Navneet Kumar Vs.Union of India & Ors. (Calcutta High Court)
Additional Director General of the Directorate of Revenue Intelligence has no jurisdiction to invoke the provisions of Section 124 of the Customs Act, 1962. A notice to show cause can be issued under Section 124 of the Act of 1962 by the persons named in Section 122 of the Act of 1962, and at best, by the delegatees, if so delegated with such powers, under Section 152 of the Act of 1962. An Additional Director General of Directorate of Revenue Intelligence is not a person contemplated under the Act of 1962 to proceed under the provisions of Section 124 of the Act of 1962. We refers to Section 2 of the Customs Act and in particular to Sub-section (1) and Sub-section (34) thereof. Adjudicating authority is defined in Section 2(1) of the Act of 1962. Proper officer is defined in Section 2(34) of the Act of 1962. The appointment of officers of Customs is provided in Section 4 of the Act of 1962. Section 5 of the Act of 1962 defines the power officers of Customs. Section 6 allows entrustment of functions of the Board or officers of Customs on certain other officers of the Central Government or State Government or Local Authority. There is a distinction between the exercise of power of a Customs officer and the functions of such officer. Such distinction is apparent in the statute itself. The functions of a Customs officer can be entrusted upon any officer of Central Government or State Government or Local Authority in terms of Section 6 of the Act of 1962. The powers of the Customs officers cannot be delegated save and except to the extent as recognized and permitted under Section 152 of the Act of 1962. An Additional Director General of the Directorate of Revenue Intelligence is not a person who falls within the category of posts designated under Section 152 or under Section 122 of the Act of 1962. Consequently, he has no authority to issue the impugned show cause notice.
FULL TEXT OF THE ITAT JUDGMENT
Thirteen several writ petitions are taken up for analogous hearing as they involve the same issues. The facts of W.P. No. 3336(W) of 2018 are alluded to for the purpose of convenience.
The petitioner assails a notice to show cause dated December 2, 2017 issued by the Additional Director General, Directorate of Revenue Intelligence, Kolkata invoking Section 124 of the Customs Act, 1962 on the ground of lack of jurisdiction to do so.
Learned Senior Advocate appearing for the petitioner submits that, an Additional Director General of the Directorate of Revenue Intelligence has no jurisdiction to invoke the provisions of Section 124 of the Customs Act, 1962. He submits that, a notice to show cause can be issued under Section 124 of the Act of 1962 by the persons named in Section 122 of the Act of 1962, and at best, by the delegatees, if so delegated with such powers, under Section 152 of the Act of 1962. He contends that, an Additional Director General of Directorate of Revenue Intelligence is not a person contemplated under the Act of 1962 to proceed under the provisions of Section 124 of the Act of 1962. He refers to Section 2 of the Customs Act and in particular to Sub-section (1) and Sub-section (34) thereof. He submits that, the adjudicating authority is defined in Section 2(1) of the Act of 1962. Proper officer is defined in Section 2(34) of the Act of 1962. The appointment of officers of Customs is provided in Section 4 of the Act of 1962. Section 5 of the Act of 1962 defines the power officers of Customs. Section 6 allows entrustment of functions of the Board or officers of Customs on certain other officers of the Central Government or State Government or Local Authority. He contends that, there is a distinction between the exercise of power of a Customs officer and the functions of such officer. According to him, such distinction is apparent in the statute itself. The functions of a Customs officer can be entrusted upon any officer of Central Government or State Government or Local Authority in terms of Section 6 of the Act of 1962. The powers of the Customs officers cannot be delegated save and except to the extent as recognized and permitted under Section 152 of the Act of 1962. An Additional Director General of the Directorate of Revenue Intelligence is not a person who falls within the category of posts designated under Section 152 or under Section 122 of the Act of 1962. Consequently, he has no authority to issue the impugned show cause notice.
Referring to Chapter V of the Act of 1962, learned Senior Advocate for the petitioner submits that, such Chapter deals with levy of, and exemption from Customs duties. He relies upon Sections 17 and 28 thereof and submits that, the function of a Customs officer and recovery of duties as enumerated under Sections 17 and 28, can be entrusted upon any officer of the Central or State or Local Authority in terms of Section 6 of the Act of 1962. Chapter XIV deals with confiscation of goods and conveyance and imposition of penalties. It is a separate Chapter. Sections 112, 122, 124 and 152 are under Chapter XIV. The powers to be exercised by Customs officers under the provisions of Sections 122 and 124 cannot be delegated. He relies upon 2011 Volume 3 Supreme Court Cases 537 (Commissioner of Customs v. Sayed Ali & Anr.) submits that, when the show-cause notice has not been issued by a proper officer within the meaning of the Customs Act, 1962, such show-cause notice is non est. He relies upon 1989 Volume 4 Supreme Court Cases page 99 (Ramlal Khurana (Dead) By L. Rs v. State of Punjab & Ors.) and submits that, one officer cannot hold two substantive posts. Referring to 1978 Lab IC page 41 (T.R. Pandey v. The Chief Commissioner, Andaman and Nicobar Islands and Ors.) he submits that, a person officiating at a post cannot discharge the powers to be exercised by the post holder. According to him, since the impugned show-cause notice suffers from the vice of lack of jurisdiction, the same should be quashed as against the petitioner.
Learned Advocate appearing for the Directorate of Revenue Intelligence submits that, all officers of the Directorate of Revenue Intelligence are treated as officers of Customs. In support of such contention, he relies upon four notifications issued by the Central Government. Relying upon the notification No. 31 /97-Cus. (N.T.) dated July 7, 1997 learned Advocate appearing for the Directorate of Revenue Intelligence submits that, the petitioner falls within the ambit of a person who can issue a notice to show cause under the provisions of the Customs Act, 1962. He refers to Section 112 of the Act of 1962 and submits that, penalty can be imposed on any person. In the facts of the present case, the petitioner has been asked to show-cause as to why penalty should not be imposed against him. He refers to Section 122 of the Act of 1962 and submits that, such a section contemplates that, a proceeding can be initiated against any person who is liable to pay a penalty. Section 124 of the Act of 1962 requires such person who has been given a notice to be informed in writing about the grounds on which it is proposed to impose the penalty, afford an opportunity of making a representation in writing and give such person a reasonable opportunity of being heard. The Directorate of Revenue Intelligence is entrusted with the job of the investigating revenue frauds. Upon the Directorate of Revenue Intelligence receiving intelligence, it proceeds to investigate. In the present case, on investigation the Directorate of Revenue Intelligence had found the involvement of the petitioner requiring an adjudication so as to impose a penalty, if found guilty. It is the practice that, the person investigating the matter issue, the show-cause notice, in terms of the four notifications of the Central Government. The notice is adjudicated upon by the persons named in Section 122 of the Act 1962. By following such process, the authorities adhere to the principles of natural justice as a person cannot be a judge of its own cause. The person who issued the show-cause notice does not hear the show-cause reply or adjudicate therein. The show-cause notice is adjudicated upon by the person named in Section 122 of the Act of 1962. Referring to Section 122A of the Act of 1962, learned Advocate for the Directorate of Revenue Intelligence submits that, the adjudication procedure is prescribed therein. Learned Advocate appearing for the Directorate of Revenue Intelligence relies upon 2015 (318) ELT page 245 (Abhishek Mundhra v. A.D.G., D.G. of Revenue Intelligence, Chennai) and submits that, the Madras High Court has held that, an officer of Directorate of Revenue Intelligence is competent to invoke the provisions of Section 124 of the Customs Act, 1962. He submits that, the Gujarat High Court in 2014 Volume 2 ECS page 122 (Swati Menthol and Allied Chemicals Ltd. v. Joint Director-Directorate of Revenue Intelligence) has held that, all officers of the Directorate of Revenue Intelligence are appointed as officers of the Customs. An officer of the Customs is amenable to a proceeding under Section 124 of the Act of 1962, and in support of such contention, learned Advocate for the Directorate of Revenue Intelligence relies upon a judgment and order dated February 7, 2018 passed in W.P. No. 715 of 2015 (Vikash Kumar v. Directorate of Revenue Intelligence & Ors.). He relies upon 1996 Volume 10 Supreme Court Cases page 520 (Union of India & Ors. v. Jain Sudh Vanaspati Ltd. & Anr.) and submits that, the noticee in a proceeding under Section 124 has an opportunity to make a written representation, and to be heard before passing of the final order. Therefore, there is no prejudice caused to such noticee. Consequently, he submits that, the writ petition should be dismissed.
Although the parties wanted to canvass other points, the contentions of the parties were limited to the question of lack of jurisdiction of the Additional Director of Directorate of Revenue Intelligence to invoke the provisions of Section 124 of the Customs Act, 1962. The issue, therefore, that falls for consideration in the writ petitions is whether the Additional Director of Directorate of Revenue Intelligence has the jurisdiction to invoke Section 124 of the Act of 1962 or not.
It appears from the impugned show-cause notice dated December 2, 2017 that, the Directorate of Revenue Intelligence, Kolkata Zonal Unit, Kolkata, received specific information with regard to merit of different contraband and high value items. An investigation was carried out by the Directorate of Revenue Intelligence with regard thereto. On investigation the Directorate of Revenue Intelligence found that, 12 importers were involved in misdeclaration of the consignment imported by them. On completion of the investigation, Directorate of Revenue Intelligence initiated proceedings under Section 124 of the Customs Act, 1962 against the persons involved. The writ petitioner, according to the Directorate of Revenue Intelligence, is one of the persons involved in such transactions and is required to be proceeded against, under Section 124 of the Customs Act, 1962. The Directorate of Revenue Intelligence had issued separate show-cause notices to the 12 importers involved apart from the petitioner. As noted above, the impugned notice has been issued by the Additional Director of the Directorate of Revenue Intelligence. Appointment of Customs Officer is governed by Section 4 of the Customs Act, 1962. Section 2(34) of the Act of 1962 defines a proper officer under the Act of 1962. The impugned show-cause notice requires the petitioner to reply thereto and be heard by the Principal Commissioner of Customs. The impugned show-cause notice has invoked Section 124 of the Act of 1962. For the purpose of appreciating the rival contentions, it would be appropriate to set out the relevant provisions of the Customs Act, 1962 alluded to by the rival parties in the course of their submissions. They are as follows:-
“2. Definitions. — In this Act, unless the context otherwise requires,—
(1) “adjudicating authority” means any authority competent to pass any order or decision under this Act, but does not include the Board, Commissioner (Appeals) or Appellate Tribunal;
(1A) “aircraft” has the same meaning in the Aircraft Act, 1934 (22 of 1934);
(1B) “Appellate Tribunal” means the Customs, Excise and Service Tax Appellate Tribunal constituted under section 129;
……………………………………………………….
(34) “proper officer”, in relation to any functions to be performed under this Act, means the officer of customs who is assigned those functions by the Board or the Commissioner of Customs;”
“4. Appointment of officers of customs.—
(1) The Board may appoint such persons as it thinks fit to be officers of customs.
(2) Without prejudice to the provisions of sub-section (1), Board may authorise a Chief Commissioner of Customs or a Joint or Assistant or Deputy Commissioner of Customs to appoint officers of customs below the rank of Assistant Commissioner of Customs.”
“5. Powers of officers of customs.—
(1) Subject to such conditions and limitations as the Board may impose, an officer of customs may exercise the powers and discharge the duties conferred or imposed on him under this Act.
(2) An officer of customs may exercise the powers and discharge the duties conferred or imposed under this Act on any other officer of customs who is subordinate to him.
(3) Notwithstanding anything contained in this section, a Commissioner (Appeals) shall not exercise the powers and discharge the duties conferred or imposed on an officer of customs other than those specified in Chapter XV and section 108.”
“6. Entrustment of functions of Board and customs officers on certain other officers.— The Central Government may, by notification in the Official Gazette, entrust either conditionally or unconditionally to any officer of the Central or the State Government or a local authority any functions of the Board or any officer of customs under this Act.”
“112. Penalty for improper importation of goods, etc. – Any person,-
(a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or
(b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable,—
(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty 216 not exceeding the value of the goods or five thousand rupees, whichever is the greater;
(ii) in the case of dutiable goods, other than prohibited goods, to a penalty 217 [not exceeding the duty sought to be evaded on such goods or five thousand rupees], whichever is the greater;
(iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty 219[not exceeding the difference between the declared value and the value thereof or five thousand rupees], whichever is the greater;
(iv) in the case of goods falling both under clauses (i) and (iii), to a penalty 220 [not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest;
(v) in the case of goods falling both under clauses (ii) and (iii), to a penalty 221 [not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest.”
“122. Adjudication of confiscations and penalties.— In every case under this Chapter in which anything is liable to confiscation or any person is liable to a penalty, such confiscation or penalty may be adjudged,—
(a) without limit, by a Principal Commissioner of Customs or a Deputy Commissioner of Customs;
(b) where the value of goods liable to confiscation does not exceed two lakh rupees, by an Assistant Commissioner of Customs or Deputy Commissioner of Customs;
(c) where the value of the goods liable to confiscation does not exceed ten thousand rupees, by a gazetted officer of customs lower in rank than an Assistant Commissioner of Customs or Deputy Commissioner of Customs.”
“124. Issue of show cause notice before confiscation of goods, etc.— No order confiscating any goods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods or such person—
(a) is given a notice in 1[writing with the prior approval of the officer of customs not below the rank of a Deputy Commissioner of Customs, informing] him of the grounds on which it is proposed to confiscate the goods or to impose a penalty;
(b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and
(c) is given a reasonable opportunity of being heard in the matter:
Provided that the notice referred to in clause (a) and the representation referred to in clause (b) may at the request of the person concerned be oral.”
“152. Delegation of powers.— The Central Government may, by notification in the Official Gazette, direct that subject to such conditions, if any, as may be specified in the notification—
(a) any power exercisable by the Board under this Act shall be exercisable also by a Chief Commissioner of Customs or a Commissioner of Customs empowered in this behalf by the Central Government;
(b) any power exercisable by a Commissioner of Customs under this Act may be exercisable also by a Joint Commissioner of Customs or an Assistant Commissioner of Customs or Deputy Commissioner of Customs empowered in this behalf by the Central Government;
(c) any power exercisable by a Joint Commissioner of Customs under this Act may be exercisable also by an Assistant Commissioner of Customs or Deputy Commissioner of Customs] empowered in this behalf by the Central Government;
(d)any power exercisable by an Assistant Commissioner of Customs or Deputy Commissioner of Customs under this Act may be exercisable also by a gazetted officer of customs empowered in this behalf by the ”
The Directorate of Revenue Intelligence relies upon four contentions that, they have powers to issue a show-cause notice under Section 124 of the Act of 1962. They are as follows:-
Government of India
Ministry of Finance
(Department of Revenue)
Notification No.31/97- Customs (N.T.)
New Delhi, dated
the 7th July, 1997.
Appointment of Appraisers, Examiners, Superintendents, Inspectors, Preventive Officers, Women Searchers, Ministerial Officers and Class IV officers in the Customs Department in any place in India. Officers of DRI, Narcotics Control Bureau and EIB appointed as “Officers of Customs”. – In exercise of the powers conferred by sub-section (1) of section 4 of the Customs Act, 1962 (52 of 1962) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 38/63-Customs, dated 1st February, 1963 the Central Government hereby appoints the following persons to be the Officers of Customs, namely:-
1. Appraisers, Examiners, Superintendent Customs (Preventive), Preventive Officers, Women Searchers, Ministerial Officers and Class IV Officers in the Customs Department in any place in India.
2. Superintendents, Inspectors, Women Searchers, Ministerial staff and Class IV staff or Central Excise Department, who are for the time being posted to a Customs port, Customs airport, Land-Customs station, Coastal Port, Customs preventive post, Customs Intelligence post or a Customs warehouse.
3. Superintendents, and Inspectors of Central Excise Department in any place in India.
4. All Officers of the Directorate of Revenue Intelligence.
5. All Officers of the Narcotics Control Bureau.
6. All Assistant Directors of the Central Economic Intelligence Bureau.
[Notification No. 31 /97-Cus. (N.T.), dated 7-7-1997 as amended by Notification No. 18/2017-Cus. (N.T.), dated 3-3-2017.]
Ministry of Finance
(Department of Revenue)
Notification No.17/2002- Customs (N .T.)
New Delhi, dated
the 7th March, 2002.
Appointment of D.R.I. officials as Customs Officers – In exercise of the powers conferred by sub-section (1) of section 4 of the Customs Act, 1962 (52 of 1962) and in suppression of notification of the Government of India in the Ministry of finance (Department of Revenue) No. 19/90-Customs (N.T.), dated the 26th April, 1990, the Central Government appoints the officers mentioned in Column (2) of the Table below to be the [Principal Commissioner of Customs or Commissioner of Customs], the officers mentioned in column (3) thereof to be the Additional commissioners or Joint commissioners of Customs and Officers mentioned in column (4) thereof to be the Deputy Commissioners or Assistant commissioners of Customs for the areas mentioned in the corresponding entry in column (1) of the said Table with effect from the date to be notified by the Central Government in the Official Gazette:-
TABLE
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