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2014 (12) TMI 151 - HC - CustomsJurisdiction of the officer issuing Show Cause Notice - Proper Officer or not - Seizure of goods - Goods imported in name of dummy firms - misdeclaration of goods in terms of description, quantity and value - Jurisdiction of custom officer - Proper officer - Held that - If the show cause notice has been issued by the Director of Intelligence, then, we have to find as to whether he was competent to do so. In that regard, we have on record the Notification dated 26th April, 1990 Exhibit-I at page 369 of the paper book - when section 17 and 28 are specifically referred to in the Notification, then, we do not see any force in the argument of the Petitioner that the DRI was not competent to issue the subject show cause notice. The Notifications clearly indicate that the officers of this directorate have been entrusted or assigned the functions of the Customs Officers for the purpose of these sections. They could have therefore set the law in motion. Section 28(11) was inserted by Act 14 of 2011 w.e.f. 16th September, 2011. That alters the basis of the Judgments, which have been delivered by any Court of law, Tribunal or other authority. Once this section says that all persons appointed as officers of Customs under section 1(4) before 6th July, 2011 shall be deemed to have been and always to be the proper officers for the purpose of this section, then, the Notifications, which are referred by us above at page 369 and 373 of the paper book are specifically saved and validated. They have been given a retrospective effect. These Notifications were holding the field and were not quashed or set aside. In the teeth of such Notifications, the legislature stepped in to clarify the position that if the functions of the Customs officer can be entrusted or assigned by the Central Government or the Board in terms of section 6 of the Customs Act, 1962, then, all such Notifications, have been validly issued and enforced. They enable the parliament to clarify that the officers mentioned therein shall be deemed to be the proper officers for the purposes of section 17 and 28 of the Act. Precisely, that has been done in the instant case. The assignment of functions to these officers, who were earlier carrying on preventive work came w.e.f. 6th July, 2011. That Notification was not, at the relevant time, given retrospective effect. It is in such circumstances that the Hon ble Supreme Court held that in terms of the Notifications, which were issued and holding the field, not designating the Collector of Customs (Preventive) as a proper officer for the purpose of section 28 as it then stood, he was not competent to issue show cause notice (see para 24 of Sayed Ali s Judgment). This position has now undergone a change and from 6th July, 2011, admittedly, they have been assigned these functions and of the Custom officers. They are therefore competent and the Notification in that behalf at page 373 of the paper book has been given a retrospective effect. - 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 Finance Bill therein denotes the bill by the section itself was substituted by Act 8 of 2011 w.e.f. 8th April, 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. - Decided against assessee.
Issues Involved:
1. Legality and validity of the show cause notice issued by the Directorate of Revenue Intelligence (DRI). 2. Constitutionality of the amendment to Section 28 of the Customs Act, 1962 by inserting clause (11). 3. Validity of Circular No. F. No. 437/143/2009-Cus. IV dated 23rd September, 2011. Issue-wise Analysis: 1. Legality and Validity of the Show Cause Notice: The petitioner challenged the show cause notice issued by the Directorate of Revenue Intelligence (DRI) on the grounds that the DRI officials are not "proper officers" as defined under Section 2(34) of the Customs Act, 1962. The petitioner relied on the Supreme Court's judgment in "Commissioner of Customs vs. Sayed Ali" to argue that only officers specifically assigned the functions of assessment and reassessment of duty are competent to issue such notices. The court noted that the DRI officials were appointed as Customs Officers through a notification dated 26th April 1990, which was not quashed or set aside. The court concluded that the DRI officials were competent to issue the show cause notice, as they were deemed "proper officers" under the Customs Act. 2. Constitutionality of the Amendment to Section 28 of the Customs Act: The petitioner argued that the amendment to Section 28 by inserting clause (11) was ultra vires and unconstitutional, violating Articles 14, 19, and 21 of the Constitution of India. The court examined the amendment, which states that all persons appointed as officers of Customs under subsection (1) of section 4 before 6th July 2011 shall be deemed to have always had the power of assessment under section 17 and shall be deemed to have been proper officers for the purposes of this section. The court held that the amendment was a valid exercise of legislative power and did not find any merit in the petitioner's challenge. The court emphasized that the amendment clarified the position of DRI officials as proper officers, thus validating their actions retrospectively. 3. Validity of Circular No. F. No. 437/143/2009-Cus. IV: The petitioner also challenged the validity of Circular No. F. No. 437/143/2009-Cus. IV dated 23rd September 2011, which validated show cause notices issued by officers of Customs, including those from the DRI, before 6th July 2011. The court found that the circular was based on the amended Section 28(11) of the Customs Act, which had been upheld as constitutional. Therefore, the circular was also valid and enforceable. The court noted that the circular merely implemented the legislative intent of the amendment and did not introduce any new legal principles. Conclusion: The court dismissed the writ petition, upholding the legality and validity of the show cause notice issued by the DRI, the constitutionality of the amendment to Section 28 of the Customs Act, and the validity of Circular No. F. No. 437/143/2009-Cus. IV. The court emphasized that the DRI officials were deemed proper officers for the purposes of the Customs Act, and their actions were validated retrospectively by the amendment.
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