Under Section 28(4) of Customs Act,1962 “proper officer” shall recover the duty

M/S CANON INDIA PRIVATE LIMITED Vs. COMMISSIONER OF CUSTOMS(Supreme Court of India); CIVIL APPEAL NO.1827 OF 2018; 09.03.2021

Issue:

1. Whether the Directorate of Revenue Intelligence had authority in law to issue a show cause notice under Section 28(4) of the Custom Act,1962 for recovery of duties allegedly not levied or paid when the goods have been cleared for import by a Deputy Commissioner of Customs who decided that the goods are exempted.

2. whether the cameras that were cleared on the basis that they were exempted from customs duty under Exemption Notification No.15/2012 were in fact eligible for the exemption or not.

Facts:

• The consignment of cameras arrived at Delhi on 15.3.2012. The importer submitted a Bill of Entry to the Customs Authorities on 20.3.2012. Along with the Bill of Entry, the importer submitted a covering letter and literature containing specifications of the cameras.
• After verification of the Bill of Entry by the Inspector and the Superintendent, the importer requested the Deputy Commissioner of Customs for a first check on 21.3.2012.
• The Customs Authorities checked the goods on 24.3.2012. They compared the goods with the description given in the literature and took a decision to clear the goods on 24.3.2012, as being exempt from duty in terms of the Notification No.15/2012 which was issued on 17.3.2012.
• On 19.8.2014, a show cause notice was issued under Section 28 (4) of the Customs Act, 19621 alleging that the Customs Authorities had been induced to clear the cameras by willful mis-statement and suppression of facts about the cameras.
• The decision to clear the goods for import because they were exempted from customs duties under Notification No.15/2012, was taken by Deputy Commissioner, Appraisal Group, Delhi Air Cargo, the show cause notice was issued by the Additional Director General, Directorate of Revenue Intelligence.

Observations :

Section 28(4) states that Where any duty has not been [levied or not paid or has been short levied or short-paid] or erroneously refunded, or interest payable has not been paid, part paid or erroneously refunded, by reason of, –

(a) collusion; or

(b) any willful 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 not paid] or which has been so 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.

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 where the power to re-open 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.

In this case one officer has exercised his powers of assessment, the power to order re-assessment 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 unruly operation of a statute which is not contemplated by any canon of construction of statute.

Judgement :

It was held by Supreme Court that entire proceeding in the present case initiated by the Additional Director General of the DRI by issuing show cause notices in all the matters before the court are invalid without any authority of law and liable to be set-aside and superseding demands are also set-aside.

Cameras with similar specifications have been treated as exempted under the Explanatory Note to the Combined Nomenclature of the European communities. It is important to add that the same cameras have been considered to be eligible for exemption before 17.03.2012 and after 30.04.2015 under the exemption Notifications issued under the Customs Act read with Chapter 84 & 85 (First Schedule) of Customs Tariff Act, 1975.

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