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2022 (3) TMI 120 - AT - CustomsJurisdiction - proper officers - power of DRI officers to issue SCN or not - HELD THAT - Learned counsel for the appellant was correct in his assertion that DRI officers were held to be NOT proper officers under in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS 2021 (3) TMI 384 - SUPREME COURT and hence the order issued in pursuance of an SCN issued by DRI demanding duty was set aside. The ratio of CANON INDIA was followed in various cases and the orders confirming demands in pursuance of SCN issued by DRI were set aside. A perusal of some other enactments also shows that DRI and Customs officers were treated as separate by legislature. As per the Narcotic Drugs and Psychotropic Substances Act, 1985 NDPS Act the government can empower officers of various departments to conduct search, seizures and make arrests. It clearly mentions Customs officers and officers of Revenue Intelligence separately - If officers of Revenue Intelligence were also Customs officers, there would have been no need to mention them separately in section 42 of the NDPS 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 functions by the DRI under the Customs Act. Even on this ground, the impugned order cannot be sustained. 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. The settled legal position is 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, 1994 - In the Central Goods and Services Tax Act, 2017 (CGST Act) section 73 deals with demands other than cases of fraud, willful mis-statement 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. To sum up, section 28(11) of the Customs Act cannot sustain the SCN issued in this case by DRI officers because a) DRI officers have not been entrusted the functions under the Customs Act by the Government 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.
Issues Involved:
1. Authority of DRI officers to issue Show Cause Notices (SCNs) under Section 28 of the Customs Act. 2. Validity of the impugned order based on SCN issued by DRI officers. 3. Interpretation of "the proper officer" under Section 28. 4. Retrospective application and legislative intent of Section 28(11) of the Customs Act. Issue-Wise Analysis: 1. Authority of DRI Officers to Issue SCNs: The appellant contested the validity of the SCN issued by DRI officers, arguing that they were not "proper officers" under Section 28 of the Customs Act, as held by the Supreme Court in Canon India. The Departmental Representative countered by citing Section 28(11), which deems all Customs officers appointed before 6th July 2011 as proper officers for assessment and issuing demands. However, the Tribunal noted that DRI officers, although appointed as Customs officers under Section 4(1), were not specifically entrusted with the functions under the Customs Act by the Government under Section 6. Thus, the SCN issued by DRI was deemed invalid. 2. Validity of the Impugned Order: The Tribunal examined the impugned order, which was based on an SCN issued by DRI officers. Following the precedent set in Canon India, the Tribunal concluded that the SCN issued by DRI officers lacked jurisdiction, making the impugned order unsustainable. The Tribunal also referenced several other cases where similar SCNs issued by DRI were set aside due to lack of jurisdiction. 3. Interpretation of "The Proper Officer": The Tribunal emphasized the significance of the definite article "the" in the term "the proper officer" under Section 28. It clarified that only the officer who initially assessed the goods or his successor could issue a demand under Section 28. This interpretation was consistent with the Supreme Court's ruling in Canon India, which stated that the power to recover duties not levied or short-paid is conferred specifically on "the proper officer" who assessed the goods initially. 4. Retrospective Application and Legislative Intent of Section 28(11): The Tribunal discussed the legislative intent behind the insertion of Section 28(11), which aimed to validate actions taken by Customs officers, including those from DRI, before 6th July 2011. However, the Tribunal noted that the constitutional validity of Section 28(11) was upheld by the Delhi High Court but its retrospective application was stayed by the Supreme Court. The Tribunal concluded that Section 28(11) did not override the requirement that only "the proper officer" could issue demands under Section 28. Conclusion: The Tribunal allowed the appeal, setting aside the impugned order and granting consequential relief to the appellant. It held that the SCN issued by DRI officers was invalid as they were not "the proper officers" under Section 28, and their actions were not entrusted by the Government under Section 6. The Tribunal also noted the potential impact of proposed amendments in the Finance Bill 2022, which, if enacted, could affect the authority of DRI officers in future cases.
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