TMI Blog2022 (3) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. It is evident from the RTI Act that DRI was treated by the legislature as an intelligence and security organization created by the Government and hence was granted immunity under section 24. Such immunity was not given to the Customs officers. Like Customs Act and NDPS Act, RTI Act also treats officers of DRI as separate and distinct from the Customs officers. Even if there are more than one proper officer by virtue of section 28(11), the demand can be raised only by the proper officer i.e., one who assessed the Bills of Entry in the first place or his successor in office and not by any other proper officer. In this case, since the Bills of Entry were not assessed by the officers of DRI, the SCN issued under Section 28 is without authority even if section 28(11) is considered. Thus section 28(11) does not carry the case of Revenue any further - any other functions under the Act (for example, searches, seizures, arrests, recording of statements) by the officers of DRI also get vitiated because no functions have been entrusted to them under Section 6 by the Government. Evidently, in this case, the SCN itself is the culmination of investigation which involved several fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t under section 6 and hence cannot perform such functions. b) The SCN in this case was not issued by the proper officer , i.e., the officer who had assessed the Bills of Entry in the first place. The impugned order emanating from an SCN issued by DRI demanding duty under section 28 cannot be sustained - Appeal allowed - decided in favor of appellant. - Customs Appeal No.75015 of 2015 - FINAL ORDER NO.75125/2022 - Dated:- 23-2-2022 - SHRI P.K.CHOUDHARY, MEMBER (JUDICIAL) AND SHRI P.V.SUBBA RAO, MEMBER(TECHNICAL) Shri Sourabh Bagaria Indranil Banerjee, both Advocates for the Appellant Shri M.P.Toppo, Authorized Representative for the Respondent ORDER M/s. Beriwala Impex [ Appellant ] filed this appeal assailing Order-in-Original [ Impugned order ] dated 14.7.2014 passed by the Commissioner of Customs, Kolkata (Port), whereby he adjudicated upon the Show Cause Notice [ SCN ] dated 3.4.2012 issued by the Additional Director General, Directorate of Revenue Intelligence [ DRI ], Chennai, to the appellant in respect of the goods imported by it through Kolkata port, Chennai port and Inland Container Depot (ICD), Tughlakabad, Delhi. The appellant was asked to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side 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. 5. Learned Departmental Representative, on the other hand, submits that the judgment of Hon ble Supreme Court in Canon India was that DRI officers were not proper officers as per section 2(34) of the Customs Act. However, there is another section- Section 28(11) according to which all Customs officers are proper officers for the purpose of assessment under section 17. Thus, there are two sections under which a Customs officer will be a proper officer- Section 2(34) and section 28(11)- which read as follows: Section 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 Principal Commissioner of Customs or Commissioner of Customs; Section 28 Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. (1) (10) (11) Notwithstanding anything to the contrary contained in any judgement, decree or order of any court of law, tribunal or other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icers, 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. 8. He submits that from the judgment of Hon ble Supreme Court in Canon India, it does not appear that section 28(11) was either under consideration or has been struck down by Hon ble Supreme Court. Nor has this section been struck down by any High Court till date. Explaining the background to insertion of section 28(11) and its legislative intent, he submits that Hon ble Supreme Court had, in Commissioner vs. Sayed Ali [ 2011(265) ELT 17(SC) ], held that officers of Customs (Preventive) were not proper officers to issue SCN under section 28. Thereafter, Parliament amended section 28 retrospectively inserting section 28(11) as above. The Statement of objects and reasons presented by the Hon ble Finance Minister while introducing the bill clarifies the legislative intent of section 28(11). It reads as follows: STATEMENT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rroneously 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. 9. He submits that the constitutional validity of section 28(11) was challenged before the Hon ble High Court of Delhi in the case of Mang li Impex [ 2016 (335) ELT 605 (Del) ]. The High Court held that the section is constitutionally valid but set aside its retrospective application. On an appeal by revenue, Hon ble Supreme Court stayed [ 2017 (349) ELT A 98 (SC) ] the operation of this judgment and order of Hon ble Delhi High Court. The validity of Section 28(11) was also upheld by the Hon ble High Court of Bombay in the case of Sunil Gupta Vs. Union of India [ 2014-TIOL-1949-HC-MUM-CUS ]. Thus, section 28(11) is operative in its full force, according to which, any person appointed as Customs office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alidity of section 28(11) was upheld except to the extent of its retrospective application by Hon ble High Court of Delhi in Mangali Impex and its validity was fully upheld by Hon ble High Court of Bombay in Sunil Gupta. The judgment of Hon ble High Court of Delhi setting aside the retrospective application of section 28(11) in Mangali Impex was stayed by the Hon ble Supreme Court. There does not appear to be any judgment of Hon ble Supreme Court or any High Court whereby Section 28(11) was held to be invalid. Thus, section 28(11) is on the statute book and is valid. The case laws cited by both sides are binding on us and we proceed to examine and decide this case accordingly. We proceed to discuss this issue in depth and examining all dimensions of the issue. 14. The Directorate of Revenue Intelligence was created by a notification by the Government of India dated 4 December 1957. Later, Customs Act, 1962 was enacted replacing its predecessor Customs laws such as Sea Customs Act, 1878. Section 3 of the Customs Act, 1962 defines various classes of officers of Customs which does NOT include DRI officers till date. Section 4 states that the Board may appoint such persons as it thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 24 and Second Schedule of this Act read as follows: 24. (1) Nothing contained in this Act shall apply to the intelligence and security organisations specified in the Second Schedule, being organisations established by the Central Government or any information furnished by such organisations to that Government: .. THE SECOND SCHEDULE (See section 24) Intelligence and security organisation established by the Central Government 1. Intelligence Bureau. 2. Research and Analysis Wing of the Cabinet Secretariat. 3. Directorate of Revenue Intelligence. 4. Central Economic Intelligence Bureau. 5. Directorate of Enforcement. 6. Narcotics Control Bureau. 7. Aviation Research Centre. 8. Special Frontier Force. 9. Border Security Force. 10. Central Reserve Police Force. 11. Indo-Tibetan Border Police. 12. Central Industrial Security Force. 13. National Security Guards. 14. Assam Rifles. 15. Special Service Bureau 16. Special Branch (CID), Andaman and Nicobar. 17. The Crime Branch-C.I.D.-CB, Dadra and Nagar Haveli. 18. Special Branch, Lakshadweep Police. 18. It is evident from the RTI Act that DRI was treated by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om Customs officers as did the legislature in Customs Act, NDPS Act and RTI Act. The relevant portion of the judgment is as follows: 20. Section 6 is the only Section which provides for entrustment of functions of Customs officer on other officers of the Central or the State Government or local authority, it reads as follows: 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 13 functions of the Board or any officer of customs under this Act. 21. If it was intended that officers of the Directorate of Revenue Intelligence who are officers of Central Government should be entrusted with functions of the Customs officers, it was imperative that the Central Government should have done so in exercise of its power under Section 6 of the Act. The reason why such a power is conferred on the Central Government is obvious and that is because the Central Government is the authority which appoints both the officers of the Directorate of Revenue Intelli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms who decided that the goods are exempted. It is necessary that the answer must flow from the power conferred by the statute i.e. under Section 28(4) of the Act. This Section empowers the recovery of duty not paid, part paid or erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts and confers the power of recovery on the proper officer . The obvious intention is to confer the power to recover such duties not on any proper officer but only on the proper officer . This Court in Consolidated Coffee Ltd. and Another vs. Coffee Board, Bangalore2 [ 2 (1980) 3 SCC 358 ] has held:- 14. ...Secondly, and more importantly, the user of the definite article the before the word agreement is, in our view, very significant. Parliament has not said an agreement or an agreement for or in relation to such export and in the context the expression the agreement would refer to that agreement which is implicit in the sale occasioning the export. In Shri Ishar Alloy Steels Ltd. vs. Jayaswals Neco Ltd.3 [ 3 (2001) 3 SCC 609 ] has held:- 9. ... The is the word used before nouns, with a specifying or particularising effect as opposed to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same case. Where 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. 14. It is well known that when a statute directs that the things be done in a certain way, it must be done in that way alone. As in this case, when the statute directs that the proper officer can determine duty not levied/not paid, it does not mean any proper officer but that proper officer alone. We find it completely impermissible to allow an officer, who has not passed the original order of assessment, to re-open the assessment on the grounds that the duty was not paid/not levied, by the original officer who had decided to clear the goods and who was competent and authorised to make the assessment. The nature of the power conferred by Section 28 (4) to recover duties which have escaped assessment is in the nature of an administrative review of an act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o functions have been entrusted to them under Section 6 by the Government. Evidently, in this case, the SCN itself is the culmination of investigation which involved several functions by the DRI under the Customs Act. Even on this ground, the impugned order cannot be sustained. 25. We note that after we concluded hearing in this case and reserved the order, Hon ble Finance Minster presented the Finance Bill 2022 which proposed some retrospective amendments to the Customs Act. Although these are not yet enacted, if enacted as proposed in the bill, the proposed retrospective application may affect past cases. Among these are proposed amendments to section 2(34) [clause 85 of the Bill] and section 5 [clause 87] to empower the Board to assign functions to officers, substituting section 3 [clause 86] to include officers of DRI and audit as officers of Customs under the Act and a new Section 110AA [clause 93] providing that after investigation, the case should be transferred to the officer who had taken the original decision in the matter. Retrospective application is proposed by clause 96. These clauses in the Finance Bill 2022 are as follows: 85. In the Customs Act, 1962 (hereina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner 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. . 93. After section 110A of the Customs Act, the following section shall be inserted, namely: Action subsequent to inquiry, investigation or audit or any other specified purpose. 110AA. Where in pursuance of any proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t shall be disposed of in accordance with the provisions of the Customs Act, as amended by this Act. 26. If the Finance Bill becomes the Act, DRI officers will be at par with Customs officers under the Customs Act by virtue of the substitution of section 3 and their various actions such as searches, seizures, arrests may not become void because of non-entrustment of those functions by the Government under Section 6. However, there is no proposal to amend section 28 and hence SCNs can be issued even after this Bill becomes the Act only by the proper officer , i.e., the officer who has done the assessment in the first place. In fact, this specific legal position as held by the Supreme Court in Canon India is likely to be reaffirmed by insertion of section 110AA in the Act. It would not be out of place to mention that the nature of powers under section 11A of the Central Excise Act and Section 73 of the Finance Act, 1994 are similar to the power under Section 28 of the Customs Act. However, this power has been conferred on the proper officer under the Customs Act and on the Central Excise officer in the other two Acts and this dissimilarity implies that the Central Excise offi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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