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Case Law Details

Case Name : Commissioner of Customs (Export) Vs Reliance Industries Limited (Bombay High Court)
Appeal Number : Customs Appeal No. 45 of 2013
Date of Judgement/Order : 20/12/2021
Related Assessment Year :

Commissioner of Customs (Export) Vs Reliance Industries Limited (Bombay High Court)

The proper officer, to whom power is conferred by Section 28 of the said Act and other related provisions would necessarily mean the proper officer, who in the first instance, assessed and cleared the goods, i.e., Apprising Officer of Air Cargo Complex. Therefore, the Additional Director General (ADG) of DRI, cannot be the proper officer in the facts and circumstances of the case.

In the facts and circumstances of this case, the Additional Director General of DRI not having, in the first instance, assessed and cleared the goods, he will not be ‘the’ proper officer for issuance of show cause notice under Section 28(1) of the said Act. The appeal has to fail because the show cause notice originally issued itself would be termed non-est. The entire proceeding in the present case initiated by the Additional Director General of DRI by issuing show cause notice is invalid without any authority of law and is liable to be set aside.

FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT

On 25th June 2014 this appeal was admitted and the following substantial questions of law were framed :

(i) Whether in the facts and circumstances of the case and in law the Tribunal is justified in holding that the catalyst is different from consumable and therefore denial of benefit to the Respondent is not sustainable?

(ii) Whether in the facts and circumstances of the case and in law the Tribunal is justified in holding that the policy will prevail over the customs notification when the Ministry of Finance, Govt. of India has every authority to regulate the customs duty benefit?

(iii) Whether in the facts and circumstances of the case and in law the Tribunal is justified in holding that the extended period of limitation is not available despite the fact that the benefit of notification was availed by willfully mis-declaring the goods?”

2 On 4th December 2021, the following order came to be passed :

1. Mr. Dada submits that in view of the judgments contained in the compilation tendered on 29th November 2021 and in particular judgment of the Apex Court in Canon India Private Limited V/s. Commissioner of Customs 1 and order dated 26th October 2021 in Kitchen Essentials and Ors. V/s. The Union of India and Ors. in Writ Petition No.5154 of 2021 nothing would survive in the appeals filed by the Customs department. Ms. Cardozo disagrees with Mr. Dada.

2. Therefore, the appeals be listed for hearing on 9th December 2021.

3 Ms. Cardozo submitted that where any duty has not been levied or not paid or has been short levied or short paid or erroneously refunded, or any interest payable has not been paid or part paid or erroneously refunded, for any reason other than the reasons of collusion or any willful mis-statement or suppression of facts, the proper officer shall, within the time prescribed from the relevant date, serve notice on the person chargeable with the duty or interest which has not been so levied or paid or which has been short levied or short paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice.

Ms. Cardozo further submitted that under sub Section 34 of Section 2 of the Customs Act, 1962 (the said Act), the proper officer, in relation to any function to be performed under the said Act, means the officer of customs who is assigned those functions by the Board or the Principal Commissioner of Customs or Commissioner of Customs.

Ms. Cardozo submitted that by a Notification No.31/97-Cus. (N.T.) dated 7th July 1997, the Central Government has appointed all officers of the Directorate of Revenue Intelligence to be the officers of Customs. The notification, for ease of reference, is scanned and reproduced hereinbelow :

Notification number

Ms. Cardozo also relied upon a Notification No.17/2002-Customs (N.T.) dated 7th March 2002 to submit that Additional Directors or Joint Directors of Directorate of Revenue Intelligence posted at Headquarters and Zonal or regional units have also been appointed by the Central Government as Additional Commissioners or Joint Commissioners of Customs. The notification, for ease of reference, is scanned and reproduced hereinbelow :

Notification no. 17-2002

Ms. Cardozo further submitted that by another Notification No.44/2011-Customs (N.T.) dated 6th July 2011, the Central Board of Excise and Customs has assigned the functions of the proper officer to Additional Director Generals, Additional Directors or Joint Directors, Deputy Directors or Assistant Directors in the Directorate General of Revenue Intelligence for the purposes of Section 17 and Section 28 of the said Act. The notification, for ease of reference, is scanned and reproduced hereinbelow :

Directorate General of Revenue

Ms. Cardozo further relied on a Circular No.44/2011-Customs dated 23rd September 2011 issued by the Central Board of Excise and Customs to submit that sub Section 11 in Section 28 of the said Act was brought in as an amendment with effect from 16th September 2011 and accordingly, show cause notices issued prior to 6th July 2011 by officers of Customs, which would include officers of Directorate General of Revenue Intelligence (DRI), stand validated since these officers are retrospectively recognized as proper officers for the purpose of Section 17 and Section 28 of the said Act. The said circular, for ease of reference, is scanned and reproduced hereinbelow :

Adjudication of appraising

Adiudication of appraising-1

4 Ms. Cardozo submitted that, therefore, the Additional Director General of DRI was a proper officer under Section 28 of the said Act and the notice was issued by a proper officer and there was nothing wrong with the notice and contested the submission of Mr. Dada as recorded in the order dated 4th December 2021 reproduced above. Ms. Cardozo submitted that the Department has filed a Review Petition on 13th May 2021 in the matter of Canon India Private Limited V/s. Commissioner of Customs1 because in the said judgment, except the Notification No.17/2002-Customs (N.T.) dated 7th March 2002, the other notifications reproduced above have not been considered and the Apex Court has also not considered the effect of sub-Section 11 in Section 28 of the said Act and, therefore, the jurisdictional issue raised by Mr. Dada is not correct.

5 Mr. Dada relied upon Canon India Private Limited (Supra) to submit that Additional Director General of DRI, who had issued the notice in this case, was not ‘the’ proper officer. Mr. Dada submitted that even if one goes alongwith Ms. Cardozo for a moment that the Additional Director General of DRI also was a proper officer under Section 28 of the said Act, still he was not ‘the’ proper officer because the clearance of the imported goods under concessional rate of duty was granted by the Apprising Officer of Air Cargo Complex and not the Additional Director General of DRI. Therefore, for the case at hand, ‘the’ proper officer will be the Apprising Officer of Air Cargo Complex or anyone authorised from the Appraisal Group and not the Additional Director General of DRI and only the Apprising Officer of Customs or someone from the Appraisal Group so authorised could have issued the show cause notice under Section 28 of the said Act. Mr. Dada submitted that in effect by issuing the show cause notice under Section 28 of the said Act, the proper officer is exercising broadly power to review the earlier decision of assessment and such power can be exercised only by the same officer or his successor and not by another officer of another department though he may be designated to be officer of the same rank.

6 Mr. Dada submitted that even if the Supreme Court in the review petition would hold that the Additional Director General of DRI was a proper officer empowered to issue recovery notice under Section 28(4) of the said Act, still he would not be ‘the’ officer, who had in the first instance assessed and cleared the goods and, therefore, in the facts and circumstances of this case, can never be stated to be ‘the’ proper officer. Mr. Dada further submitted that the Apex Court in Commissioner of Customs, Kandla V/s. Agarwal Metals and Alloys2 and the Division Bench of this Court in Kitchen Essentials and Ors. V/s. The Union of India and Ors.3 have held that the Additional Director General of DRI is not a proper officer within the meaning of Section 28(4) read with Section 2(34) of the said Act.

7 We have considered the judgment of the Apex Court in Canon India Private Limited (Supra) where paragraphs 9 to 16 read as under :

9. The question that arises is whether the Director 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 willful 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.”

10. 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.”

11. 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’.

12. 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.

13. 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 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.

14. 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 re-assessment 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.

15. 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 re-open 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)].

16. 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.

The proper officer, therefore, 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 and in this case, anyone authorised from the appraisal group.

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 decisions of assessment. Such power is not inherent in any authority. 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 re-assessment 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. 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. It is impermissible to allow an officer, who has not passed the original order of assessment, to re-open 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) of the said Act 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) of the said Act.

8. Therefore, the proper officer, to whom power is conferred by Section 28 of the said Act and other related provisions would necessarily mean the proper officer, who in the first instance, assessed and cleared the goods, i.e., Apprising Officer of Air Cargo Complex. Therefore, the Additional Director General of DRI, cannot be the proper officer in the facts and circumstances of the case.

9. On the submissions of Ms. Cardozo that the Supreme Court has not considered all the circulars and provisions of sub-Section 11 in Section 28 of the said Act in Canon India Private Limited (Supra) and we would agree with her still, even if the Supreme Court reviews the judgment of Canon India Private Limited (Supra), the review petition having been filed, and holds the Additional Director General of DRI was also the proper officer conferred with powers of Section 28 of the said Act, in the facts and circumstances of this case, the Additional Director General of DRI not having, in the first instance, assessed and cleared the goods, he will not be ‘the’ proper officer for issuance of show cause notice under Section 28(1) of the said Act. The appeal has to fail because the show cause notice originally issued itself would be termed non-est. The entire proceeding in the present case initiated by the Additional Director General of DRI by issuing show cause notice is invalid without any authority of law and is liable to be set aside.

10. In the circumstances, we do not think it is necessary to answer the substantial questions of law as framed by this Court in its order dated 25th June 2014.

11 Appeal disposed accordingly.

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