Commissioner of Customs v. M/s Canon India Pvt. Ltd.

Judgment / Order of the Supreme Court Judgment

* Ed. Note: Pagination as per the original Judgment.

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1Copy pinpoint1. Since the pivotal question of law involved in all the captioned petitions is the same, they were taken up for hearing analogously and are being disposed of by this common judgment and order.

2Copy pinpoint2. For the sake of convenience, the Review Petition No. 400 of 2021 filed by the Customs Department is treated as the lead matter.

3Copy pinpoint3. This Review Petition has been filed by the Customs Department through the Commissioner of Customs, New Delhi (the “Department”) under Order XLVII of the Supreme Court Rules, 2013 seeking review of the judgment and order dated 09.03.2021 passed by this Court in Civil Appeal No. 1827 of 2018 titled M/s Canon India Private Ltd. v. Commissioner of Customs.

A. FACTUAL BACKGROUND OF THE REVIEW PETITION

4Copy pinpoint4. A two-Judge Bench of this Court in the case of Commissioner of Customs v. Sayed Ali and Another reported in (2011) SCC 537, had held that the Commissioner of Customs (Preventive) is not a “proper officer” as defined in Section 2(34) of the Customs Act, 1962 (“the Act, 1962”) and therefore did not have the jurisdiction to issue a show cause notice in terms of Section 28 of the Act, 1962. The Court observed that while all proper officers must be “officers of customs”, all “officers of customs” are not proper officers. It also held that only those officers of customs who were assigned the functions of assessment, which would include re-assessment, working under the jurisdictional collectorate within whose jurisdiction the bills of entry or baggage declarations had been filed and consignments had been cleared for home consumption, would have the jurisdiction to issue show cause notice under Section 28 or else it would lead to a situation of utter chaos and confusion, in as much as all officers of customs in a particular area, be it under the Collectorate 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”

5Copy pinpoint5. 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

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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 power of assessment under Section 17 and were deemed to be and always have been “proper officers” for the purpose of the said section.

6Copy pinpoint6. The constitutional validity of Section 28(11) of the Act, 1962, came to be challenged before the High Court of Delhi in the case of Mangali Impex Ltd. v. Union of India reported in (2016) SCC Online Del 2597 and a batch of matters were disposed of by the High Court vide a common judgment on 03.05.2016.

7Copy pinpoint7. The High Court held that although Section 28(11) of the Act, 1962 begins with a non-obstante clause, it neither explicitly nor implicitly seeks to overcome the legal position brought about by Explanation 2 which states that the cases of non-levy, short-levy or erroneous refund prior to 08.04.2011 would continue to be governed by the unamended Section 28 of the Act, 1962 as it stood prior to said date. On this basis, it held that the newly enacted Section 28(11) would not empower officers of DRI or DGAE to either to adjudicate the show-cause notices already issued by them for the period prior to 08.04.2011 or to issue fresh show-cause notices for said period.

8Copy pinpoint8. The High Court also held that Section 28(11) of the Act, 1962 is overbroad in as much as it confers jurisdiction on a plurality of officers on the same subject matter which may result in utter chaos, unnecessary harassment and conflicting decisions. It held that such untrammelled power would be arbitrary and violative of Article 14 of the Constitution. The issue as to the constitutional validity and effect of Section 28(11) of the Act, 1962 was answered accordingly. The Department preferred an appeal against the decision in Mangali Impex (supra) in Civil Appeal No. 6142 of 2019 before this Court and vide order dated 01.08.2016, a two-Judge Bench of this Court stayed the operation of that decision.

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9Copy pinpoint9. The constitutional validity of Section 28(11) of the Act, 1962 was also challenged before the High Court of Bombay in the case of Sunil Gupta v. Union of India and Others reported in (2014) SCC Online Bom 1742. The two-Judge Bench vide its Judgement dated 03.11.2014 held thus: “25. As a result of the above discussion and finding that Explanation 2 has not been dealing with the case, which was specifically dealt with by sub- section (11) of section 28 of the Act, that we are of the opinion that the challenge in the writ petition is without any merit. The 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 must fail.”

10Copy pinpoint10. Since the decision in Sunil Gupta (supra) was anterior in time, the same was relied upon by the Department before the High Court of Delhi during the hearing in Mangali Impex (supra). However, the High Court of Delhi did not agree with the view taken therein.

11Copy pinpoint11. A batch of four statutory appeals came to be decided by this Court on 09.03.2021 in Canon India (supra) wherein this Court decided

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the following two issues – first, whether the officers of DRI would be “proper officers” under Section 2(34) for the purposes of Sections 17 and 28 of the Act, 1962 respectively; and second, whether such officers are empowered to issue show cause notices demanding customs duty under section 28 of the Act, 1962. To elaborate: (a) Whether the Directorate of Revenue Intelligence (DRI) had the legal authority to issue a show cause notice under Section 28(4) of the Act, 1962, when the goods were cleared for import by a Deputy Commissioner of Customs (who had decided that the goods are exempted from being taxed on import)? (b) Whether an Additional Director General of DRI, who has been appointed as an “officer of Customs” under the Notification dated 07.03.2002, has been entrusted with the functions of “the proper officer” for the purpose of Section 28 of the Act, 1962?

12Copy pinpoint12. This Court while disposing of the aforesaid batch of matters proceeded to reiterate the principles laid down in Sayed Ali (supra) that only such officers who are vested with the power of assessment under Section 17 can be empowered to issue show cause notices under Section 28 or else this would result in a state of chaos and confusion. It also held that unless it is shown that the officers of DRI are at the first instance, customs officers under the Act, 1962 and are entrusted with the functions of a proper officer under Section 6 of the Act, 1962, they would not be competent to issue show-cause notices. It was held that, since no entrustment was made under Section 6 of the Act, 1962, the officers of DRI who were not otherwise officers of customs, could not have been assigned as the “proper officers”.

13Copy pinpoint13. It also observed that from a conjoint reading of Section 2(34) and Section 28 respectively of the Act, 1962, it is manifest that only such a custom officer who has been assigned the specific functions of assessment and reassessment in the jurisdictional area where 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.

14Copy pinpoint14. 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

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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.

15Copy pinpoint15. 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 Appeals. This Court vide order dated 15.02.2022 in the present Review Petition allowed an open court hearing to be conducted and after hearing the parties, issued notice on the Review Petition vide order dated 19.05.2022. A co-ordinate Bench of this Court later in Union of India and Another v. Godrej and Boyce Manufacturing (SLP (C) No. 1513/2022) through order dated 11.02.2022 also issued notice.

16Copy pinpoint16. The aforesaid developments led to a hiatus. As a result, the appeals pending before the Tribunals and other authorities could not be decided. This necessitated the introduction of the following provisions by Parliament: Sections 86, 87 and 88 in the Finance Act, 2022 (Act No. 6 of 2022) to amend Sections 2(34), 3 and 5 of the Act, 1962 respectively. Further, Sections 94 and 97 of the Finance Act, 2022 introduced a new Section 110AA and a validation enactment respectively. These amendments came to be challenged before this Court in W.P. (C) 526 of 2022 titled Daikin Air Conditioning India Pvt. Ltd v. Union of India.

17Copy pinpoint17. The present batch comprises of three clusters of matters: (i) The Review Petitions in the Canon India (supra) batch; (ii) The Mangali Impex (supra) appeal and other appeals pending before this Court on the issue of whether the officers of DRI would be proper officers in light of Section 28(11); and (iii) The petitions challenging the constitutional validity of Section 97 of the Finance Act, 2022.

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B. SUBMISSIONS ON BEHALF OF THE DEPARTMENT

18Copy pinpoint18. Mr. N. Venkataraman, the learned Additional Solicitor General of India, made extensive submissions on the following broad issues – (i) The Review Petitions filed in the case of Canon India (supra) are maintainable as there is an error apparent on the face of the record. (ii) The decision rendered by this Court in Sayed Ali (supra) requires reconsideration. (iii) The decision rendered by the Delhi High Court in Mangali Impex (supra) should be overruled and the view expressed by the Bombay High Court in Sunil Gupta (supra) should be upheld. (iv) The changes introduced by the Finance Act, 2022 are merely clarificatory in nature and the crux of the issue before the Court can be answered without reference to and reliance upon the changes introduced by the said Act.

i. Error apparent in the judgment under review

19Copy pinpoint19. It was submitted 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.

20Copy pinpoint20. 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 submitted that there is no discussion worth the name on

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these provisions as regards its applicability to the DRI officers who are none other than a class of officers of customs under Section 3 appointed pursuant to Section 4 and consequently, no entrustment is required under Section 6. He submitted that Section 6 would come into play for such of those officers of the Central or State Government or Local Authority, who are not a class of officers of customs under Section 3 appointed in accordance with Section 4 of the Act, 1962. He explained this clear distinction between the two provisions by relying on the notifications issued under Section 4 of the Act, 1962 proclaiming DRI officers to be a class of officers of Customs under Section 3 of the Act.

21Copy pinpoint21. He submitted that this Court erred in not taking into consideration Sections 3, 4 and 5 of the Act, 1962 respectively and its interplay, if any, with Section 6, as duly indicated by the notifications issued from time to time. More particularly, the Court did not take into account the origin and history of the DRI and how it was always a part of the Ministry of Finance since its inception except for a brief period between 1970 and 1977.

22Copy pinpoint22. He adverted to Sections 3, 4, 5 and 6 of the Act, 1962 respectively along with the relevant notifications issued under the respective provisions. The provisions and relevant notifications are reproduced hereinbelow: Section 3 as introduced in 1962: “3. There shall be the following classes of officers of custom namely: — (a) Collectors of Customs; (b) Appellate Collectors of Customs; (c) Deputy Collectors of Customs; (d) Assistant Collectors of Customs; and (e) such other class of officers of customs as may be appointed for the purposes of this Act.” The provision was amended by the Finance Act, 1995 and underwent only one change wherein the expression ‘collector’ was replaced by the expression ‘commissioner’. The amended provision reads as under:

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“3. Classes of officers of customs.- There shall be the following classes of officers of customs, namely.- (a) Chief Commissioners of Customs; (b) Commissioners of Customs; (c) Commissioners of Customs (Appeals); (d) Deputy Commissioners of Customs;”

23Copy pinpoint23. He submitted that Section 3 refers to the class of officers 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.

24Copy pinpoint24. 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 conferred or imposed on an officer of customs other than those specified in Chapter XV and section 108.”

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25Copy pinpoint25. Section 4 relates to appointment of officers of customs and Section 5 deals with the powers and duties of officers of customs. There is only one significant change carried out in Section 4 on 11.05.2002. Prior to that date, the appointing Authority was the Central Government and post 11.05.2002, the Board became the appointing Authority.

26Copy pinpoint26. Some of the relevant notifications issued under Sections 4 and 5 of the Act, 1962 respectively are reproduced below: “G.S.R. 214 ̶In exercise of the powers conferred by sub-section (1) of Section 4 of the Customs Act, 1962 (52 of 1962), the Central Government hereby appoints— (a) the officers specified below to be Collectors of Customs within their respective jurisdictions, namely:—

1. Director, Directorate of Revenue Intelligence.

2. Collector of Customs and Central Excise, Cochin.

3. Collectors of Land Customs and Central Excise, Delhi, Calcutta and Shillong.

4. Collectors of Central Excise, Baroda, Bombay, Poona, Bangalore, Madras, Hyderabad, Calcutta, Nagpur, Patna, Allahabad and Kanpur. (b) the Deputy Collectors posted under the Collectors specified in clause (a) to be Deputy Collectors of Customs within their respective jurisdictions; (b) the Assistant Collectors posted under the Collectors specified in clause (a) to be Assistant Collectors of Customs within their respective jurisdictions. [No. 37/F. No. 4/1/63-CAR] G.S.R. 215-In exercise of the powers conferred by sub-section (1) of section 4 of the Customs Act, 1962 (52 of 1962), the Central Government hereby appoints the following persons to be officers of Customs, namely:-

1. Principal Appraisers, Appraisers, Examiners, Chief Inspectors, Additional Chief Inspectors, Inspectors, Preventive Officers, Women

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searches, Mnisterial officers and Class IV officer in the Customs Department at Bombay, Calcutta, Madras, Cochin, Visakhapatnum and Kandla.

2. Reverificadors, Verficiadores, Appraisers, Preventive Inspectors, Preventive Officers, Officials Probationary Officials, Fiscal Guards, Cabos, Sub-Chefes, and Auxiliaries of the Technical Cadre, borne on the establishment of Customs and Central Excise Administration, Goa.

3. Superintendents, Deputy 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.]”

27Copy pinpoint27. 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.

28Copy pinpoint28. 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 onwards, DRI has remained with the Ministry of Finance.

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29Copy pinpoint29. Placing reliance on the decision of the Delhi High Court in the case of S.K. Srivastava v. Union of India reported in 1971 SCC OnLine Del 134, he submitted that DRI was always a part of the Customs Department, working under a common Board and the Ministry of Finance. The relevant paragraphs from this decision are extracted below: “(2) Therefore, on 3-12-1970 the order dated 27-7-1970 was cancelled. (3) On 16-12-1970 the President was pleased to order that the petitioner “be posted as Collector of Central Excise, Hyderabad”. The petitioner however refused to join his posting at Hyderabad and has filed the present writ petition challenging his transfer from the post of Director of Revenue Intelligence to the post of Collector of Customs as being illegal and unconstitutional. Let us first consider the legality of the transfer. Under Article 310 of the Constitution, the petitioner held office during the pleasure of the President. The conditions of service of the petitioner could be regulated by Parliament by legislation under Article 309 of the Constitution. In the absence of such legislation the President could also frame rules to do so under the proviso to Article 309. But neither any such legislation nor any such rules exist. The formation of the Indian Customs and Central Excise Service Class I was itself brought about by purely executive action. It is well-established that the administration of service by the Government of India can be carried on by executive instructions and executive action even though no statute or statutory rules may have been made. The distinction between the personnel forming a Service and the posts which may be manned by the members of such a Service has to be noted at the outset in this case. The petitioner along with others belong to the Indian Customs and Central Excise Service Class I. The members of this Service stood in relation to each other in a particular order of seniority.

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There was no statute or rules, however, restricting the appointments of the members of the Service to any particular post. Initially the officers of the Collectorate of Customs and Excise working under the Ministry of Finance, Department of Revenue, used to do all the work relating to customs and excise. In 1939, the work of inspection in the Departments 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 Intelligence has been carved out from the work originally performed by the Collectorates of Customs and Central Excise and as no separate personnel was recruited to man the posts in these two Directorates, the members of the Indian Customs and Central Excise Service Class I have been manning those posts. There have been therefore numerous transfers

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of officers of the Indian Customs and Central Excise Service Class I from their posts in the Collectorates to the subsequently created posts in the Directorates. Equally frequently these officers have been transferred back to the posts in the Collectorates. The important fact to be noted is that only one set of personnel originally recruited for the Customs and Central Excise Collectorates has been used to fill the posts not only in the Collectorates but also in the Directorates. The reason is obvious. The Central Board of Excise and Customs in 1963 and prior to that the Central Board of Revenue functioning as a part of the Department of Revenue, Ministry of Finance of the Government of India administered and controlled the work of the Collectorates of Customs and Central Excise as well as of the Directorates of Inspection and Revenue Intelligence. These three units form one whole working under the Board and the Ministry. This position is reflected in the following documents:— (1) The Central Civil Services [Revised Pay Rules, 1960 (Annexure R xiv)] have a Schedule in which the various posts which could be manned by the Central Civil Services are shown with the emoluments attached to those posts. In this Schedule section 10 forms the Ministry of Finance (Department of Revenue).…” [emphasis supplied]

30Copy pinpoint30. Having adverted to Sections 3, 4 and 5 of the Act, 1962, he submitted that the officers of DRI would fall under Section 3 as “class of officers” and under Section 4 as “officers of customs” and that the Board is empowered to assign and fix powers and assign duties to such DRI officers similar to other classes of officers and officers of customs.

31Copy pinpoint31. In the aforesaid context, he submitted that having failed to advert to these three sections and the various notifications referred to above, this Court erred in placing sole reliance on Section 6 of the Act, 1962 to conclude that DRI officers are not officers of customs as they belong to a different department and require specific entrustment under Section 6 of the Act, 1962 by the Central Government before

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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.”

32Copy pinpoint32. 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 notifications conferring powers and duties are already on record.

33Copy pinpoint33. Our attention was also drawn to Notification 161-Cus dated 22.06.1963 issued under Section 6 entrusting powers of search to DRI officers. As per Notifications GSR 214 and GSR 215 issued in the same year under Section 4 of the Act, 1962, all officers of DRI were appointed as officers of customs. Therefore, an inadvertent reference to Section 6 under Notification No. 161 dated 22.06.1963 should not lead to the drawing of any adverse inferences as at the highest, it may only be a case of misquoting of a Section. Secondly, till 11.05.2002, it was the Central Government which was the appointing authority under Section 4 for officers of customs as well as for entrustment under Section 6. It is only from 11.05.2002 that the powers under Section 4 were delegated to the Board since Notification No. 161 dated 22.06.1963 was issued prior to 11.05.2002 and the authority being the Central Government under both Sections, any incorrect reference to a provision would be totally inconsequential.

34Copy pinpoint34. He submitted that by virtue of the aforesaid and also without reference to the Notification No. 44/2011 – Cus (N.T.) dated 06.07.2011, erroneous conclusions came to be rendered in paragraphs 17 to 23

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of the decision under review. The findings in Canon India (supra) in paragraphs 13 and 14 respectively that DRI officers belong to a different department and therefore cannot become proper officers under Section 28, and if done so, would result in anarchical and unruly operation of the statute, too, is erroneous in light of the aforesaid submissions.

35Copy pinpoint35. He further submitted that despite being a conceded position that issuance of a show cause notice under Section 28 is a quasi-judicial exercise of power, this Court fell in error in holding the same to be an administrative review in paragraph 15. The Court also erred in concluding that the expression “the proper officer” can only signify an officer empowered to undertake assessment and re-assessment under Section 17, by placing unfounded reliance on the decision in Consolidated Coffee Ltd. and Anr. v. Coffee Board, Bangalore reported in 1980 AIR 1468 as it relates to a totally different scenario envisaged under Article 286 read with Section 5 of the Central Sales Tax Act, 1956.

36Copy pinpoint36. After pointing out the aforesaid aspects as errors apparent on the face of the record, he prayed that the present review petition be allowed. ii. Why the decision in Sayed Ali (supra) requires reconsideration

37Copy pinpoint37. 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.

38Copy pinpoint38. 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

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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 an officer of customs vests with the Board or the Commissioner of Customs. Since the Board issued this assignment, the DRI officers became proper officers with effect from 15.02.1999. As a result, the decision rendered in Sayed Ali (supra) which was with reference to only Customs (Preventive) would have no application to the DRI and DGAE officers. The circular dated 15.02.1999 is reproduced hereinbelow: “F. No. 437/9/98-Cus.IV Circular No. 4/99-Cus Dated 15/2/1999 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject: Issuance of Show Cause Notice by the Officers of directorate of Revenue Intelligence -regarding- A doubt has been recently raised as to whether the Officers of Directorate of Revenue Intelligence could issue show cause notices in cases investigated by them – a practice started last year apparently in tune with the practice of the Directorate General of Anti Evasion. The matter has been examined in the Board.

2. It has been observed that in terms of Customs Notification No. 19/90-Cus (NT.), dated 26.4.90, as amended from time to time, the Officers of Directorate of Revenue Intelligence of different categories have been notified and appointed as Commissioners of Customs, Deputy Commissioners of Customs or Assistant Commissioners of Customs for the are specified. These officers, therefore, can legally be entrust with discharge of functions normally performed by Commissioners, Deputy Commissioners or Assistant Commissioners of Customs in their jurisdiction, as the case may be. Board can no doubt subject these powers/functions

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to certain restrictions/limitations as may be imposed, as provided under section 5(1) of the Customs Act.

3. Directorate of Revenue Intelligence Officer are, therefore, to undertake investigations of cases detected by them, and to issue the Show Cause Notices on completion of investigations. In line with the instructions issued (vide F.No. 208/23/97-CX-8, dated 20.1.98) in respect of Officers of Directorate General Anti Evasion, Board has decided that in impact of cases investigated by the Directorate General of Revenue intelligence, the officers of said Directorate will be competent to and may issue show cause notices in cases investigated by them – though these will 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”

39Copy pinpoint39. 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 same issue leading to utter chaos and confusion. He submitted that the Board has been issuing circulars and notifications from time to time with a view to ensure that no such overlap occurs. He also argued that the respondents have not adduced any evidence

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or empirical statistics to even remotely indicate that an importer has been visited with either multiple show cause notices or adjudication orders on the same subject.

40Copy pinpoint40. He further submitted that the Board had vested DRI with the power to issue only show cause notices and the adjudication orders in furtherance of the show cause notices were to be passed by the respective port officers. In cases involving multiple ports, common adjudicators were assigned powers by the Board and later also by the DRI and these adjudicators never involved themselves either in the investigation of the case or in the issuance of show cause notices. In such circumstances, he submitted that both the findings in Sayed Ali (supra) require reconsideration.

41Copy pinpoint41. He further drew our attention to Circular No. 18/2015 – Customs dated 09.06.2015 issued by the Board pertaining to the appointment of common adjudicating authority and the mode and manner of assignment of functions for adjudication with a view to avoid multiplicity or plurality. The same is extracted below: “Circular No. 18/2015- Customs F.No. 450/145/2014- Cus IV Government of India Ministry of Finance Department of Revenue Central Board of Excise and Customs To All Chief Commissioner of Customs / Customs (Preventive) All Chief Commissioners of Customs and Central Excise All Commissioners of Customs All Commissioners of Customs and Central Excise Sir / Madam, Subject: Appointment of common adjudicating authority -regarding Reference is invited to Notification No 60/2015-Customs (N.T.), dated 04.06.2015 whereby the power to appoint

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common adjudicating authority in cases investigated by DRI upto the level of Commissioner of Customs has been delegated to Principal Director General of Directorate of Revenue Intelligence in terms of section 152 of the Customs Act, 1962. This notification was issued in the interest of expediting decision making with resultant benefits to both trade and revenue in terms of faster settlement of outstanding disputes. These appointments were done hitherto 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 Commissioner of Customs; (d) Non-DRI cases pending with erstwhile Commissioner (Adjudication) would be assigned to Additional Director General (Adjudication), DRI;

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(e) Past DRI cases pending for adjudication with jurisdictional Commissioners of Customs would continue with these officers; (f) Remand cases would be decided by the original adjudicating authority.

3. All other cases of appointment of common adjudicator i.e. other than the cases mentioned in paragraph 2 above would continue to be dealt by the Board. This would include cases made by Commissionerates or cases made by DRI wherein the adjudicating officer is an officer below the level of Additional Director General (Adjudication), DRI.

4. Board has also decided that all the pending cases where common adjudicating authorities have not been appointed so far or where the common adjudicating authorities have been appointed but adjudications have not been done should be disposed of expeditiously in terms of aforementioned guidelines. However, while doing so in regard to the latter category of cases, Principal DG, DRI will take into consideration the fact whether or not personal hearings have taken place and the stage of passing the adjudication order. This is to ensure that cases about to be finalized are not reallocated to another adjudicating authority thereby defeating the objective of expediting the finalization of disputes.

5. Difficulty faced, if any, may be brought to the notice of the Board at an early date. Yours faithfully (Pawan Khetan) OSD (Customs IV)”

42Copy pinpoint42. He also brought to our notice similar notifications and circulars issued subsequently to plead that all steps have been taken with a view to ensure that there is no overlap of jurisdiction. In the absence of any evidence or proof adduced by the importer, the dictum as laid in Sayed Ali (supra) declaring that this would result in utter chaos and confusion and only such officers vested with the power of assessment and re-assessment can issue notices under Section 28, requires reconsideration.

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iii. The decision in Mangali Impex (supra) is liable to be set aside and the decision in Sunil Gupta (supra) ought to be affirmed

43Copy pinpoint43. He submitted that the decision in Mangali Impex (supra) too observed that the assignment of powers to DRI officers for issuing show cause 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.

44Copy pinpoint44. 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 statute even after the insertion of Section 28(11), it places an embargo for the period prior to 08.04.2011, for the application of Section 28(11). The Ld. ASG submitted that Explanation 2, in no way, had interfered or can interfere with the validating power introduced vide Section 28(11). He delineated the sequence of events leading to the insertion of Section 28(11) in the Act, 1962 to make good his submission. (i) This Court delivered the judgment in Sayed Ali (supra) on 18.02.2011. (ii) Parliament vide the Finance Act, 2011 introduced certain amendments to Section 28 on 08.04.2011. (iii) On 06.07.2011, the Central Government issued Notification 44/2011 assigning the functions of proper officers to officers of Customs (Preventive), DRI, DGAE and officers of Commissioner of Central Excise. The same is extracted below:

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“Proper officers for Customs Sections 17 and 28 In exercise of the powers conferred by sub-section (34) of section 2 of the Customs Act, 1962 (52 of 1962), the Central Board of Excise and Customs hereby assigns the functions of the proper officer to the following officers mentioned in column (2) of the Table below, for the purposes of section 17, section 28, section 28AAA and second proviso to Section 124 of the said Act, namely:- TABLE

Sl.No. Designation of the officers (1) (2)

1. Additional Director Generals, Additional Directors or Joint Directors, Deputy Directors or Assistant Directors in the Directorate General of Revenue Intelligence.

2. Commissioners of Customs (Preventive), Additional Commissioners or Joint Commissioners of Customs (Preventive), Deputy Commissioners or Assistant Commissioners of Customs (Preventive).

3. Additional Director Generals, Additional Directors or Joint Directors, 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.” [Notification No. 44/2011-Cus. (N.T.), dated 6-7-2011]

(iv) The Validation Bill, 2011, introducing Section 28(11) along with the Statement of Reasons came to be issued on 02.08.2011 and the same is extracted below: “Introduction of Sub-section 11 in Section 28 as per the Customs (Amendment And Validation) Bill, 2011

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“(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) held that only a customs officer who has been specifically assigned the duties of assessment and re-assessment in the jurisdiction area is competent to issue a notice for the demand of duty as a proper officer. As such the Commissioner of Customs (Preventive) who has not been assigned the function of a “proper officer” for the purposes of assessment or re-assessment of duty and issue of show cause Notice to demand Customs duty under Section 17 read with Section 28 of the Act in respect of goods entered for home consumption is not competent to function as a proper officer which has not been the legislative intent.

2. In view of the above the Show Cause Notices issued over the time by the Customs officers such as those of the Commissionerates of Customs (Preventive),

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Directorate General of Revenue Intelligence and others, who were not specifically assigned the functions of assessment and re-assessment of customs duty may be construed as invalid. The result would be huge loss of revenue to the exchequer and disruption in the revenue already mobilized in cases already adjudicated. However, having regard to the urgency of the matter, the Government issued notification on 6th July, 2011 specifically declaring certain officers as proper officers for the aforesaid purposes.

3. In the circumstances, it has become necessary to clarify the true legislative intent that Show Cause Notices issued by Customs officers, i.e., officers of the Commissionerates of Customs (Preventive), Directorate General of Revenue Intelligence (DRI), Directorate General of Central Excise Intelligence (DGCEI) and Central Excise Commissionerates for demanding customs duty not levied or short levied or erroneously refunded in respect of goods imported are valid, irrespective of the fact that any specific assignment as proper officer was issued or not. It is, therefore, purposed to amend the Customs Act, 1962 retrospectively and to validate anything done or any action taken under the said Act in pursuance of the provisions of the said Act at all material times irrespective of issuance of any specific assignment on 6th July, 2011.

4. The Bill seeks to achieve the above objects.” (v) Finally, the Validation Act came to be passed on 16.09.2011 and Sub-Section (11) became part of Section 28.

45Copy pinpoint45. He contended that Explanation 2 and the introduction of Section 28(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

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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.

46Copy pinpoint46. 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 governed by Notification No. 44/2011 dated 06.07.2011 which even according to the High Court is valid and proper. Consequently, the validation has a very limited role to play as it travels back only to empower such of those officers of customs who had issued show cause notices in the past and vesting them also with the power under Section 17.

47Copy pinpoint47. He submitted that the decision in Sunil Gupta (supra) clarifies the correct legal position and should be held to be so by this Court. iv. Changes introduced by the Finance Act, 2022 are in the nature of surplusage

48Copy pinpoint48. Lastly, he referred to the amendments brought about by the Finance Act, 2022, vide Sections 86, 87, 88, 94 and 97. The same are extracted below: Section 86 - Amendment of section 2 of the Act, 1962 “86. In the Customs Act, 1962 (52 of 1962), (hereinafter referred to as the Customs Act), in section 2, in clause (34), after the words “Principal Commissioner of Customs or Commissioner of Customs”, the words and figure “under section 5” shall be inserted.” Section 87 - Substitution of new section for section 3 of the Act, 1962 “87. For section 3 of the Customs Act, the following section shall be substituted, namely:

3. Classes of officers of customs.-

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“There shall be the following classes of officers of customs, namely:-- (a) Principal Chief Commissioner of Customs or Principal Chief Commissioner of Customs (Preventive) or Principal Director General of Revenue Intelligence; (b) Chief Commissioner of Customs or Chief Commissioner of Customs (Preventive) or Director General of Revenue Intelligence; (c) Principal Commissioner of Customs or Principal Commissioner of Customs (Preventive) or Principal Additional Director General of Revenue Intelligence or Principal Commissioner of Customs (Audit); (d) Commissioner of Customs or Commissioner of Customs (Preventive) or Additional Director General of Revenue Intelligence or Commissioner of Customs (Audit); (e) Principal Commissioner of Customs (Appeals); (f) Commissioner of Customs (Appeals); (g) Additional Commissioner of Customs or Additional Commissioner of Customs (Preventive) or Additional Director of Revenue Intelligence or Additional Commissioner of Customs (Audit); (h) Joint Commissioner of Customs or Joint Commissioner of Customs (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);

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(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 functions, as he may deem fit, to an officer of customs, who shall be the proper officer in relation to such functions.”; (b) after sub-section (3), the following sub-sections shall be inserted, namely:- “(4) In specifying the conditions and limitations referred 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.”

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Section 94 - Insertion of new section 110AA to the Act, 1962 “94. After section 110A of the Customs Act, the following section shall be inserted, namely:-- 110AA. Action subsequent to inquiry, investigation or audit or any other specified purpose.- “Where in pursuance of any proceeding, in accordance with Chapter XIIA or this Chapter, if an officer of customs has reasons to believe that-- (a) any duty has been short-levied, not levied, short-paid or not paid in a case where assessment has already been made; (b) any duty has been erroneously refunded; (c) any drawback has been erroneously allowed; or (d) any interest has been short-levied, not levied, short- paid or not paid, or erroneously refunded, then such officer of customs shall, after causing inquiry, investigation, or as the case may be, audit, transfer the relevant documents, along with a report in writing. (i) to the proper officer having jurisdiction, as assigned under section 5 in respect of assessment of such duty, or to the officer who allowed such refund or drawback; or (ii) in case of multiple jurisdictions, to an officer of customs to whom such matter is assigned by the Board, in exercise of the powers conferred under section 5, and thereupon, power exercisable under sections 28, 28AAA or Chapter X, shall be exercised by such proper officer or by an officer to whom the proper 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

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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 times. Explanation. -- For the purposes of this section, it is hereby clarified that any proceeding arising out of any action taken under this section and pending on the date of commencement of this Act shall be disposed of in accordance with the provisions of the Customs Act, as amended by this Act.”

49Copy pinpoint49. He submitted that the amendments carried out in the Act, 1962 vide Sections 87 and 88 of the Finance Act, 2022 respectively are a mere surplusage done ex abundanti cautela and are clarificatory in nature. He further submitted that Section 3 deals with classes of officers and officers of the same rank will constitute the same class. The amended Section 5 only expands the very same class with designation and functions and nothing more.

50Copy pinpoint50. He submitted that Section 94 of the Finance Act, 2022 introducing Section 110AA to the Act, 1962 is only a way forward for the future wherein post search and investigation by the DRI, certain category of cases have now been directed to be handed over to the port authorities for issuing necessary show cause notices and this, in no way, can vitiate notices issued by DRI earlier especially in the absence of a constitutional or statutory embargo.

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51Copy pinpoint51. Finally, he submitted that a provision of law should appear arbitrary or abusive to be declared illegal or unconstitutional or invalid. A possible misuse of the provision by the authorities or a perceived misuse or mere presumptions and conjectures of a possible misuse cannot constitute basis to hold that a provision is arbitrary and violative of Article 14. He relied on the following decisions to fortify his submission: a. Collector of Customs v. Nathella Sampathu Chetty, 1962 SCC OnLine SC 30 b. Shreya Singhal v. Union of India (2015) 5 SCC 1 c. Commissioner of Customs v. Dilip Kumar & Co. (2018) 9 SCC 1 d. Goodyear India Ltd. v. State of Haryana (1990) 2 SCC 71

C. SUBMISSIONS ON BEHALF OF THE RESPONDENTS

52Copy pinpoint52. Mr. Mukul Rohatgi, Mr. Arvind Datar and Mr. V. Lakshmikumaran, learned Senior Counsel appeared on behalf of the various importers and vehemently objected to the review of Canon India (supra) and also contended that both Sayed Ali (supra) and Mangali Impex (supra) are correct in their conclusions and need no interference.

53Copy pinpoint53. Mr. Mukul Rohatgi contended that the power of review is extremely circumscribed and limited. 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.

54Copy pinpoint54. 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.

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55Copy pinpoint55. 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 inter-dependent 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. (ii) Section 17 deals with assessment and reassessment. Section 46 obligates filing of bills of entries. Section 47 allows clearance of goods for home consumption post the assessment under Section 17 and Section 28 pertains to demand of duty in the nature of short levy, short paid and erroneously refunded. Since all these statutory action points are interrelated, it is the same proper officer who should be empowered to perform all of these four functions and the same cannot be assigned to different sets of officers. (iii) The amendment to Section 17 in 2011 allowing self-assessment is inconsequential since the power to assess and reassess and allow clearances is still with the officer of customs. (iv) On the issue of whether there are any statutory limitations to the assignment of powers under Section 28 only to those officers who do assessment or re-assessment under Section 17, he submitted that the scheme of the Act, 1962 as explained in Sayed Ali (supra) and Mangali Impex (supra), clearly indicates that Sections 17 and 28 of the Act, 1962 respectively are interconnected and interdependent. (v) Canon India (supra) is correct in holding that DRI officers should be entrusted with the functions under Section 6 of the Act, 1962. Since the Central Government has not done so, they cannot be assigned the functions of proper officer. (vi) Section 5 of the Act, 1962 deals only with powers and duties but not the functions, whereas, Section 6 deals with functions and thus, a notification under Section 6 is necessary. He emphasised on the different consequences arising from the use of the words “powers” and “duties” in Section 5 and use of the word “functions” in Section 6.

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(vii) It was contended that Section 28 deals with short levy, non-levy and erroneous refund. Levy means determination of duty through a process of assessment/reassessment. Section 28 therefore involves rendering a finding that the earlier assessment was not correct. Section 28 is intended to revise or upset the original assessment done under Section 17 and once an order gets passed under Section 28, the original assessment would not survive and therefore, the same officer can issue the show cause notice. (viii) The Board’s Circular dated 15.02.1999 cannot come to the rescue of the Department because there was no assignment of function of assessment/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 Impex (supra) is correct and need not be disturbed for the following reasons: a. Section 28(11) does not validate the show cause notices issued by various officers. It merely deems all officers who were appointed as officers of customs under Section 4(1) to

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have always had the powers under Sections 17 and 28 the Act, 1962 respectively. This would not automatically revive the show cause notices issued by such officers of customs. b. In order to hold that Section 28(11) validates past actions, this Court will have to insert words in the statute, that too in a taxing statute which imposes liabilities on assesses, that too retrospectively. c. Several unintended consequences may arise if it is held that show cause notices issued by other officers of customs will be revived. There are instances wherein many show cause notices have been issued after the Sayed Ali (supra) judgment by the jurisdictional commissionerate wherever the limitation period permitted for demands to be made. In those cases, assessees will be faced with two show cause notices. He laid emphasis on the need to take an undertaking from the Department to avoid such a situation if it were to arise. d. The High Court has correctly held that Section 28(11) perpetrates the very chaos that the judgment in Sayed Ali (supra) sought to prevent. e. Explanation 2 to Section 28 should be given a plain meaning. It was in the statute before Section 28(11) was introduced, hence the framers of the statute were well aware of the implications of the Explanation 2. f. On 08.4.2011, Section 28 of the Act, 1962 underwent a drastic change and not just a mere change in terms of time period being changed from six months to one year. The mode & manner of issuing the show cause notice, the manner of adjudication and payment of duty, etc. have been amended making it more beneficial to the assessee. That is the reason why the old notices were to be dealt with under the old Section. g. It is impossible to read Section 28(11) and Explanation 2 together as validating any action prior to 08.04.2011. Such is the plain meaning and only such an interpretation is warranted in the present case.

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