who was competent and authorised to make the assessment. The nature of the power conferred by Section 28 (4) to recover duties which have escaped assessment is in the nature of an administrative review of an act. The section must therefore be construed as conferring the power of such review on the same officer or his successor or any other officer who has been assigned the function of assessment. In other words, an officer who did the assessment, could only undertake re-assessment [which is involved in Section 28 (4)].
15. It is obvious that the re-assessment and recovery of duties i.e. contemplated by Section 28(4) is by the same authority and not by any superior authority such as Appellate or Revisional Authority. It is, therefore, clear to us that the Additional Director General of DRI was not “the” proper officer to exercise the power under Section 28(4) and the initiation of the recovery proceedings in the present case is without any jurisdiction and liable to be set aside.
16. At this stage, we must also examine whether the Additional Director General of the DRI who issued the recovery notice under Section 28(4) was even a proper officer. The Additional Director General can be considered to be a proper officer only if it is shown that he was a Customs officer under the Customs Act. In addition, that he was entrusted with the functions of the proper officer under Section 6 of the Customs Act. The Additional Director General of the DRI can be considered to be a Customs officer only if he is shown to have been appointed as Customs officer under the Customs Act.
17. Shri Sanjay Jain, learned Additional Solicitor General, relied on a Notification No.17/2002 – Customs (NT) dated 7.3.2002 to show all Additional Directors General of the DRI have been appointed as Commissioners of Customs. At the relevant time, the Central Government was the appropriate authority to issue such a notification. This notification shows that all Additional Directors General, mentioned in Column (2), are appointed as Commissioners of Customs.
18. The next step is to see whether an Additional Director General of the DRI who has been appointed as an officer of Customs, under the notification dated 7.3.2002, has been entrusted with the functions under Section 28 as a proper officer under the Customs Act. In support of the contention that he has been so entrusted with the functions of a proper officer under Section 28 of the Customs Act, Shri Sanjay Jain, learned Additional Solicitor General relied on a Notification No.40/2012 dated 2.5.2012 issued by the Central Board of Excise and Customs. The notification confers various functions referred to in Column (3) of the notification under the Customs Act on officers referred to in Column (2). The relevant part of the notification reads as follows:-
“[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii)] Government of India Ministry of Finance (Department of Revenue) Notification No.40/2012-Customs (N.T.) New Delhi, dated the 2nd May, 2012 S.O. (E). – In exercise of the powers conferred by subsection (34) of section 2 of the Customs Act, 1962 (52 of 1962), the Central Board of Excise and Customs, hereby assigns the officers and above the rank of officers mentioned in Column (2) of the Table below, the functions as the proper officers in relation to the various sections of the Customs Act, 1962, given in the corresponding entry in Column (3) of the said Table: –
