2011 (2) TMI 5 - SC - Customs

Only customs officers assigned assessment and re-assessment under Section 2(34) can issue Section 28 show-cause notices

SC held that only customs officers specifically assigned assessment and re-assessment functions for the relevant jurisdiction under Section 2(34) may ... Proper officer - assignment of specific functions by the Board or the Commissioner of Customs - notice under Section 28 for levy or re-assessment of customs duty - specific entrustment test under Section 2(34) - territorial appointment under Section 4 does not ipso facto confer proper officer functionsProper officer - assignment of specific functions by the Board or the Commissioner of Customs - notice under Section 28 for levy or re-assessment of customs duty - territorial appointment under Section 4 does not ipso facto confer proper officer functions - Whether the Collector/Commissioner of Customs (Preventive), Mumbai was a 'proper officer' empowered to issue show cause notices under Section 28 of the Customs Act, 1962 in respect of goods manifested, assessed and cleared for home consumption by the Imports Collectorate. - HELD THAT: - Section 2(34) defines 'proper officer' as an officer of customs who is assigned the functions to be performed under the Act by the Board or the Commissioner of Customs. Section 28 empowers the 'proper officer' to issue notices for duties not levied or short levied. The provisions must be read together so that only an officer who has been specifically entrusted with assessment/re assessment functions in the relevant jurisdiction can issue a notice under Section 28. A mere territorial appointment of a Collector of Customs (Preventive) under Section 4 (Notifications No. 250-Cus. and 251-Cus.) does not, by itself, confer the specialised functions of a 'proper officer' for assessment or re assessment. Accepting the Revenue's contention that territorial jurisdiction alone makes all officers in an area 'proper officers' would render Section 2(34) meaningless and create administrative confusion. The preventive establishment performs functions directed at prevention of smuggling and related checks; where the import manifest and bill of entry have been filed, assessed and clearance for home consumption allowed by the Imports Collectorate, the jurisdiction to initiate re assessment under Section 28 lies with the officers assigned those assessment functions. Consequently, in the present cases nothing was shown to indicate that the Collector of Customs (Preventive) had been assigned the functions under Section 28 by the Board or the Commissioner/Collector of Customs, and therefore he was not competent to issue the re assessment show cause notices. [Paras 13, 14, 16]The Collector/Commissioner of Customs (Preventive), Mumbai was not a 'proper officer' for purposes of issuing notices under Section 28 in respect of goods manifested and assessed by the Imports Collectorate, since no specific assignment of assessment/re assessment functions was shown.Final Conclusion: Appeals contesting re assessment orders passed by the Collector (Preventive) are dismissed as devoid of merit in the first set and allowed in the second set to the extent indicated; the Collector (Preventive) lacked jurisdiction to issue Section 28 notices in these facts. The revenue is not precluded from initiating any proceedings permissible under the Act for recovery of duty. No order as to costs. Issues Involved:1. Jurisdiction of the Commissioner of Customs (Preventive) to issue show cause notices under Section 28 of the Customs Act, 1962.2. Definition and scope of 'proper officer' under Section 2(34) of the Customs Act, 1962.3. Validity of demands raised by virtue of re-assessment orders passed by the Commissioner of Customs (Preventive).Detailed Analysis:1. Jurisdiction of the Commissioner of Customs (Preventive):The core issue in these appeals is whether the Commissioner of Customs (Preventive), Mumbai, had the jurisdiction to issue show cause notices under Section 28 of the Customs Act, 1962. The Customs, Excise & Gold (Control) Appellate Tribunal (CEGAT) and the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) delivered conflicting judgments on this matter. The CEGAT held that the Commissioner of Customs (Preventive) was not a 'proper officer' as defined in Section 2(34) and thus lacked jurisdiction. Conversely, the CESTAT upheld the jurisdiction of the Commissioner of Customs (Preventive) to issue such notices.2. Definition and Scope of 'Proper Officer':Section 2(34) of the Customs Act defines a 'proper officer' as an officer of customs who is assigned specific functions by the Board or the Commissioner of Customs. The Supreme Court emphasized that only officers who have been specifically assigned the functions of assessment and re-assessment of duty in the jurisdictional area where the import has occurred can be considered 'proper officers' under Section 28. The mere appointment of a person as an officer of customs with territorial jurisdiction does not automatically confer the authority to exercise statutory powers entrusted to proper officers.3. Validity of Demands Raised by Re-assessment Orders:The Supreme Court examined whether the demands raised by the Commissioner of Customs (Preventive) through re-assessment orders were valid. The Court held that the Commissioner of Customs (Preventive) was not a 'proper officer' within the meaning of Section 2(34) and thus was not competent to issue show cause notices for re-assessment under Section 28. The Court noted that the import manifest and bill of entry were filed before the Collectorate of Customs (Imports), Mumbai, and assessed by the proper officer, making the Commissioner of Customs (Preventive) unauthorized to issue such notices.Conclusion:The Supreme Court concluded that the Commissioner of Customs (Preventive) did not have the jurisdiction to issue show cause notices under Section 28 of the Customs Act, 1962, as he was not a 'proper officer' within the meaning of Section 2(34). Consequently, the demands raised by re-assessment orders issued by the Commissioner of Customs (Preventive) were invalid. The appeals by the revenue were dismissed, while the appeals by the importers were allowed. The judgment clarified that the revenue could initiate proceedings against the importers for recovery of duty and other charges if permissible under the Act. No order as to costs was made.Note:This summary preserves the legal terminology and significant phrases from the original text, ensuring a thorough and detailed analysis of the judgment.