Jurisdiction of DRI officers to issue show cause notices under Section 28 affirmed; retrospective validation and procedural directions issued.

The note holds that the distinction between assignment of proper officer functions and entrustment of customs functions is dispositive: DRI officers were lawfully made proper officers by administrative notification and circulars, thus possessing jurisdiction to issue show cause notices under Section 28, and the Canon India rationale on lack of jurisdiction is reviewed and set aside insofar as it concerned jurisdiction. Retrospective validation of show cause notices by the Finance Act, 2022 is upheld for the issues raised in the review. Findings on limitation in Canon India remain intact. Directions are provided for restoration and adjudication of affected proceedings and appeals.

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Issues Involved:

1. Error apparent on the face of the record in the Canon India judgment.
2. Jurisdiction of DRI officers to issue show cause notices under Section 28 of the Customs Act, 1962.
3. Interpretation and application of Sections 17 and 28 of the Customs Act, 1962.
4. Constitutional validity of Section 28(11) of the Customs Act, 1962.
5. Validity of the Finance Act, 2022, particularly Section 97.
6. Impact of amendments made by the Finance Act, 2022 on past actions.

Detailed Analysis:

1. Error apparent on the face of the record in the Canon India judgment:

The Supreme Court acknowledged that the judgment in Canon India was delivered without considering crucial notifications and circulars, specifically Circular No. 4/99-Cus dated 15.02.1999 and Notification No. 44/2011 dated 06.07.2011, which empowered DRI officers to issue show cause notices under Section 28. The Court noted that these documents were not presented during the original proceedings, leading to an incorrect conclusion about the jurisdiction of DRI officers. The review petition was allowed on this basis, highlighting that the statutory scheme of Sections 2(34) and 5 was not properly considered in the original judgment.

2. Jurisdiction of DRI officers to issue show cause notices under Section 28:

The Court clarified that DRI officers are "proper officers" for the purposes of Section 28, as they were appointed as officers of customs under Section 4 and assigned functions under Section 5. The judgment in Canon India, which held that DRI officers lacked jurisdiction, was based on an erroneous interpretation of the statutory scheme. The Court emphasized that the assignment of functions under Section 2(34) and Section 5 suffices for DRI officers to issue notices under Section 28, without requiring entrustment under Section 6.

3. Interpretation and application of Sections 17 and 28 of the Customs Act, 1962:

The Court found no statutory linkage between Sections 17 and 28, contrary to the interpretation in Canon India. Section 17 pertains to self-assessment and re-assessment, while Section 28 involves recovery of duties not levied or short-levied. The functions under these sections are distinct, and the requirement that the same officer handle both is not supported by the statutory scheme. The changes to Section 17 introduced by the Finance Act, 2011, which were not considered in Canon India, further support this distinction.

4. Constitutional validity of Section 28(11) of the Customs Act, 1962:

The Court upheld the constitutional validity of Section 28(11), which retrospectively validated actions taken by officers of customs, including DRI officers, prior to 06.07.2011. The provision was enacted to address the issues raised in Sayed Ali and was found to effectively cure the defects identified therein. The Court disagreed with the Delhi High Court's decision in Mangali Impex, which had limited the retrospective application of Section 28(11).

5. Validity of the Finance Act, 2022, particularly Section 97:

Section 97 of the Finance Act, 2022, which retrospectively validated show cause notices issued under Section 28, was upheld as constitutional. The Court found that the provision effectively addressed the issues identified in Canon India and was not arbitrary or disproportionate. The amendments made by the Finance Act, 2022, were deemed clarificatory and did not alter the statutory scheme in a manner that would render past actions invalid.

6. Impact of amendments made by the Finance Act, 2022 on past actions:

The amendments introduced by the Finance Act, 2022, including Sections 86, 87, 88, and 94, were found to be clarificatory and intended to streamline the assignment of functions to customs officers. The retrospective application of these amendments was upheld, and the Court clarified that they do not invalidate past actions taken by DRI officers. The amendments were seen as a legislative response to the evolving legal landscape and administrative needs.

Conclusion:

The review petition was allowed, setting aside the decision in Canon India regarding the jurisdiction of DRI officers. The Court upheld the constitutional validity of Section 28(11) and Section 97 of the Finance Act, 2022, affirming that DRI officers are competent to issue show cause notices under Section 28. The Court directed that pending cases challenging the jurisdiction of DRI officers be disposed of in accordance with this judgment.

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