DRI officers are not proper officers to issue SCN under Customs Act

The Customs, Excise, And Service Tax Appellate (CESTAT) in its order said that DRI officers have not been entrusted the functions of Proper Officer under the Customs Act by the Government under section 6 and hence cannot perform of issuing Show Cause Notice (SCN).

Learned counsel for the appellant S/Shri Sourabh Bagaria & Indranil Banerjee submitted that the impugned order needs to be set aside because it was passed in pursuance of SCN issued by the DRI demanding duty under section 28 and officers of DRI are not “proper officers”, to issue an SCN under that section as held by a three member bench of Hon‘ble Supreme Court in the case of Canon India. He submits that this judgment was followed subsequently by Hon‘ble Supreme Court, various High Courts and also various benches of this Tribunal and wherever the SCN demanding duty under section 28 was issued by DRI, all such orders were set aside on the ground of lack of jurisdiction. He prays that a similar decision may be taken and the impugned order may be set aside and their appeal may be allowed.

Learned Departmental Representative Shri M.P.Toppo submits that it is undisputed that DRI officers were appointed as Customs officers under section 4(1) prior to 6th July 2011. After the notification dated 3.2002 appointing DRI officers as Customs officers, another Notification No.40/2012-Customs (N.T.) New Delhi, dated the 2nd May, 2012 was issued by the Central Board of Excise and Customs under section 2(34), assigning various functions including functions under section 28 to officers of and above certain ranks. This notification has been struck down in Canon India as having been issued without authority.

The Coram of Judges having Hon’ble Shri P.K.Choudhary, Member (Judicial), and P. V. Subba Rao Member, (Technical) held that when the legislature uses the definite article “the” it refers to a particular thing or particular person. This brings certitude as to who can issue a Show Cause Notice to demand duty or tax not levied short levied, not paid, short paid, etc. in all these three Acts viz., Customs Act, Central Excise Act, and the Finance Act, We also find legislature has also used definite article in subsequent enactments. In the Central Goods and Services Tax Act, 2017 (CGST Act) section 73 deals with demands other than cases of fraud, wilful misstatement or suppression of facts while section 74 deals with cases where these elements are present. In both sections, the notice can be issued by “the proper officer”. These provisions of CGST Act, 2017 are also made applicable to Inter-state Goods and Services Tax Act. Similar provisions are also there in the State Goods and Services Tax Acts of various states. Section 156 of the Income Tax Act, 1961 also gives the power of issuing notice of demand on the assessing officer. What is common in these provisions of various enactments is that the power to issue notice demanding tax or duty is always conferred on a particular officer which legislative intent is clarified by using definite article “the” instead of “a” or “any” or “any of the”. The proposed Section 110AA in the Finance Bill 2022 is also consistent with the legislature conferring the powers of raising a demand on only one officer.

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