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2024 (11) TMI 391
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..... 1832 OF 2018 R.P.(C) No. 401 OF 2021 in C.A. No. 3213 OF 2018 S.L.P.(C) No. 2504 OF 2022 C.A. No. 2367-2368 OF 2022 C.A. No. 10788 OF 2024 C.A. No. 3253 OF 2017 C.A. No. 10873 OF 2024 C.A. No. 10819 OF 2024 C.A. No. 4559 OF 2022 C.A. NO. OF 2024 @ SLP(C) No. 12970 OF 2022 W.P.(C) No. 501 OF 2022 W.P.(C) No. 499 OF 2022 W.P.(C) No. 502 OF 2022 W.P.(C) No. 504 OF 2022 W.P.(C) No. 522 OF 2022 W.P.(C) No. 507 OF 2022 W.P.(C) No. 526 OF 2022 W.P.(C) No. 534 OF 2022 W.P.(C) No. 537 OF 2022 W.P.(C) No. 548 OF 2022 W.P.(C) No. 575 OF 2022 W.P.(C) No. 566 OF 2022 W.P.(C) No. 568 OF 2022 C.A. No. 10698 OF 2024 C.A. No. 10693 OF 2024 C.A. NO. 10752 OF 2024 C.A. NO. 10697 OF 2024 C.A. No. 10753 OF 2024 C.A. No. 10754 OF 2024 C.A. No. 10755 OF 2024 C.A. No. 10712 OF 2024 C.A. No. 10756 OF 2024 C.A. No. 10757 OF 2024 C.A. No. 10710 - 10711 OF 2024 C.A. No. 10758 OF 2024 C.A. No. 10759 OF 2024 C.A. No. 10760 OF 2024 C.A. No. 10709 OF 2024 C.A. No. 10761 OF 2024 C.A. No. 10762 OF 2024 C.A. No. 10763 OF 2024 C.A. No. 10764 OF 2024 C.A. No. 10765 OF 2024 C.A. No. 10766 OF 2024 C.A. No. 10767 OF 2024 C.A. No. 10768 OF 2024 C.A. No. 10769 OF 2024 C.A. No. 10770 OF 2024 C.A. No. 10771 OF 2024 C.A. No....
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....ardhan Dhoot, Adv. Ms. Qurratulain, AOR Ms. Aakriti Mathur, Adv. Ms. Shagun Mishra, Adv. For the Respondent : Mr. V Lakshmikumaran, Adv. Ms. Charanya Lakshmikumaran, AOR Ms. Umang Motiyani, Adv. Ms. Neha Choudhary, Adv. Mr. S Vasudevan, Adv. Mr. Rachit Jain, Adv. Ms. Falguni Gupta, Adv. Mr. Dhruv Matta, Adv. Mr. Ayush Agarwal, Adv. Mr. Nitish Massey, AOR Ms. Rashi Bansal, AOR Mr. Abhishek A Rastogi, Adv. Ms. Garima Gupta, Adv. Mr. Divyasha Mathur, Adv. Ms. Meenal Songire, Adv. Mr. Nikhil Jain, AOR Ms. Divya Jain, Adv. M/S. Ap & J Chambers, AOR Mr. Dama Sheshadri Naidu, Sr. Adv. Mr. Roddam Prashanth Reddy, Adv. Mr. Somanadri Goud Katam, AOR Mr. Ravi Bharuka, AOR Mr. Prateek Gattani, Adv. Mr. Rohit Agarwal, Adv. Mrs. Vanita Bhargava, Adv. Mr. Ajay Bhargava, Adv. M/S. Khaitan & Co., AOR Mr. Anil Kaushik, Sr. Adv. Mrs. Shashi Sharma, Adv. Mr. Rajat Rana, Adv. Mr. Mayank Gautam, Adv. Ms. Shilpa Singh, AOR Mr. Rajeev Singh, AOR Mr. K. Paari Vendhan, AOR Mr. Rishabh Sancheti, Adv. Mrs. Padma Priya, Adv. Mr. Armaan Arora, Adv. Mr. Naman Jain, Adv. Mr. Kumar Visalaksh, Adv. Mr. Rahul Khurana, Adv. 7Mr. Udit Jain, Adv. Mr. Arihant Tater, Adv. Ms. Akanksha Dikshit, Adv. Mr. Abhishek Vikas,....
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....d by the Finance Act, 2022 are in the nature of surplusage .............................................................................................. 42 C. SUBMISSIONS ON BEHALF OF THE RESPONDENTS .................. 48 D. ISSUES FOR CONSIDERATION ......................................................... 57 E. ANALYSIS .............................................................................................. 59 i. Review jurisdiction ................................................................................ 59 ii. The decision in Commissioner of Customs v. Sayed Ali ........................ 74 iii. Changes to Section 17 w.e.f. 11.04.2011 - the assessment of bill(s) of entry and shipping bill(s) ................................................................................ 78 iv. Scheme of Sections 17 and 28 of the Act, 1962 ..................................... 90 v. Use of the article 'the' in the expression "the proper officer" ................. 93 vi. DRI officers as proper officers under section 2(34) ................................ 96 vii. Section 4 of the Act, 1962 ......................................................................
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....ectorate of Customs (Imports) or the Preventive Collectorate, would fall under the definition of "proper officers". Section 2(34) is extracted below : "(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 Principal Commissioner of Customs or Commissioner of Customs" 5. As a result of the decision in Sayed Ali (supra), the Central Board of Excise and Customs (the "Board") issued Notification No. 44/2011-Cus-NT dated 06.07.2011 under Section 2(34) of the Act, 1962, assigning the functions of the "proper officers" to the Commissioners of Customs (Preventive), Directorate of Revenue Intelligence ("DRI"), Directorate General of Anti Evasion ("DGAE") and Officers of Central Excise. The notification specified that it would operate prospectively. With a view to account for the past periods, Section 28(11) was introduced vide the Customs (Amendment and Validation) Act, 2011 (Act No.14 of 2011) dated 16.09.2011 by virtue of which all persons appointed as Officers of Customs under sub-section (1) of Section 4 before the 06.07.2011 were deemed to have and always had the powe....
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....he Explanation removes the doubts and states that even those cases which are governed by section 28 and whether initiated prior to the Finance Bill 2011 receiving the assent of the President shall continue to be governed by section 28, as it stood immediately before the date on which such assent is received. The reference to the Finance Bill therein denotes the Bill by the section itself was substituted by Act 8 of 2011 with effect from April 8, 2011. Prior to this Bill by which the section was substituted receiving the assent of the President of India, some cases were initiated and section 28 was resorted to by the authorities. Explanation 2 clarifies that they will proceed in terms of the unamended provision. The position dealt with by insertion of section 28(11) is distinct and that is about competence of the officer. The officers namely those from the Directorate of Revenue Intelligence having been entrusted and assigned the functions as noted above, they are deemed to have been possessing the authority, whether in terms of section 28 unamended or amended and substituted as above. In these circumstances, for these additional reasons as well, the challenge to this sub-section mu....
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.... the import concerned has been affected, either by the Board or the Commissioner of Customs, in terms of Section 2(34) of the Act, 1962, was competent to issue notice under Section 28 of the Act, 1962. 14. It appears from the decision in Canon India (supra) that the Notification No. 44/2011-Cus-NT dated 06.07.2011 designating officers of DRI as "proper officers" for the purposes of both Sections 17 and 28 of the Act, 1962 respectively; the introduction of Section 28(11) vide the Validation Act, 2011 introducing Section 28(11) empowering such officers for the period prior to 06.07.2011; the statutory scheme as envisaged under Sections 3, 4, 5 and 2(34) of the Act, 1962 respectively; and the pendency of the appeal against the decision in Mangali Impex (supra) and the stay of the operation of the said decision by this Court was either not noticed or not brought to the notice of the Court. 15. The Department preferred the present Review Petition against the judgement delivered in Canon India (supra) on 09.03.2021. This judgement was followed in other cases adjudicated by this Court and the High Courts, resulting in various other Review Petitions, Special Leave Petitions and Civil....
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....that the judgement rendered by this Court in Canon India (supra) requires review as there are errors apparent on the face of the record. The Ld. ASG submitted that it is equally important that the legality and validity of the decision rendered by the High Court of Delhi in Mangali Impex (supra) which is a part of the present batch of pending appeals be considered since the issues in both Canon India (supra) and Mangali Impex (supra) are one and the same. He submitted that the fact that an appeal against Mangali Impex (supra) was pending before this Court and that the operation of the said judgement was stayed went unnoticed in Canon India (supra). He submitted that this would have a direct bearing both in the review and in the batch of appeals before this Court. 20. He submitted that Canon India (supra) proceeded on the assumption that DRI officers are not officers of Customs and therefore need to be entrusted with such powers under Section 6 of the Act, 1962 and only upon such entrustment, the functions of a proper officer can be assigned to them. This, he submitted, is in the teeth of the provisions of the Act, 1962 more particularly Sections 3, 4, and 5 thereof. He further su....
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....ficers of customs. All officers of the same rank irrespective of the functions and roles they play would fall under Section 3 as class of officers of customs. Class in this sense would refer to the same rank. 24. Sections 4 and 5 of the Act, 1962 are extracted below: Section 4: "(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 (7), the Board may authorise a Commissioner of Customs or a Deputy or Assistant Commissioner of Customs to appoint officers of customs below the rank of Assistant Commissioner of Customs." Section 5: "(1) Subject to such conditions and limitations as the Board may impose, an officer of customs may exercise the powers and discharge custom 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, an Appellate Collector of Customs shall not exercise the powers and discharge the duties confer....
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....Superintendent, Inspectors, Sub-Inspectors, women searchers, Ministerial staff and Class IV staff of 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. 4. Superintendents, Duty Superintendents and Inspectors of Central Excise Department in any place in India. 5. All officers of the Directorate of Revenue Intelligence. [No. 38/F. No. 4/1/63-CAR.]" 27. Our attention was specifically drawn to S. No. 1 of GSR 214 as extracted above wherein the Central Government appointed the Director, Directorate of Revenue Intelligence as an officer of customs and also to S. No. 5 of GSR 215 by which the Central Government appointed all the officers of DRI as officers of customs. 28. He also placed before us the origin and history of the DRI as a part of the Ministry of Finance. From 04.12.1957 till 24.06.1970, DRI was with the Ministry of Finance. From 25.06.1970 to 28.07.1970, it was with the Ministry of Home Affairs. Between 29.07.1970 and 06.04.1977, it was with the Cabinet Secretariat and from 07.04.1977 onwa....
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....ts of Customs and Central Excise which was till then performed by the departments themselves as carved out and given to a separate Directorate of Inspection (Customs and Central Excise) as a part of the office of the Central Board of Revenue which was formed by an Act of 1924 and which was split later by an Act of 1963 into two Boards, namely:- (a) Board of Direct Taxes under which functions the Department of Income-tax; (b) The Central Board of Excise and Customs under which functioned the Collectorates of Customs and Central Excise, Directorate of Inspection and Directorate of Revenue Intelligence. It was in 1957 that the intelligence work till then performed by the Central Revenue Intelligence Bureau functioning as a unit in the Directorate of Inspection, was constituted as a third unit in the Department of Revenue, Ministry of Finance styled as Directorate of Revenue, Intelligence. All this and more information is contained in the Government publication Organisation Set-up and Functions of the Ministries/Departments of the Government of India ", 4th Edition, 1968, pages 68-70 (Annexure R XIII). As the work of Directorates of Inspection and Revenue Int....
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.... 6 of the Act, 1962 by the Central Government before the powers of a proper officer under Section 2(34) of the Act, 1962 can be assigned to them. Section 6 is reproduced below: "(6) 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." 32. He submitted that the question of entrustment would arise only in relation to an officer of Central or State Government or Local Authority who does not fall within the class of officers of customs under Section 3 appointed under Section 4 of the Act, 1962. Some instances of the Central Government entrusting such functions of customs officers under Section 6 are M.F. (D.R.) Notification No. 161-Cus dated 22.06.1963 and M.F.(D.R.&I.) Notification No. 33-Cus., dated 27.04.1974 which entrusted functions of customs officer to police officers in a particular jurisdiction and officers of the Border Security Force respectively. However, in the case of DRI officers, they would clearly fall under Sections 3, 4 and 5 of the Act, 1962 and the....
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....of the record, he prayed that the present review petition be allowed. ii. Why the decision in Sayed Ali (supra) requires reconsideration 37. He submitted that there are two fundamental errors in the dictum laid in Sayed Ali (supra) - (i) Firstly, it casts an obligation that an officer of customs who is empowered to undertake assessment or reassessment under Section 17 alone is qualified to become a proper officer under Section 28 for the purpose of raising demand of short levy, non-levy or erroneous refund. No other officer can be assigned the functions of the proper officer under Section 28. (ii) Secondly, the judgment was rendered in connection with officers of the Customs (Preventive), who were not assigned the powers and duties of a proper officer, and no notifications to this effect were produced or brought to the notice of this Court. 38. It was pointed out by him that Sayed Ali (supra) did not deal with DRI officers who were indeed vested with the powers of proper officers vide the Circular No. 437/9/98-Cus.IV dated 15.02.1999 issued by the Board in terms of Section 2(34). Under Section 2(34), the power of assigning functions of a proper officer to....
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....ill continue to be adjudicated by the concerned jurisdictional Commissioners, Additional Commissioners, Deputy Commissioners or Assistant Commissioners of Customs, as the case may be. 4. The Board has also decided that these instructions may kindly be brought to the notice of all departmental officers by issuing suitable standing orders. Sd/- (Rajendra Singh) Under Secretary to the Government of India" 39. As regards the observations in Sayed Ali (supra) on the inter se link between Sections 17 and 28 of the Act, 1962 respectively, he submitted that no such mandate flows from either of the two sections and reading any such linkage into the scheme of the Act, 1962 would directly undermine the powers of search, seizure and investigation of the DRI officers under the Act, 1962 along with the assignment of functions as proper officers to issue show cause notices post such search and investigation. Although no disability is to be found in any provisions of the Act, 1962, yet Sayed Ali (supra) creates such an embargo and also proceeds to hold that empowering such officers to issue show cause notices would result in multiple persons dealing with the ....
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.... by the Central Board of Excise and Customs under sections 4 and 5 of the Customs Act 1962. 2. In the light of the aforementioned notification, all cases of appointment of common adjudicating authority in respect of cases investigated by DRI will be handled by Principal DG, DRI. In this regard, the Board has prescribed the following guidelines for Principal DG, DRI: (a) The following cases initiated by DRI shall be assigned to Additional Director General (Adjudication), DRI: (i) Cases involving duty of Rs.5 crores and above; (ii) Group of cases on identical issues involving aggregate duty of Rs.5 crores or more; (iii) Cases involving seizure value of Rs.5 crores or more; (iv) Cases of over-valuation irrespective of value involved; and (v) Existing DRI cases with erstwhile Commissioner (Adjudication). (b) Cases other than at (a) above involving more than one Customs Commissionerate would be assigned to the jurisdictional Commissioner of Customs on the basis of the maximum duty evaded; (c) Cases other than at (a) above involving a single Customs Commissionerate would be assigned to the jurisdictional Com....
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....se notices under Section 28 of the Act, 1962 would create a situation of utter confusion and chaos and declared Section 28(11) of the Act, 1962 to be unconstitutional for being violative of Article 14 owing to its inherent arbitrariness. The decision also directed the Department to issue suitable instructions and ensure avoidance of multiplicity or plurality of proceedings. He submitted that the instructions have been scrupulously followed and complied with since 1999 through various notifications and Board circulars, thereby avoiding any overlap. He submitted that it was because of this reason that the importers were not able to produce any material to support such adverse inferences. Thus, he submitted that the decision in Mangali Impex (supra) also deserved to be set aside. 44. On the correctness of the decision in Mangali Impex (supra), he further submitted that the reasoning in the decision i.e., the Validation Act, 2011 does not extend its non-obstante clause to anything contained elsewhere in the same statute or in any other law for the time being in force, is incorrect and not legally unsustainable. On the finding of the High Court that since Explanation 2 remains on the....
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....nt And Validation) Bill, 2011 "(11) Notwithstanding anything to the contrary contained in any judgment, decree or order of any court of law, tribunal or other authority, all persons appointed as officers of Customs under sub-section (1) of section 4 before the 6th day of July, 2011 shall be deemed to have and always had the power of assessment under section 17 and shall be deemed to have been and always had been the proper officers for the purposes of this section." STATEMENT OF OBJECTS AND REASONS The Customs Act, 1962 consolidates and amends the law relating to customs. Clause (34) of section 2 of the said Act defines the expression "proper officer" in relation to the functions under the said Act to mean the officer of customs who is assigned those functions by the Central Board of Excise and Customs or the Commissioner of Customs. Recently, a question has arisen as to whether the Commissioner of Customs (Preventive) is competent to exercise and discharge the powers of a proper officer for issue of a notice for the demand of duty. The Hon'ble Supreme Court of India in Commissioner of Customs versus Sayed Ali and Anr. (Civil Appeal Nos. 4294-4295 of 2002....
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....8(11) are for distinct purposes and are not connected to each other in any way. Prior to 08.04.2011, the period of limitation available under the statute for demanding short levy, non-levy or erroneous refund was six months. Whereas after 08.04.2011, it was enhanced to one year. As the amendment substituted the then-existing Section 28, it provided a saving provision to protect the notices issued prior to 08.04.2011 from the extension of limitation period from 6 months to one year. He submitted that the purport of Explanation 2 was only to ensure that those rights envisaged under old Section 28 stand preserved. Explanation 2 did not deal with the jurisdictional exercise of the power of DRI officers in issuing show cause notices under Section 28, whereas, the Validation Act, 2011, introducing Section 28(11) addressed precisely only that issue. 46. He submitted that the conclusion drawn in Mangali Impex (supra) was legally incorrect for holding that Section 28(11) is overbroad in assuming every officer of customs to be deemed as proper officers both for Sections 17 and 28. The Validation Act, 2011, was enacted to regularize only past actions and not future actions, which are gover....
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....s (Preventive) or Joint Director of Revenue Intelligence or Joint Commissioner of Customs (Audit); (i) Deputy Commissioner of Customs or Deputy Commissioner of Customs (Preventive) or Deputy Director of Revenue Intelligence or Deputy Commissioner of Customs (Audit); (j) Assistant Commissioner of Customs or Assistant Commissioner of Customs (Preventive) or Assistant Director of Revenue Intelligence or Assistant Commissioner of Customs (Audit); (k) such other class of officers of customs as may be appointed for the purposes of this Act." Section 88 - Amendment of section 5 of the Act, 1962 "88. In section 5 of the Customs Act,-- (a) after sub-section (1), the following sub-sections shall be inserted, namely:-- "(1A) Without prejudice to the provisions contained in sub-section (1), the Board may, by notification, assign such functions as it may deem fit, to an officer of customs, who shall be the proper officer in relation to such functions. (1B) Within their jurisdiction assigned by the Board, the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, may, by order, assign such function....
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....officer is subordinate in accordance with sub-section (2) of section 5." Section 97 - Validation of certain actions taken under the Act, 1962 "97. Notwithstanding anything contained in any judgment, decree or order of any court, tribunal, or other authority, or in the provisions of the Customs Act, 1962 (52 of 1962), (hereinafter referred to as the Customs Act):- (i) anything done or any duty performed or any action taken or purported to have been taken or done under Chapters V, VAA, VI, IX, X, XI, XII, XIIA, XIII, XIV, XVI and XVII of the Customs Act, as it stood prior to its amendment by this Act, shall be deemed to have been validly done or performed or taken; (ii) any notification issued under the Customs Act for appointing or assigning functions to any officer shall be deemed to have been validly issued for all purposes, including for the purposes of section 6; (iii) for the purposes of this section, sections 2, 3 and 5 of the Customs Act, as amended by this Act, shall have and shall always be deemed to have effect for all purposes as if the provisions of the Customs Act, as amended by this Act, had been in force at all material tim....
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....ed. It is not a means to provide a second innings to anyone. The Department in the guise of a review is seeking to re-argue the whole matter. Even if a different view is possible, the same cannot give rise to a review. He relied on the following decisions: (i) Col. Avtar Singh Sekhon v. Union of India, (1980) Supp SCC 562 (ii) Lily Thomas Vs Union of India, (2000) 6 SCC 224 (iii) Champsey Bhara & Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd., (1923) SCC OnLine PC 10 (iv) State of Telangana v. Mohd. Abdul Qasim, (2024) 6 SCC 461. 54. Mr. Arvind Datar too submitted that the scope of review is extremely limited and further contended that Section 97 of the Finance Act, 2022 is a clear overreach and needs to be considered separately. 55. Mr. V. Lakshmikumaran made the following submissions: (i) The scheme of the Act, 1962 clearly indicates that Sections 17, 46, 47 and 28 of the Act, 1962 respectively are interlinked to and interdependent on each other. These provisions involve a sequential flow of events to be processed by a single officer, and therefore, empowering DRI officers who are not connected to this scheme, is illegal. ....
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....ssessment/reassessment as required by Sayed Ali (supra). According to the learned counsel, both Notification No. 44/2011 dated 06.07.2011 and Section 28(11) were brought to the notice of this Court in Canon India (supra). (ix) Having accepted the principles laid down in Sayed Ali (supra) on the interlinkage between Sections 17 and 28 of the Act, 1962 respectively, both vide Section 28(11) and Notification No. 44/2011 dated 06.07.2011, it is not open to the Department to now contend the contrary as reaffirmed in Canon India (supra). (x) All proper officers are officers of customs, but all officers of customs are not proper officers. Mere conferment of power or assignment of functions of assessment/reassessment under Sections 17 and 28 of the Act, 1962 respectively is not enough. Out of the various proper officers who have been empowered under Sections 17 and 28, only that proper officer who had actually carried out the assessment will be the proper officer. There can be concurrent conferment of power but there cannot be concurrent exercise of powers as the same may result in chaos and utter confusion. (xi) The decision rendered by the High Court in Mangali....
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....oes not cure the defects pointed out by this Court in its decision rendered in Canon India (supra) for the following reasons: a. The amendments introduced vide the Finance Act, 2022 continue to violate the principles laid down in the judgment of this Court in Sayed Ali (supra) wherein it was held that granting jurisdiction to multiple officers will create utter chaos and confusion. He highlighted that the review filed against the decision in Sayed Ali (supra) has already been dismissed. b. The validation of past actions by way of Section 97(i) of the Finance Act, 2022 violates the principles enshrined in the judgment of Canon India (supra) since it will lead to a very anarchical and unruly operation of a statute which was sought to be avoided in Canon India (supra). c. A Validation Act can only validate the law but cannot validate a fact. Once a particular officer has exercised the function of assessment, it is a jurisdictional fact that has occurred to the exclusion of all other groups in the Customs Department. Thereafter, only that officer or his superiors (known as the Customs group) who had undertaken assessment under Section 17 in the first place sh....
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....y the Central Government under Section 6 of the Act, 1962 is mandatory to empower the Officers of the DRI for the purpose of issuing show cause notices? c. Whether the power under Section 28 can be exercised only by someone who is empowered to exercise the power under Section 17 of the Act, 1962 for the goods in question? In other words, how best the meaning of the expression "proper officer" should be construed for the purposes of exercise of functions under Section 28? d. Whether "the proper officer" in Section 28 must necessarily be the same proper officer referred to under Section 17 of the Act, 1962? If no, whether the use of the definite article "the" in the expression "the proper officer" in Section 28 is in the context of that proper officer who has been assigned the powers of discharging the functions under Section 28 by virtue of powers conferred under Section 5 of the Act, 1962? e. Whether issuance of show cause notices followed by adjudication under Section 28 of the Act, 1962 is an administrative review as held in Canon India (supra) or a quasi-judicial exercise of power under administrative law? (iii) Whether the introduction of Sec....
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....ufficient reason, desires to obtain a review of the decree passed or order made against him, may apply for a review of judgment to the court which passed the decree or made the order." 60. Thus, in view of the above, the following grounds of review are maintainable as stipulated by the statute: (i) Discovery of new and important matter or evidence which, after the exercise of due diligence, was not within the knowledge of the petitioner or could not be produced by him at the time when the decree was passed or order made; (ii) Mistake or error apparent on the face of the record; or (iii) Any other sufficient reason. 61. The words "any other sufficient reason" have been interpreted by the Privy Council in the case of Chhajju Ram v. Neki reported in 1922 SCC OnLine PC 11 and approved by this Court in Moran Mar Basselios Catholicos v. Mar Poulose Athanasius reported in 1954 SCC OnLine SC 49 to mean a reason sufficient on grounds, at least analogous to those specified in the rule. 62. In the case of Tinkari Sen v. Dulal Chandra Das reported in 1966 SCC OnLine Cal 103, the Calcutta High Court held that if the court overlooks or fails to consider a lega....
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....view of a judgment delivered by this Court merely for the purpose of a rehearing and a fresh decision of the case. The normal principle is that a judgment pronounced by the Court is final, and departure from that principle is justified only when circumstances of a substantial and compelling character make it necessary to do so: Sajjan Singh v. State of Rajasthan [AIR 1965 SC 845 : (1965) 1 SCR 933, 948 : (1965) 1 SCJ 377] . For instance, if the attention of the Court is not drawn to a material statutory provision during the original hearing, the Court will review its judgment: G.L. Gupta v. D.N. Mehta [(1971) 3 SCC 189 : 1971 SCC (Cri) 279 : (1971) 3 SCR 748, 750] . The Court may also reopen its judgment if a manifest wrong has been done and it is necessary to pass an order to do full and effective justice: O.N. Mohindroo v. Distt. Judge, Delhi [(1971) 3 SCC 5 : (1971) 2 SCR 11, 27]. .... [Emphasis supplied] 65. This Court in Yashwant Sinha v. CBI reported in (2020) 2 SCC 338, has observed that if a relevant law has been ignored while arriving at a decision, it would make the decision amenable to review. The relevant observations read as follows: "78. The view ....
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.... maximum use. We regret to say that this case is typical of the unfortunate but frequent phenomenon of repeat performance with the review label as passport. Nothing which we did not hear then has been heard now, except a couple of rulings on points earlier put forward. May be, as counsel now urges and then pressed, our order refusing special leave was capable of a different course. The present stage is not a virgin ground but review of an earlier order which has the normal feature of finality." [Emphasis supplied] 67. Thus, the decisions referred to above make it abundantly clear that when a court disposes of a case without due regard to a provision of law or when its attention was not invited to a provision of law, it may amount to an error analogous to one apparent on the face of record sufficient to bring the case within the purview of Order XLVII Rule 1 of the Code of Civil Procedure, 1908. In other words, if a court is oblivious to the relevant statutory provisions, the judgment would in fact be per incuriam. In such circumstances, a judgment rendered in ignorance of the applicable law must be reviewed. 68. From here onwards, our endeavour is to ascertain whethe....
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....ion 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 reopen 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 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 unru....
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....ection (i)] 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 :- Sl. No. Designation of the officers Functions under Section of the Customs Act, 1962 (1) (2) (3) Commissioner of Customs (i) Section 33 Additional Commissioner or Joint Commissioner of Customs (i) Sub-section (5) of section 46; and (ii) Section 149 Deputy Commissioner or Assistant Commissioner of Customs and Central Excise (i) ..... (ii) ..... (iii) ..... (iv)..... (v) ..... (vi) Section 28; ........." 19. It appears that a Deputy Commissioner or Assistant Commissioner of Customs has b....
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....1- 5-2002, were appointed by the Central Government. The notification which purports to entrust functions as proper officer under the Customs Act has been issued by the Central Board of Excise and Customs in exercise of non-existing power under Section 2(34) of the Customs Act. The notification is obviously invalid having been issued by an authority which had no power to do so in purported exercise of powers under a section which does not confer any such power. 22. In the above context, it would be useful to refer to the decision of this Court in the case of Commissioner of Customs v. Sayed Ali and Another [(2011) 3 SCC 537 = 2011 (265) E.L.T. 17 (S.C.)] wherein the proper officer in respect of the jurisdictional area was considered. The consideration made is as hereunder :- "16. It was submitted that in the instant case, the import manifest and the bill of entry were filed before the Additional Collector of Customs (Imports), Mumbai; the bill of entry was duly assessed, and the benefit of the exemption was extended, subject to execution of a bond by the importer which was duly executed undertaking the obligation of export. The Learned Counsel argued that the func....
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....y cause service of notice on the person chargeable, requiring him to show cause why he should not pay the amount specified in the notice. It is evident that the notice under the said provision has to be issued by the 'proper officer'. 19. Section 2(34) of the Act defines a 'proper officer', thus : '2. Definitions. - ...................... (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;' It is clear from a mere look at the provision that only such officers of customs who have been assigned specific functions would be 'proper officers' in terms of Section 2(34) the Act. Specific entrustment of function by either the Board or the Commissioner of Customs is therefore, the governing test to determine whether an 'officer of customs' is the 'proper officer'. 20. From a conjoint reading of Sections 2(34) and 28 of the Act, it is manifest that only such a Customs Officer who has been assigned the specific functions of assessment and reassessment of duty in the jurisdictional area where the import co....
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....the extended period of limitation, and why the penalties under Sections 112(a) and (b)(i) and (ii) of the Act, 1962, should not be imposed on the said importer. 76. The jurisdiction of the Collector of Customs (Preventive) to issue the show cause notice was questioned in the reply to the show cause notice by referring to Notification No. 251/83 and Notification No.250/83. The Collector of Customs (Preventive) rejected the submission on the point of jurisdiction. The demand was thus affirmed by the Collector of Customs (Preventive) vide Order dated 19.08.1996. The matter was taken up before the Tribunal, which held that the Commissioner of Customs (Preventive) had no jurisdiction to issue the show cause notice and therefore did not have the jurisdiction to adjudicate the matter when the imports had taken place within the Bombay Customs House. 77. This Court, after referring to Section 28 of the Act, 1962 as it stood during the period in dispute, concluded that from a conjoint reading of Section 2(34) and Section 28 of the Act, 1962, it is manifest that only such a customs officer who has been assigned the specific functions of assessment and reassessment of duty in the jurisdi....
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....ection 28 of the Act, 1962 as the Customs (Preventive) officers, whose jurisdiction to issue show cause notices was under challenge in that case, were not assigned the functions of the "proper officer" for the purposes of Section 28 through a notification issued by the appropriate authority. As we have observed in the foregoing parts of this judgment, assignment of functions is a mandatory requirement for the exercise of jurisdiction by the "proper officer". The observations made in Sayed Ali (supra) on the connection between Sections 17 and 28 of the Act, 1962 are obiter dicta at best and do not constitute the binding ratio decidendi of that judgment. 83. Further, Sayed Ali (supra) could not have been relied upon by this Court in Canon India (supra) as it could not have been applied for the period subsequent to 08.04.2011 in view of the fact that Section 17 of the Act, 1962 has undergone a radical change by virtue of the amendments made by the Finance Act, 2011. iii. Changes to Section 17 w.e.f. 11.04.2011 - the assessment of bill(s) of entry and shipping bill(s) 84. Section 17 of the Act, 1962 was amended by Section 38 of the Finance Act, 2011 with effect from 08.04.2011....
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....the goods under Section 17 of the Act. Thus, a "Proper Officer" under Section 17(1) & 17(4) of the Act is merely required to re-assess the imported goods or export goods where he differs with the self assessment of an importer or an exporter. This important change was not brought to the attention of the Hon'ble Supreme Court in Canon India Pvt Ltd Case. 210. As mentioned above, an importer or an exporter is merely required to make a self-assessment in the Bill(s) of Entry or Shipping Bill(s) as may be in the case of import or export respectively and file the same. 211. Officers who are appointed as "Proper Officers" for the purpose of Section 17 of the Customs Act, 1962 are "Officers of Customs" like any "Officer of Customs" as per Section 3 and 4 read with notification issued under these provisions. There is delegation of functions by the Board and senior officers to different class of officers by the Board. This is an internal arrangement with a view for better tax administration. Thus, officers of Directorate of Revenue Intelligence are also one among the class "Officers of Customs" like any Officer of Customs as per Section 3 and 4 read with notification i....
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....Officer" for the aforesaid purpose. 218. The "proper officer" who is/was involved at the stage of assessment under Section 17 of the Act upto 08.04.2011 and reassessment after 08.04.2011 have rarely been involved in collateral adjudication of notices issued under Section 28 of the Act. However, once again at the stage of recovery of duty or penalty under other provision of the Customs Act, 1962 or redemption fine under Section 125 of the Customs Act, 1962, they are authorized. 219. Mostly, at the time of clearance of imported goods or export goods for the purpose of assessment under Section 17 of the Custom Act,1962, it is the Superintendent/Appraisers of Customs from Group 'B' Executive - Gazetted Officers who act as "proper officers". They are merely required to verify the entries made in the Bill(s) of Entry filed under Section 46 of the Act (in case of import) and or Shipping Bill(s) filed under Section 50 of the Act (in case of export). As "proper officers" are required to merely examine or test any imported or export goods or such parts thereof. Such Officer of Customs under the Scheme of the Act and Notification issued thereunder can only re-assess ....
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....nd thereupon the importer, exporter or such other person shall produce such document and furnish such information. (3) For verification of selfassessment under sub-section (2), the proper officer may require the importer, exporter or any other person to produce any contract, broker's note, insurance policy, catalogue or other document, whereby the duty leviable on the imported goods or export goods, as the case may be, can be ascertained, and to furnish any information required for such ascertainment which is in his power to produce or furnish, and thereupon, the importer, exporter or such other person shall produce such document or furnish such information. (4) Notwithstanding anything contained in this section, imported goods or export goods may, prior to the examination or testing thereof, be permitted by the proper officer to be assessed to duty on the basis of the statements made in the entry relating thereto and the documents produced and the information furnished under sub-section (3); but if it is found subsequently on examination or testing of the goods or otherwise that any statement in such entry or document or any information so furnished is not true in ....
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....eived." 89. The examination of Section 17, as amended vide the Finance Act, 2011 visà- vis the provisions of the old Section 17 as it stood prior to 08.04.2011, highlights the following major changes: (a) Self-assessment of duty: The concept of self-assessment of duty was introduced by way of the amendment to Section 17 wherein there is no role of the proper officer to assess the duty at the first instance. The onus for providing the duty leviable has been shifted to the assessee itself. (b) Discretion to verify: Sub-section (2) of the new Section 17 states that "The proper officer may verify the self-assessment of the goods...". The use of the word "may" indicates two things: (i) that the actions to be taken by the proper officer under the old Section 17 are no longer compulsory. The proper officer may choose to accept the self-assessment made by the assessee, thereby becoming functus officio and there is no compulsion on him or her to examine or test any goods for reaching a first instance assessment; (ii) The proper officer is not involved in the assessment of duty under Section 17 at the first instance except for his or her role in ....
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....m the date of the "re-assessment" of duty. Such change shows the legislative intent to transfer the process of "assessment" under the old Section 17 to the stage of "re-assessment" under the new Section 17 and replace the "assessment" to be done by the proper officer under the old Section 17 with the process of "selfassessment". 90. These changes highlight that the competence of the proper officer to conduct "assessment" is completely taken away by the legislature vide the amendment to Section 17. The new Section 17 empowers the proper officer to perform the functions of verification of self-assessment and subsequent re-assessment, if found necessary. However, such re-assessment is not a mandatory function on the same footing as "assessment" under the old Section 17. Therefore, in our considered view the scope of the functions of the proper officer under the new Section 17 is limited. 91. It is evident from the aforesaid that the attention of this Court in Canon India (supra) was not drawn to the important changes brought to Section 17 of the Act, 1962 vide Section 38 of the Finance Act, 2011 with effect from 08.04.2011. 92. The observation in paragraph 13 in Canon India (....
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....er officer, if so required, for undertaking a check at the first instance. 96. The proceedings under Section 28 are subsequent to the completion of the process set out in Section 17 of the Act, 1962. The procedure envisaged under Section 28 is in the nature of a quasi-judicial proceeding with the issuance of the show cause notice by the proper officer followed by adjudication of such notices by the field customs officers. It is also worth noting that in the case of DRI, the proceedings under Section 28 start only after an investigation has been undertaken by DRI. This is reaffirmed by Circular No. 4/99-Cus dated 15.02.1999 and Circular No. 44/2011- Customs dated 23.11.2011. Therefore, the nature of review under Section 28 is significantly different from the nature of assessment and reassessment under Section 17. The ambit of Section 28 has also been restricted to the review of assessments and re-assessments done under Section 17 for ascertaining if there has been a short-levy, non-levy, partpayment, non-payment or erroneous refund. 97. Keeping this statutory scheme in mind, we are unable to subscribe to the view taken in both Sayed Ali (supra) and Canon India (supra), namely,....
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....) and Canon India (supra) is patently erroneous. v. Use of the article 'the' in the expression "the proper officer" 100. This Court in Canon India (supra), while laying much emphasis on the use of the expression "the proper officer" observed that the Parliament had employed the article "the" instead of "a/an" in Section 28 of the Act, 1962 so as to give effect to its intention of specifying that the proper officer referred to in Section 28 is the same officer as the one referred to in Section 17. The Court further observed that the use of a definite article instead of an indefinite article is indicative of the fact that the proper officer referred to in Section 28 is not "any" proper officer but "the" proper officer assigned with the function of assessment and reassessment under Section 17. 101. However, there is an error apparent in the aforesaid view. Undoubtedly, a definite article "the" has been used before "proper officer" with a view to limit the exercise of powers under Section 28 by a specific proper officer and not any proper officer. But, in the absence of any statutory linkage between Sections 17 and 28 of the Act, 1962 respectively, there was no legal footing f....
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.... DRI who were designated as "the proper officer" for the purpose of Section 28 by the aforesaid notification were competent to issue show cause notices under Section 28. 105. Craies on Statute Law 7th Ed., Page 83 has stated that "the language of statutes is not always that which a rigid grammarian would use, it must be borne in mind that a statute consists of two parts, the letter and the sense". It was observed by this Court in State of Andhra Pradesh v. Ganesweara Rao, reported in AIR 1963 SC 1850 that the aforesaid rule of construction that the provisions of a statute are to be read together and given effect to and that it is the duty of the court to construe a statute harmoniously has gained general acceptance. In Management, S.S.L. Rly. Co. v. S.S.R.W. Union reported in AIR 1969 SC 513, this Court observed that the principle that literal meaning of the word in a statute is to be preferred is subject to the exception that if such literal sense would give rise to any anomaly or would result in something which would defeat the purpose of the Act, a strict grammatical adherence to the words should be avoided as far as possible. The above principles would help us to desist from....
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....ation issued thereunder. 111. This Court in paragraphs 11 to 15 of Canon India (supra) proceeded on the footing that under the provisions of the Act, 1962, the Board has no power to appoint "Proper Officers". 112. As per Section 4 of the Act, 1962, the Board constituted under the provisions of Central Board of Revenue Act, 1963 is vested with the power to appoint such persons as it thinks fit to be "officers of customs". 113. Under sub-section (1) to Section 4(1) of the Act, 1962, the Board may appoint such person as Officers of Customs as it thinks fit. Under Section 4(2) of the Act, 1962 the Board can even authorize a Chief Commissioner of Customs or a Joint or Assistant or Deputy Commissioner of Customs to appoint any officers below the rank of Assistant Commissioner of Customs as an "officer of customs". It appears that this aspect was also not brought to the notice of this Court in Canon India (supra). vii. Section 4 of the Act, 1962 114. For an easy reference, Section 4 of the Act, 1962 is reproduced below: "Section 4 : Appointment of "Officers of Customs": 1) The Board may appoint such persons as it thinks fit to be Officers of Customs. ....
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....d. In exercise of the powers conferred by subsection (1) of Section 4 of the Customs Act, 1962 (52 of 1962) and in supersession 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 the 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:- Area of Jurisdiction Designation of the Officers (1) (2) (3) (4) Whole of India Additional Director Additional Directors or Joint Deputy Directors, or General, Directorate General of Revenue Intelligence posted at Headquarters and Zonal/region al units Directors, of Directorate of Revenue Intelligence posted at Headquarters and Zonal/region al units. ....
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.... Deputy Directors or Assistant Directors in the Directorate General of Central Excise Intelligence. 4. Commissioners of Central Excise, Additional Commissioners or Joint Commissioners of Central Excise, Deputy Commissioners or Assistant Commissioners of Central Excise. 245. Thus, over a period of time, the officers of Directorate of Revenue Intelligence (DRI) who are primarily drawn from the Customs Department were also given the task of issuing show cause notice and adjudicating the same in terms of Notifications issued as "Proper Officer", as defined in Section 2(34) of the Customs Act, 1962. 246. Now, under the amended Section 2(34), the word "under Section 5" has been inserted. Thus, what was implicit in the Customs Act, 1962 has now been made explicit in the amendment to the Customs Act, 1962 vide Finance Act, 2022. 247. As per Section 5(1) of the Act, an "Officer of Customs" may exercise the powers and discharge the duties conferred or imposed on him under the Customs Act, 1962, subject to such conditions and limitations as the Board may impose. 248. The power to be exercised may be subject to such conditions and limitations as the Bo....
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....eferred to in sub-section (1), and in assigning functions under sub-section (1A), the Board may consider any one or more of the following criteria, including, but not limited to-- a) territorial jurisdiction; b) persons or class of persons; c) goods or class of goods; d) cases or class of cases; e) computer assigned random assignment; f) any other criterion as the Board may, by notification, specify. (5) The Board may, by notification, wherever necessary or appropriate, require two or more officers of customs (whether or not of the same class) to have concurrent powers and functions to be performed under this Act.". 251. During the interregnum in 2012, a more comprehensive notification was issued vide Notification No.40/2012-Cus. (N.T.), dated 02.05.2012. This notification fell for consideration in Canon India Private Limited Vs. Commissioner of Customs, 2021 (376) E.L.T.3(S.C). However, No.40/2012-Cus. (N.T.), dated 02.05.2012 cannot be read in isolation. It had to be read along with notifications issued under Section 4 of the Customs Act, 1962. 252. Notification No.40/2012-Cus. (N.T.), dated 02.05.2012 was also amended from time to time and has now ....
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....of powers under a section which does not confer any such power." [Emphasis supplied] 118. It was held that Section 6 is the only section which provides for the entrustment of the functions of customs officers to other officers of the Central or State Government or local authority. As a result of the judgment in Canon India (supra), the respondents herein vociferously argued that Section 5 of the Act, 1962 only deals with the powers and duties and not functions and it is Section 6 which refers to functions. Such argument proceeded on the erroneous footing that any notification empowering the DRI should have been issued under Section 6 of the Act, 1962 and not having been done so, the show cause notice issued by the DRI was without jurisdiction. 119. Section 6 of the Act, 1962 reads thus: "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." [Emphasis supplied] ....
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....der the Act is derived from Section 5. 125. A plain reading of Section 6 of the Act, 1962 referred to above, makes it abundantly clear that it applies only to officers from departments other than the officers of the customs under Section 4 of the Act, 1962. The officers of DRI are not any other officers of the Central Government or the State Government or the local authority to be entrusted with the functions of the Board and the Customs Officers. It has been rightly observed by the High Court of Madras in M/s N.C. Alexander (supra) that post 07.03.2002, a notification of the Central Government under Section 6 is not required to recognise the officers from DRI as officers of customs. 126. The observations of the High Court in M/s N.C. Alexander (supra) in the aforesaid context with which we are in complete agreement are reproduced hereinbelow: "269. By such entrustment, these officers of other Departments do not become Officers of Customs. They can merely function as such officers. Since entrustment under Section 6 is on the officers from other department, the Parliament by design has given the powers to the Central Government and not to the Board. 270. As t....
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....of Customs or Joint or Assistant or Deputy Commissioner of Customs, to appoint Officers of Customs below the rank of Assistant Commissioner of Customs. Thus, the following Group 'B' Executive - Gazetted and Non-Gazetted Officers assist in the initial stage of assessment of goods as:- Sl. No. Group 'B' Executive Gazetted Officer Group 'B' Executive Non - Gazetted Officer 1 Superintendent of Customs (Preventive) Preventive Officers (Customs) 2 Appraiser of Customs Examiner (Customs) 277. As mentioned above, assessment is neither by the Group 'B' Executive - Gazetted Officer nor by Group 'B' Executive - Non-Gazetted Officer after 08.04.2011. Only, prior to 08.04.2011, the assessment of goods at the port was vested with the Group 'B' Executive - Gazetted Officer. However, after the said date, the fundamental of assessment has undergone a sea change and changed permanently as mentioned above. 278. These fundamental changes brought to the manner of the assessment under the Customs Act, 1962 with effect from 08.04.2011 appear to have not been brought to the attention of the Hon'ble Supreme Court and therefore....
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....of issuance of show cause notices under Section 28 was raised before the High Court of Delhi in the case of Mangali Impex (supra). The specific challenge therein was to the constitutional validity of Section 28(11) of the Act which was inserted by the Customs (Amendment and Validation) Act, 2011 (the "Validation Act") with effect from 16.09.2011. 132. A Division Bench of the High Court held that sub-section (11) of Section 28 could not validate the show cause notices issued by the DRI officers prior to 08.04.2011, i.e., the date when Section 28 was amended. 133. With a view to understanding the true purport of Section 28(11) and the issues pertaining thereto, it is necessary to first examine the changes to Section 28 that were introduced prior to the Validation Act. Section 28 as it stood prior to the Finance Bill 2011 is reproduced below: "28. Notice for payment of duties, interest, etc. (1) When any duty has not been levied or has been short - levied or erroneously refunded, or when any interest payable has not been paid, part paid or erroneously refunded, the proper officer may,- (a) in the case of any import made by any individual for his personal use or....
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....een levied or has been short-levied, or the interest has not been paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts, where it is possible to do so, shall determine the amount of such duty or the interest, within a period of one year: and (ii) in any other case, where it is possible to do so, shall determine the amount of duty which has not been levied or has been short-levied or erroneously refunded or the interest payable which has not been paid, part paid or erroneously refunded, within a period of six months, from the date of service of the notice on the person under subsection (1). (2B) Where any duty has not been levied, or has been short-levied or erroneously refunded, or any interest payable has not been paid, part paid or erroneously refunded, the person, chargeable with the duty or the interest, may pay the amount of duty or interest before service of notice on him under sub-section (1) in respect of the duty or the interest, as the case may be, and inform the proper officer of such payment in writing, who, on receipt of such information, sha....
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....t been so levied 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; (b) the person chargeable with the duty or interest, may pay before service of notice under clause (a) on the basis of,- (i) his own ascertainment of such duty; or (ii) the duty ascertained by the proper officer, the amount of duty along with the interest payable thereon under section 28AA or the amount of interest which has not been so paid or part-paid. (2) The person who has paid the duty along with interest or amount of interest under clause (b) of sub-section (1) shall inform the proper officer of such payment in writing, who, on receipt of such information shall not serve any notice under clause (a) of that sub-section in respect of the duty or interest so paid or any penalty leviable under the provisions of this Act or the rules made thereunder in respect of such duty or interest. (3) Where the proper officer is of the opinion that the amount paid under clause (b) of sub-section (1) falls short of the amount actually payable, then, he sh....
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....isions of sections 135, 135A and 140 be deemed to be conclusive as to the matters stated therein; or (ii) (ii) that the duty with interest and penalty that has been paid falls short of the amount actually payable, then the proper officer shall proceed to issue the notice as provided for in clause (a) of sub-section (1) in respect of such amount which falls short of the amount actually payable in the manner specified under that sub-section and the period of one year shall be computed from the date of receipt of information under sub-section (5). (7) In computing the period of one year referred to in clause (a) of sub-section (1) or five years referred to in sub-section (4), the period during which there was any stay by an order of a court or tribunal in respect of payment of such duty or interest shall be excluded. (8) The proper officer shall, after allowing the concerned person an opportunity of being heard and after considering the representation, if any, made by such person, determine the amount of duty or interest due from such person not being in excess of the amount specified in the notice. (9) The proper officer shall determine the amount ....
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....nder subsection (1) of section 4 before the 6th day of July, 2011 shall be deemed to have and always had the power of assessment under section 17 and shall be deemed to have been and always had been the proper officers for the purposes of this section." 138. As stated in the foregoing extract, sub-section (11) was introduced in the statute to remedy the defects highlighted by this Court in the case of Sayed Ali (supra) and the same retrospectively empowered all officers of customs appointed under Section 4(1) before 06.07.2011 to conduct assessments under Section 17 of the Act and to be proper officers for the purpose of Section 28. 139. The Statement of Objects and Reasons of the Validation Act explained that the introduction of Section 28(11) was necessary because the position of law on the functions of proper officers as interpreted by this Court in Sayed Ali (supra) and the consequent invalidation of show cause notices issued by the Commissionerates of Customs (Preventive), DRI and others, was not the legislative intent. Parliament clarified that show cause notices issued by officers of the Commissionerates of Customs (Preventive), DRI, Directorate General of Central Exci....
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....e the date on which the Finance Bill, 2011 receives the assent of the President, shall continue to be governed by the provisions of section 28 as it stood immediately before the date on which such assent is received." 144. It was vehemently argued on behalf of the respondents that reading Section 28(11) with Explanation 2 narrows down the period for the purposes of retrospective validation of the show cause notices issued and limits the application of sub-section (11) to the period from 08.04.2011 (enactment of new Section 28) to 16.09.2011 (enactment of the Validation Act). This challenge is based on the reasoning that the non-obstante clause contained in Section 28(11) is limited to "...judgment, decree or order of any court of law, tribunal or other authority..." and does not oust the application of other provisions of the Act including Explanation 2. It was argued that the phrase "...this section..." in sub-section (11) when read harmoniously with Explanation 2 refers to the new Section 28 only and will not be applicable to the old provision as it stood prior to 08.04.2011. 145. The determination of the soundness of the aforesaid argument necessitates a comparison of Sect....
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....ee of the importer or exporter, the provisions of this sub-section shall have effect as if for the words "one year" and "six months", the words "five years" were substituted. (4) Where any duty has not been levied or has been shortlevied or erroneously refunded, or interest payable has not been paid, part-paid or erroneously refunded, by reason of,- (a) collusion; or (b) any wilful mis-statement; or (c) suppression of facts, by the importer or the exporter or the agent or employee of the importer or exporter, the proper officer shall, within five years from the relevant date, serve notice on the person chargeable with duty or interest which has not been so levied or which has been so shortlevied 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. (5) Where any duty has not been levied or has been short- levied or the interest has not been charged or has been part- paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts by the importer or the exporter or the agent or the employee of the importer or the expor....
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....ination of the total amount to be recovered if part-payment has been made by the noticee. Provided further that where the amount of duty which has not been levied or has been short-levied or erroneously refunded or the interest payable has not been paid, part paid or erroneously refunded is one crore rupees or less, a notice under this sub-section shall be served by the Commissioner of Customs or with his prior approval by any officer subordinate to him: Provided also that where the amount of duty has not been levied or has been short-levied or erroneously refunded or the interest payable thereon has not been paid, part paid or erroneously refunded is more than one crore rupees, no notice under this sub- section shall be served except with the prior approval of the Chief Commissioner of Customs. The legislature has removed the pecuniary distinction and the consequent approvals from different authorities for issuance of show cause notices. Explanation : Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of one year or six months or five years, as the case may be. (7) In c....
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....eriod of six months for adjudication of notices issued under new Section 28(1)(a). Sub-section (9)(b) of the new Section 28 is analogous to sub-section (2A)(i) of the old provision and provides for a time period of one year for adjudication of notices issued in cases of collusion, wilful misstatement and suppression of facts. (2B) Where any duty has not been levied, or has been short-levied or erroneously refunded, or any interest payable has not been paid, part paid or erroneously refunded, the person, chargeable with the duty or the interest, may pay the amount of duty or interest before service of notice on him under subsection (1) in respect of the duty or the interest, as the case may be, and inform the proper officer of such payment in writing, who, on receipt of such information, shall not serve any notice under subsection (1) in respect of the duty or the interest so paid: (1) ... (a) ... (b) the person chargeable with the duty or interest, may pay before service of notice under clause (a) on the basis of,- (i) his own ascertainment of such duty; or (ii) the duty ascertained by the proper officer, the amount of duty along with the interest payable thereon under sectio....
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.... interest is specified separately. This provision is for the recovery of interest. (2C) The provisions of sub-Section (2B) shall not apply to any case where the duty or the interest had become payable or ought to have been paid before the date on which the Finance Bill 2001 receives the assent of the President. (3) For the purposes of sub-section (1), the expression "relevant date" means,- a) in a case where duty is not levied, or interest is not charged, the date on which the proper officer makes an order for the clearance of the goods; (b) in a case where duty is provisionally assessed under section 18, the date of adjustment of duty after the final assessment thereof; (c) in a case where duty or interest has been erroneously refunded, the date of refund; (d) in any other case, the date of payment of duty or interest." Explanation 1 - For the purposes of this section, "relevant date" means,- (a) in a case where duty is not levied, or interest is not charged, the date on which the proper officer makes an order for the clearance of goods; (b) in a case where duty is provisionally assessed under section 18, the date of adjustment of duty after the fin....
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.... enactment of new Section 28, Parliament added Explanation 2 to clarify that recoveries arising prior to 08.04.2011 shall be governed by old Section 28 of the Act. 147. Having analysed the aforesaid modifications made by Parliament to old Section 28, we can say with certainty that none of the changes made by the amendments to Section 28 has any impact on the competence of the proper officer for the purposes of fulfilment of functions under Section 28. In our considered view, the only major change that warrants the clarification provided under Explanation 2 is the distinction with respect to the limitation period for the issuance of show cause notices. 148. Therefore, the application of sub-section (11), which pertains only to the empowerment of proper officers to issue show cause notices under Section 28, cannot be said to be limited only to new Section 28 but also to the provision as it stood prior to 08.04.2011. The legislative intent is that subsection (11) was meant to apply to Section 28 without any restriction as to time. This is apparent from the Statement of Objects and Reasons of the Validation Act. Therefore, the contention of the respondent that the phrase "...this....
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....ictional limit which in turn may lead to "utter chaos and confusion" as highlighted in Sayed Ali (supra), is misconceived in our view. The apprehension of the petitioner therein was that plurality of proper officers empowered under Section 28 would result in more than one show cause notice and a consequent misuse of the provision, which would be detrimental to the interests of the persons chargeable with the payment of duty. Although, Mangali Impex (supra) declared Section 28(11) to be invalid on this ground, it suggested that the Board should issue instructions in its administrative capacity that once a show cause notice is issued specifying an adjudicating authority subject to such an officer being the proper officer for the purposes of Section 28, then he or she alone should proceed to adjudicate that particular show cause notice to the exclusion of all other officers who may have power in relation to that subject matter. We find this to be a reasonable construal of the import and application of Section 28(11). 152. It is a settled position of law that the possibility of misuse or abuse of a law which is otherwise valid cannot be a ground for invalidating it. This principle o....
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....wing the protocol suggested in Mangali Impex (supra) since 1999. Further, no substantial empirical evidence of the misuse of Section 28(11) which was enacted over a decade ago, was presented by the parties. Therefore, we are inclined to accept the policy of the Customs department that once a show cause notice is issued, the jurisdiction of other empowered proper officers shall be excluded for such notice. We find that such policy acts as a sufficient safeguard against the apprehension of chaos or confusion or misuse. 154. Thus, we are of the considered view that the enactment of sub-section (11) of Section 28 cures the defect pointed out in Sayed Ali (supra) and the judgment in Mangali Impex (supra) deserves to be set aside. 155. It follows from the above discussion that sub-section (11) of Section 28 is constitutionally valid, and its application is not limited to the period between 08.04.2011 and 16.09.2011. 156. For the reasons in the foregoing paragraphs, we hold that the Bombay High Court judgment in Sunil Gupta (supra) lays down the correct position of law, whereas the Delhi High Court decision in Mangali Impex (supra) is incorrect and is consequently set aside. x....
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....that Section 97(iii) of the Finance Act, 2022 gives the amendments made to Sections 2, 3 and 5 retrospective effect which would make sub-sections (4) and (5) of Section 5 applicable to the show cause notices issued in the past. It is the case of the writ petitioner that Customs Notifications Nos. 44/2011 dated 06.07.2011 and 40/2012 dated 02.05.2012 do not in any way satisfy the mandatory and salutary criteria laid down in Sections 5(4) and 5(5). 159. From the grounds summarized above, we find that the writ petitioners have challenged the constitutionality of the validation of past actions by Section 97 of the Finance Act, 2022. Therefore, we shall limit our ruling to this provision alone. 160. It is a settled position of law that the legislature is empowered to enact validating legislations to validate earlier acts declared illegal and unconstitutional by courts by removing the defect or lacuna which led to the invalidation of the law. With the removal of the defect or lacuna resulting in the validation of any act held invalid by a competent court, the act may become valid, if the validating law is lawfully enacted. 161. This Court in the case of Empire Industries Ltd. v.....
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....her such validation is consistent with the rights guaranteed in Part III of the Constitution. (5) The Court does not have the power to validate an invalid law or to legalise impost of tax illegally made and collected or to remove the norm of invalidation or provide a remedy. These are not judicial functions but the exclusive province of the Legislature. Therefore, they are not an encroachment on judicial power. (6) In exercising legislative power, the Legislature by mere declaration, without anything more, cannot directly overrule, revise or override a judicial decision. It can render judicial decisions ineffective by enacting valid law on the topic within its legislative field, fundamentally altering or changing its character retrospectively. The changed or altered conditions are such that the previous decision would not have been rendered by the Court, if those conditions had existed at the time of declaring the law as including power to amend the law. It is also empowered to give effect to retrospective legislation with a deeming date or with effect from a particular date." [ Emphasis supplied ] 163. We shall now proceed to determine whether the ena....
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....li (supra). c) However, the apprehension expressed is unfounded in our opinion especially in context of the Customs department's policy of exclusion of jurisdiction of other competent proper officers once a particular proper officer empowered to issue a show cause notice under Section 28 has issued it. Such a policy acts as an adequate safeguard in our view. d) We find that the ouster of jurisdiction of DRI to issue show cause notices under Section 28 once an assessment has been done under Section 17 is not a defect at all in light of Notification No. 44/2011 dated 06.07.2011 and new Section 17 as amended by the Finance Act, 2011. We have already recorded a finding in the foregoing segments of this judgment that these facts were not considered in Canon India (supra) and therefore, become the basis of the review petition herein. e) Notification No. 44/2011 dated 06.07.2011 specifically assigned the functions of the proper officers under Sections 17 and 28 to DRI officers. Such assignment of functions of assessment is sufficient for the DRI officers to fall in the category of "any other officer who has been assigned the function of assessment" as mentioned ....
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.... which would exclude the jurisdiction of other proper officers empowered under Section 28. (c) Canon India (supra) proceeded on an erroneous assumption that the jurisdiction of the proper officer under Sections 17 and 28 is linked. This is due to the erroneous understanding of the provisions of Act, 1962 that functions under Section 28 involve re-assessment. (d) Therefore, the very basis of the determination of jurisdictional fact for exercise of functions under Section 28 has been clarified by us. Thus, we are of the considered view that the challenge to Section 97, on the ground of inability of a validating Act to overrule a finding of fact, is unfounded and liable to be dismissed. 165. While challenging the constitutional validity, it was argued that the insertion of Section 110AA for future actions while validating the past actions (which in words of the writ petitioners was contrary to the intent of Section 110AA) does not create a reasonable classification as there is no intelligible differentia. It was further argued that Section 97 is manifestly arbitrary and fails the test of proportionality under Article 14. In our view, these submissions are not tena....
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....ready collected to stand under the re-enacted law. Sometimes the Legislature gives its own meaning and interpretation of the law under which tax was collected and by legislative fiat makes the new meaning binding upon courts. The Legislature may follow any one method or all of them and while it does so it may neutralise the effect of the earlier decision of the court which becomes ineffective after the change of the law. Whichever method is adopted it must be within the competence of the legislature and legal and adequate to attain the object of validation. If the Legislature has the power over the subject-matter and competence to make a valid law, it can at any time make such a valid law and make it retrospectively so as to bind even past transactions. The validity of a Validating Law, therefore, depends upon whether the Legislature possesses the competence which it claims over the subject-matter and whether in making the validation it removes the defect which the courts had found in the existing law and makes adequate provisions in the Validating Law for a valid imposition of the tax." [Emphasis supplied] c) We are of the opinion that the introduction of Section....
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....ny other criterion as the Board may, by notification, specify." [Emphasis supplied] b) From a plain reading of the above-referred sub-section, we find that the Board has been entrusted with wide powers in respect of determination of criteria and the use of the word "may" is indicative of the Board's discretion in this regard. Therefore, the writ petitioners are wrong in construing the sub-section as a mandatory provision for the purpose of invalidation of the show cause notices issued. c) A purposive interpretation of Section 97 indicates that clause (i) therein is the object of its enactment and clause (iii) is an extension thereof to further clarify that any deficiencies in law under Sections 2, 3 and 5 of the Act, 1962 as they stood prior to the Finance Act, 2022 would not be an obstacle to the validating act under clause (i). d) Therefore, the retrospective application of Sections 2, 3 and 5 of the Act, 1962 respectively is not stand-alone but is restricted to achievement of the ultimate object of validation under clause (i) of Section 97. Any interpretation of the amended Sections 2, 3 and 5 arising from the retrospective application thereof....
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....or Health [R. (Quintavalle) v. Secy. of State for Health, 2003 UKHL 13 : (2003) 2 AC 687 : (2003) 2 WLR 692 (HL)] when it was said : (AC p. 695 C-H, paras 8-9) "8. The basic task of the court is to ascertain and give effect to the true meaning of what Parliament has said in the enactment to be construed. But that is not to say that attention should be confined and a literal interpretation given to the particular provisions which give rise to difficulty. Such an approach not only encourages immense prolixity in drafting, since the draftsman will feel obliged to provide expressly for every contingency which may possibly arise. It may also (under the banner of loyalty to the will of Parliament) lead to the frustration of that will, because undue concentration on the minutiae of the enactment may lead the court to neglect the purpose which Parliament intended to achieve when it enacted the statute. Every statute other than a pure consolidating statute is, after all, enacted to make some change, or address some problem, or remove some blemish, or effect some improvement in the national life. The court's task, within the permissible bounds of interpretation, is to give effec....
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....eously recorded the finding that since DRI officers were not entrusted with the functions of a proper officer for the purposes of Section 28 in accordance with Section 6, they did not possess the jurisdiction to issue show cause notices for the recovery of duty under Section 28 of the Act, 1962. c. The reliance placed in Canon India (supra) on the decision in Sayed Ali (supra) is misplaced for two reasons - first, Sayed Ali (supra) dealt with the case of officers of customs (Preventive), who, on the date of the decision in Sayed Ali (supra) were not empowered to issue show cause notices under Section 28 of the Act, 1962 unlike the officers of DRI; and secondly, the decision in Sayed Ali (supra) took into consideration Section 17 of the Act, 1962 as it stood prior to its amendment by the Finance Act, 2011. However, the assessment orders, in respect of which the show cause notices under challenge in Canon India (supra) were issued, were passed under Section 17 of the Act, 1962 as amended by the Finance Act, 2011. (iii) This Court in Canon India (supra) based its judgment on two grounds: (1) the show cause notices issued by the DRI officers were invalid for want of j....
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.... manifestly arbitrary, disproportionate and overbroad, for the reasons recorded in the foregoing parts of this judgment. We clarify that the findings in respect of the vires of the Finance Act, 2022 is confined only to the questions raised in the petition seeking review of the judgment in Canon India (supra). The challenge to the Finance Act, 2022 on grounds other than those dealt with herein, if any, are kept open. (vi) Subject to the observations made in this judgment, the officers of Directorate of Revenue Intelligence, Commissionerates of Customs (Preventive), Directorate General of Central Excise Intelligence and Commissionerates of Central Excise and other similarly situated officers are proper officers for the purposes of Section 28 and are competent to issue show cause notice thereunder. Therefore, any challenge made to the maintainability of such show cause notices issued by this particular class of officers, on the ground of want of jurisdiction for not being the proper officer, which remain pending before various forums, shall now be dealt with in the following manner: a. Where the show cause notices issued under Section 28 of the Act, 1962 have been ch....