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TMI Blog2024 (11) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2(34) read with Section 5 and the entrustment of functions of officers of customs under Section 6 in some instances but there can be no scenario in which we can hold that the functions under Section 6 and Section 2(34) are congruent. One of the bases for the decision in Canon India [ 2021 (3) TMI 384 - SUPREME COURT] was that no entrustment of functions under Section 6 was done in favour of the DRI officers. This, however, is a glaring misapplication of Section 6 of the Act and is in ignorance of the applicable law which is in fact Sections 2(34) read with Section 5 of the Act, 1962. Therefore, in light of the judgment of this Court in Yashwant Sinha [ 2019 (11) TMI 1775 - SUPREME COURT] we find that it is necessary to allow this review petition to do complete justice. Order - DRI officers came to be appointed as the officers of customs vide Notification No. 19/90-Cus (N.T.) dated 26.04.1990 issued by the Department of Revenue, Ministry of Finance, Government of India. This notification later came to be superseded by Notification No. 17/2002 dated 07.03.2002 issued by the Department of Revenue, Ministry of Finance, Government of India, to account for administrative changes. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, that is, the jurisdiction of the DRI officers to issue show cause notices under Section 28. We clarify that the observations made by this Court in Canon India (supra) on the aspect of limitation have neither been considered nor reviewed by way of this decision. Thus, this decision will not disturb the findings of this Court in Canon India (supra) insofar as the issue of limitation is concerned. The Delhi High Court in Mangali Impex [ 2016 (5) TMI 225 - DELHI HIGH COURT] observed that Section 28(11) could not be said to have cured the defect pointed out in Sayed Ali (supra) as the possibility of chaos and confusion would continue to subsist despite the introduction of the said section with retrospective effect. In view of this, the High Court declined to give retrospective operation to Section 28(11) for the period prior to 08.04.2011 by harmoniously construing it with Explanation 2 to Section 28 of the Act, 1962. We are of the considered view that the decision in Mangali Impex (supra) failed to take into account the policy being followed by the Customs department since 1999 which provides for the exclusion of jurisdiction of all other proper officers once a show cause notice by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudication by the proper officer under Section 28. Where the writ petitions have been disposed of by the respective High Court and appeals have been preferred against such orders which are pending before this Court, they shall be disposed of in accordance with this decision and the show cause notices impugned therein shall be restored for adjudication by the proper officer under Section 28. Where the orders-in-original passed by the adjudicating authority under Section 28 have been challenged before the High Courts on the ground of maintainability due to lack of jurisdiction of the proper officer to issue show cause notices, the respective High Court shall grant eight weeks time to the respective assessee to prefer appropriate appeal before the Customs Excise and Service Tax Appellate Tribunal (CESTAT). Where the writ petitions have been disposed of by the High Court and appeals have been preferred against them which are pending before this Court, they shall be disposed of in accordance with this decision and this Court shall grant eight weeks time to the respective assessee to prefer appropriate appeals before the CESTAT. Where the orders of CESTAT have been challenged before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 501 OF 2022 W.P.(C) No. 499 OF 2022 W.P.(C) No. 502 OF 2022 W.P.(C) No. 504 OF 2022 W.P.(C) No. 522 OF 2022 W.P.(C) No. 507 OF 2022 W.P.(C) No. 526 OF 2022 W.P.(C) No. 534 OF 2022 W.P.(C) No. 537 OF 2022 W.P.(C) No. 548 OF 2022 W.P.(C) No. 575 OF 2022 W.P.(C) No. 566 OF 2022 W.P.(C) No. 568 OF 2022 C.A. No. 10698 OF 2024 C.A. No. 10693 OF 2024 C.A. NO. 10752 OF 2024 C.A. NO. 10697 OF 2024 C.A. No. 10753 OF 2024 C.A. No. 10754 OF 2024 C.A. No. 10755 OF 2024 C.A. No. 10712 OF 2024 C.A. No. 10756 OF 2024 C.A. No. 10757 OF 2024 C.A. 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Ap J Chambers, AOR Mr. Dama Sheshadri Naidu, Sr. Adv. Mr. Roddam Prashanth Reddy, Adv. Mr. Somanadri Goud Katam, AOR Mr. Ravi Bharuka, AOR Mr. Prateek Gattani, Adv. Mr. Rohit Agarwal, Adv. Mrs. Vanita Bhargava, Adv. Mr. Ajay Bhargava, Adv. M/S. Khaitan Co., AOR Mr. Anil Kaushik, Sr. Adv. Mrs. Shashi Sharma, Adv. Mr. Rajat Rana, Adv. Mr. Mayank Gautam, Adv. Ms. Shilpa Singh, AOR Mr. Rajeev Singh, AOR Mr. K. Paari Vendhan, AOR Mr. Rishabh Sancheti, Adv. Mrs. Padma Priya, Adv. Mr. Armaan Arora, Adv. Mr. Naman Jain, Adv. Mr. Kumar Visalaksh, Adv. Mr. Rahul Khurana, Adv. 7Mr. Udit Jain, Adv. Mr. Arihant Tater, Adv. Ms. Akanksha Dikshit, Adv. Mr. Abhishek Vikas, AOR Mr. Pawanshree Agrawal, AOR Mr. M. P. Devanath, AOR Mr. T. L. Garg, AOR Mr. Mukesh Kumar Maroria, AOR Mr. Arshad Hidayatullah, Sr. Adv. Mr. Rupesh Kumar, Sr. Adv. Ms. Pankhuri Shrivastava, Adv. Ms. Neelam Sharma, AOR Mr. Makarand Joshi, Adv. Mr. Deepak Agrawal, AOR Mr. B. Krishna Prasad, AOR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ........................................................................................... 59 i. Review jurisdiction ................................................................................ 59 ii. The decision in Commissioner of Customs v. Sayed Ali ........................ 74 iii. Changes to Section 17 w.e.f. 11.04.2011 the assessment of bill(s) of entry and shipping bill(s) ................................................................................ 78 iv. Scheme of Sections 17 and 28 of the Act, 1962 ..................................... 90 v. Use of the article the in the expression the proper officer ................. 93 vi. DRI officers as proper officers under section 2(34) ................................ 96 vii. Section 4 of the Act, 1962 ...................................................................... 98 viii. Section 6 of the Act, 1962 .................................................................... 106 ix. Observations on the constitutional validity of Section 28 (11) of the Act, 1962 ..................................................................................................... 114 x. Bombay High Court decision in Sunil Gupta (supra) ...... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion in Sayed Ali (supra), the Central Board of Excise and Customs (the Board ) issued Notification No. 44/2011-Cus-NT dated 06.07.2011 under Section 2(34) of the Act, 1962, assigning the functions of the proper officers to the Commissioners of Customs (Preventive), Directorate of Revenue Intelligence ( DRI ), Directorate General of Anti Evasion ( DGAE ) and Officers of Central Excise. The notification specified that it would operate prospectively. With a view to account for the past periods, Section 28(11) was introduced vide the Customs (Amendment and Validation) Act, 2011 (Act No.14 of 2011) dated 16.09.2011 by virtue of which all persons appointed as Officers of Customs under sub-section (1) of Section 4 before the 06.07.2011 were deemed to have and always had the power of assessment under Section 17 and were deemed to be and always have been proper officers for the purpose of the said section. 6. The constitutional validity of Section 28(11) of the Act, 1962, came to be challenged before the High Court of Delhi in the case of Mangali Impex Ltd. v. Union of India reported in (2016) SCC Online Del 2597 and a batch of matters were disposed of by the High Court vide a common judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... April 8, 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. Explanation 2 clarifies that they will proceed in terms of the unamended provision. The position dealt with by insertion of section 28(11) is distinct and that is about competence of the officer. The officers namely those from the Directorate of Revenue Intelligence having been entrusted and assigned the functions as noted above, they are deemed to have been possessing the authority, whether in terms of section 28 unamended or amended and substituted as above. In these circumstances, for these additional reasons as well, the challenge to this sub-section must fail. 10. Since the decision in Sunil Gupta (supra) was anterior in time, the same was relied upon by the Department before the High Court of Delhi during the hearing in Mangali Impex (supra). However, the High Court of Delhi did not agree with the view taken therein. 11. A batch of four statutory appeals came to be decided by this Court on 09.03.2021 in Canon India (supra) wherein this Court decided the following two issues first, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Validation Act, 2011 introducing Section 28(11) empowering such officers for the period prior to 06.07.2011; the statutory scheme as envisaged under Sections 3, 4, 5 and 2(34) of the Act, 1962 respectively; and the pendency of the appeal against the decision in Mangali Impex (supra) and the stay of the operation of the said decision by this Court was either not noticed or not brought to the notice of the Court. 15. The Department preferred the present Review Petition against the judgement delivered in Canon India (supra) on 09.03.2021. This judgement was followed in other cases adjudicated by this Court and the High Courts, resulting in various other Review Petitions, Special Leave Petitions and Civil Appeals. This Court vide order dated 15.02.2022 in the present Review Petition allowed an open court hearing to be conducted and after hearing the parties, issued notice on the Review Petition vide order dated 19.05.2022. A co-ordinate Bench of this Court later in Union of India and Another v. Godrej and Boyce Manufacturing (SLP (C) No. 1513/2022) through order dated 11.02.2022 also issued notice. 16. The aforesaid developments led to a hiatus. As a result, the appeals pending before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e operation of the said judgement was stayed went unnoticed in Canon India (supra). He submitted that this would have a direct bearing both in the review and in the batch of appeals before this Court. 20. He submitted that Canon India (supra) proceeded on the assumption that DRI officers are not officers of Customs and therefore need to be entrusted with such powers under Section 6 of the Act, 1962 and only upon such entrustment, the functions of a proper officer can be assigned to them. This, he submitted, is in the teeth of the provisions of the Act, 1962 more particularly Sections 3, 4, and 5 thereof. He further submitted that there is no discussion worth the name on these provisions as regards its applicability to the DRI officers who are none other than a class of officers of customs under Section 3 appointed pursuant to Section 4 and consequently, no entrustment is required under Section 6. He submitted that Section 6 would come into play for such of those officers of the Central or State Government or Local Authority, who are not a class of officers of customs under Section 3 appointed in accordance with Section 4 of the Act, 1962. He explained this clear distinction between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise the powers and discharge custom the duties conferred or imposed on him under this Act. (2) An officer of customs may exercise the powers and discharge the duties conferred or imposed under this Act on any other officer of customs who is subordinate to him. (3) Notwithstanding anything contained in this section, an Appellate Collector of Customs shall not exercise the powers and discharge the duties conferred or imposed on an officer of customs other than those specified in Chapter XV and section 108. 25. Section 4 relates to appointment of officers of customs and Section 5 deals with the powers and duties of officers of customs. There is only one significant change carried out in Section 4 on 11.05.2002. Prior to that date, the appointing Authority was the Central Government and post 11.05.2002, the Board became the appointing Authority. 26. Some of the relevant notifications issued under Sections 4 and 5 of the Act, 1962 respectively are reproduced below : G.S.R. 214 ̶ In exercise of the powers conferred by sub-section (1) of Section 4 of the Customs Act, 1962 (52 of 1962), the Central Government hereby appoints (a) the officers specified below to be Collectors of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ministry of Finance. From 04.12.1957 till 24.06.1970, DRI was with the Ministry of Finance. From 25.06.1970 to 28.07.1970, it was with the Ministry of Home Affairs. Between 29.07.1970 and 06.04.1977, it was with the Cabinet Secretariat and from 07.04.1977 onwards, DRI has remained with the Ministry of Finance. 29. Placing reliance on the decision of the Delhi High Court in the case of S.K. Srivastava v. Union of India reported in 1971 SCC OnLine Del 134, he submitted that DRI was always a part of the Customs Department, working under a common Board and the Ministry of Finance. The relevant paragraphs from this decision are extracted below: (2) Therefore, on 3-12-1970 the order dated 27-7- 1970 was cancelled. (3) On 16-12-1970 the President was pleased to order that the petitioner be posted as Collector of Central Excise, Hyderabad . The petitioner however refused to join his posting at Hyderabad and has filed the present writ petition challenging his transfer from the post of Director of Revenue Intelligence to the post of Collector of Customs as being illegal and unconstitutional. Let us first consider the legality of the transfer. Under Article 310 of the Constitution, the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -up and Functions of the Ministries/Departments of the Government of India , 4th Edition, 1968, pages 68-70 (Annexure R XIII). As the work of Directorates of Inspection and Revenue Intelligence has been carved out from the work originally performed by the Collectorates of Customs and Central Excise and as no separate personnel was recruited to man the posts in these two Directorates, the members of the Indian Customs and Central Excise Service Class I have been manning those posts. There have been therefore numerous transfers of officers of the Indian Customs and Central Excise Service Class I from their posts in the Collectorates to the subsequently created posts in the Directorates. Equally frequently these officers have been transferred back to the posts in the Collectorates. The important fact to be noted is that only one set of personnel originally recruited for the Customs and Central Excise Collectorates has been used to fill the posts not only in the Collectorates but also in the Directorates. The reason is obvious. The Central Board of Excise and Customs in 1963 and prior to that the Central Board of Revenue functioning as a part of the Department of Revenue, Ministry of F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder Security Force respectively. However, in the case of DRI officers, they would clearly fall under Sections 3, 4 and 5 of the Act, 1962 and the notifications conferring powers and duties are already on record. 33. Our attention was also drawn to Notification 161-Cus dated 22.06.1963 issued under Section 6 entrusting powers of search to DRI officers. As per Notifications GSR 214 and GSR 215 issued in the same year under Section 4 of the Act, 1962, all officers of DRI were appointed as officers of customs. Therefore, an inadvertent reference to Section 6 under Notification No. 161 dated 22.06.1963 should not lead to the drawing of any adverse inferences as at the highest, it may only be a case of misquoting of a Section. Secondly, till 11.05.2002, it was the Central Government which was the appointing authority under Section 4 for officers of customs as well as for entrustment under Section 6. It is only from 11.05.2002 that the powers under Section 4 were delegated to the Board since Notification No. 161 dated 22.06.1963 was issued prior to 11.05.2002 and the authority being the Central Government under both Sections, any incorrect reference to a provision would be totally incons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of Section 2(34). Under Section 2(34), the power of assigning functions of a proper officer to an officer of customs vests with the Board or the Commissioner of Customs. Since the Board issued this assignment, the DRI officers became proper officers with effect from 15.02.1999. As a result, the decision rendered in Sayed Ali (supra) which was with reference to only Customs (Preventive) would have no application to the DRI and DGAE officers. The circular dated 15.02.1999 is reproduced hereinbelow: F. No. 437/9/98-Cus.IV Circular No. 4/99-Cus Dated 15/2/1999 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject : Issuance of Show Cause Notice by the Officers of directorate of Revenue Intelligence - regarding- A doubt has been recently raised as to whether the Officers of Directorate of Revenue Intelligence could issue show cause notices in cases investigated by them a practice started last year apparently in tune with the practice of the Directorate General of Anti Evasion. The matter has been examined in the Board. 2. It has been observed that in terms of Customs Notification No. 19/90-Cus (NT.), dated 26.4.90, as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. He submitted that the Board has been issuing circulars and notifications from time to time with a view to ensure that no such overlap occurs. He also argued that the respondents have not adduced any evidence or empirical statistics to even remotely indicate that an importer has been visited with either multiple show cause notices or adjudication orders on the same subject. 40. He further submitted that the Board had vested DRI with the power to issue only show cause notices and the adjudication orders in furtherance of the show cause notices were to be passed by the respective port officers. In cases involving multiple ports, common adjudicators were assigned powers by the Board and later also by the DRI and these adjudicators never involved themselves either in the investigation of the case or in the issuance of show cause notices. In such circumstances, he submitted that both the findings in Sayed Ali (supra) require reconsideration. 41. He further drew our attention to Circular No. 18/2015 Customs dated 09.06.2015 issued by the Board pertaining to the appointment of common adjudicating authority and the mode and manner of assignment of functions for adjudication with a view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioners of Customs would continue with these officers; (f) Remand cases would be decided by the original adjudicating authority. 3. All other cases of appointment of common adjudicator i.e. other than the cases mentioned in paragraph 2 above would continue to be dealt by the Board. This would include cases made by Commissionerates or cases made by DRI wherein the adjudicating officer is an officer below the level of Additional Director General (Adjudication), DRI. 4. Board has also decided that all the pending cases where common adjudicating authorities have not been appointed so far or where the common adjudicating authorities have been appointed but adjudications have not been done should be disposed of expeditiously in terms of aforementioned guidelines. However, while doing so in regard to the latter category of cases, Principal DG, DRI will take into consideration the fact whether or not personal hearings have taken place and the stage of passing the adjudication order. This is to ensure that cases about to be finalized are not reallocated to another adjudicating authority thereby defeating the objective of expediting the finalization of disputes. 5. Difficulty faced, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of events leading to the insertion of Section 28(11) in the Act, 1962 to make good his submission. (i) This Court delivered the judgment in Sayed Ali (supra) on 18.02.2011. (ii) Parliament vide the Finance Act, 2011 introduced certain amendments to Section 28 on 08.04.2011. (iii) On 06.07.2011, the Central Government issued Notification 44/2011 assigning the functions of proper officers to officers of Customs (Preventive), DRI, DGAE and officers of Commissioner of Central Excise. The same is extracted below: Proper officers for Customs Sections 17 and 28 In exercise of the powers conferred by sub-section (34) of section 2 of the Customs Act, 1962 (52 of 1962), the Central Board of Excise and Customs hereby assigns the functions of the proper officer to the following officers mentioned in column (2) of the Table below, for the purposes of section 17, section 28, section 28AAA and second proviso to Section 124 of the said Act, namely:- TABLE Sl. No. Designation of the officers (1) (2) 1. Additional Director Generals, Additional Directors or Joint Directors, Deputy Directors or Assistant Directors in the Directorate General of Revenue Intelligence. 2. Commissioners of Customs (Prevent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad with Section 28 of the Act in respect of goods entered for home consumption is not competent to function as a proper officer which has not been the legislative intent. 2. In view of the above the Show Cause Notices issued over the time by the Customs officers such as those of the Commissionerates of Customs (Preventive), Directorate General of Revenue Intelligence and others, who were not specifically assigned the functions of assessment and re-assessment of customs duty may be construed as invalid. The result would be huge loss of revenue to the exchequer and disruption in the revenue already mobilized in cases already adjudicated. However, having regard to the urgency of the matter, the Government issued notification on 6th July, 2011 specifically declaring certain officers as proper officers for the aforesaid purposes. 3. In the circumstances, it has become necessary to clarify the true legislative intent that Show Cause Notices issued by Customs officers, i.e., officers of the Commissionerates of Customs (Preventive), Directorate General of Revenue Intelligence (DRI), Directorate General of Central Excise Intelligence (DGCEI) and Central Excise Commissionerates for demanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced by the Finance Act, 2022 are in the nature of surplusage 48. Lastly, he referred to the amendments brought about by the Finance Act, 2022, vide Sections 86, 87, 88, 94 and 97. The same are extracted below: Section 86 - Amendment of section 2 of the Act, 1962 86. In the Customs Act, 1962 (52 of 1962), (hereinafter referred to as the Customs Act), in section 2, in clause (34), after the words Principal Commissioner of Customs or Commissioner of Customs , the words and figure under section 5 shall be inserted. Section 87 - Substitution of new section for section 3 of the Act, 1962 87. For section 3 of the Customs Act, the following section shall be substituted, namely: 3. Classes of officers of customs.- There shall be the following classes of officers of customs, namely:-- (a) Principal Chief Commissioner of Customs or Principal Chief Commissioner of Customs (Preventive) or Principal Director General of Revenue Intelligence; (b) Chief Commissioner of Customs or Chief Commissioner of Customs (Preventive) or Director General of Revenue Intelligence; (c) Principal Commissioner of Customs or Principal Commissioner of Customs (Preventive) or Principal Additional Director General of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Section 94 - Insertion of new section 110AA to the Act, 1962 94. After section 110A of the Customs Act, the following section shall be inserted, namely:-- 110AA. Action subsequent to inquiry, investigation or audit or any other specified purpose.- Where in pursuance of any proceeding, in accordance with Chapter XIIA or this Chapter, if an officer of customs has reasons to believe that-- (a) any duty has been short-levied, not levied, short-paid or not paid in a case where assessment has already been made; (b) any duty has been erroneously refunded; (c) any drawback has been erroneously allowed; or (d) any interest has been short-levied, not levied, shortpaid or not paid, or erroneously refunded, then such officer of customs shall, after causing inquiry, investigation, or as the case may be, audit, transfer the relevant documents, along with a report in writing. (i) to the proper officer having jurisdiction, as assigned under section 5 in respect of assessment of such duty, or to the officer who allowed such refund or draw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DRI, certain category of cases have now been directed to be handed over to the port authorities for issuing necessary show cause notices and this, in no way, can vitiate notices issued by DRI earlier especially in the absence of a constitutional or statutory embargo. 51. Finally, he submitted that a provision of law should appear arbitrary or abusive to be declared illegal or unconstitutional or invalid. A possible misuse of the provision by the authorities or a perceived misuse or mere presumptions and conjectures of a possible misuse cannot constitute basis to hold that a provision is arbitrary and violative of Article 14. He relied on the following decisions to fortify his submission: a. Collector of Customs v. Nathella Sampathu Chetty, 1962 SCC OnLine SC 30 b. Shreya Singhal v. Union of India, (2015) 5 SCC 1 c. Commissioner of Customs v. Dilip Kumar Co., (2018) 9 SCC 1 d. Goodyear India Ltd. v. State of Haryana, (1990) 2 SCC 71 C. SUBMISSIONS ON BEHALF OF THE RESPONDENTS 52. Mr. Mukul Rohatgi, Mr. Arvind Datar and Mr. V. Lakshmikumaran, learned Senior Counsel appeared on behalf of the various importers and vehemently objected to the review of Canon India (supra) and also conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, 1962 respectively are interconnected and interdependent. (v) Canon India (supra) is correct in holding that DRI officers should be entrusted with the functions under Section 6 of the Act, 1962. Since the Central Government has not done so, they cannot be assigned the functions of proper officer. (vi) Section 5 of the Act, 1962 deals only with powers and duties but not the functions, whereas, Section 6 deals with functions and thus, a notification under Section 6 is necessary. He emphasised on the different consequences arising from the use of the words powers and duties in Section 5 and use of the word functions in Section 6. (vii) It was contended that Section 28 deals with short levy, non-levy and erroneous refund. Levy means determination of duty through a process of assessment/reassessment. Section 28 therefore involves rendering a finding that the earlier assessment was not correct. Section 28 is intended to revise or upset the original assessment done under Section 17 and once an order gets passed under Section 28, the original assessment would not survive and therefore, the same officer can issue the show cause notice. (viii) The Board s Circular dated 15.02.1999 cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a situation if it were to arise. d. The High Court has correctly held that Section 28(11) perpetrates the very chaos that the judgment in Sayed Ali (supra) sought to prevent. e. Explanation 2 to Section 28 should be given a plain meaning. It was in the statute before Section 28(11) was introduced, hence the framers of the statute were well aware of the implications of the Explanation 2. f. On 08.4.2011, Section 28 of the Act, 1962 underwent a drastic change and not just a mere change in terms of time period being changed from six months to one year. The mode manner of issuing the show cause notice, the manner of adjudication and payment of duty, etc. have been amended making it more beneficial to the assessee. That is the reason why the old notices were to be dealt with under the old Section. g. It is impossible to read Section 28(11) and Explanation 2 together as validating any action prior to 08.04.2011. Such is the plain meaning and only such an interpretation is warranted in the present case. (xii) Section 97 of the Finance Act, 2022 is liable to be struck down as manifestly arbitrary and thus violative of Article 14. According to him, the Finance Act, 2022 does not cure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. In such circumstances referred to above, it was prayed that there being no merit in the Review Petition filed by the Department, the same may be dismissed. D. ISSUES FOR CONSIDERATION 56. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the following questions fall for our consideration: (i) Whether there is an error apparent on the face of the record for the purpose of entertaining the review petition? (ii) If the answer to the aforesaid question is in the affirmative, then whether the exposition of law propounded by this Court in Canon India (supra) as regards the power of the DRI to issue show cause notices could be said to be the correct statement of law? This would entail addressal of the following questions: a. Whether officers of DRI are the proper officers for the purposes of Section 28 of the Act, 1962? b. What would be the extent, scope and domain of Section 6 of the Act, 1962 vis- -vis Section 2(34), Section 3, Section 4 and Section 5 of the Act, 1962 and whether an entrustment by the Central Government under Section 6 of the Act, 1962 is mandatory to empower the Officers of the DRI for the purpose of issuing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivil proceeding except on the ground mentioned in Order 47 Rule 1 of the Code and in a criminal proceeding except on the ground of an error apparent on the face of the record. 59. Order XLVII Rule 1(1) of the Code of Civil Procedure, 1908 provides for an application for review which reads as under: 1. Application for review of judgment. Any person considering himself aggrieved (a) by a decree or order from which an appeal is allowed, but from which no appeal has been preferred, (b) by a decree or order from which no appeal is allowed, or (c) by a decision on a reference from a Court of Small Causes, and who, from the discovery of new and important matter or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the decree was passed or order made, or on account of some mistake or error apparent on the face of the record, or for any other sufficient reason, desires to obtain a review of the decree passed or order made against him, may apply for a review of judgment to the court which passed the decree or made the order. 60. Thus, in view of the above, the following grounds of review are maintainable as stipu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of mistaken judgment. But we are unable to agree with this submission because at the time of the arguments our attention was not drawn specifically to sub-section 23-C(2) and the light it throws on the interpretation of sub-section (1). 16. In the result the review petition is partly allowed and the judgment of this Court in Criminal Appeal No. 211 of 1969 modified to the extent that the sentence of six months' rigorous imprisonment imposed on Girdharilal is set aside. The sentence of fine of Rs 2000 shall, however, stand. [Emphasis supplied] 64. In M/s Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi reported in (1980) 2 SCC 167, the scope of the power of review was explained by this Court wherein it was held that: 8. It is well-settled that a party is not entitled to seek a review of a judgment delivered by this Court merely for the purpose of a rehearing and a fresh decision of the case. The normal principle is that a judgment pronounced by the Court is final, and departure from that principle is justified only when circumstances of a substantial and compelling character make it necessary to do so: Sajjan Singh v. State of Rajasthan [AIR 1965 SC 845 : (196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, through different counsel, of old and overruled arguments, a second trip over ineffectually covered ground or minor mistakes of inconsequential import are obviously insufficient. The very strict need for compliance with these factors is the rationale behind the insistence of counsel's certificate which should not be a routine affair or a habitual step. It is neither fairness to the Court which decided nor awareness of the precious public time lost what with a huge backlog of dockets waiting in the queue for disposal, for counsel to issue easy certificates for entertainment of review and fight over again the same battle which has been fought and lost. The Bench and the Bar, we are sure, are jointly concerned in the conservation of judicial time for maximum use. We regret to say that this case is typical of the unfortunate but frequent phenomenon of repeat performance with the review label as passport. Nothing which we did not hear then has been heard now, except a couple of rulings on points earlier put forward. May be, as counsel now urges and then pressed, our order refusing special leave was capable of a different course. The present stage is not a virgin ground but review ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the dutiability of any goods and the amount of duty, tax, cess or any other sum so payable, if any, under this Act or under the Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as the Customs Tariff Act) or under any other law for the time being in force, with reference to (a)- (b)***(c) exemption or concession of duty, tax, cess or any other sum, consequent upon any notification issued therefor under this Act or under the Customs Tariff Act or under any other law for the time being in force; ] . 13. The nature of the power to recover the duty, not paid or short-paid after the goods have been assessed and cleared for import, is broadly a power to review the earlier decision of assessment. Such a power is not inherent in any authority. 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 to us where the power to reopen assessment or recover duties which have esc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under Section 28 as a proper officer under the Customs Act. In support of the contention that he has been so entrusted with the functions of a proper officer under Section 28 of the Customs Act, Shri Sanjay Jain, Learned Additional Solicitor General relied on a Notification No. 40/2012, dated 2-5-2012 issued by the Central Board of Excise and Customs. The notification confers various functions referred to in Column (3) of the notification under the Customs Act on officers referred to in Column (2). The relevant part of the notification reads as follows :- [To be published in the Gazette of India, Extraordinary, Part I, Section 3, Sub-section (i)] Government of India Ministry of Finance (Department of Revenue) Notification No. 40/2012-Customs (N.T.) New Delhi, dated the 2nd May, 2012 S.O. (E). - In exercise of the powers conferred by subsection (34) of section 2 of the Customs Act, 1962 (52 of 1962), the Central Board of Excise and Customs, hereby assigns the officers and above the rank of officers mentioned in Column (2) of the Table below, the functions as the proper officers in relation to the various sections of the Customs Act, 1962, given in the corresponding entry in Column ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erative 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 Intelligence which is set up under the Notification dated 4-12-1957 issued by the Ministry of Finance and Customs officers who, till 11- 5-2002, were appointed by the Central Government. The notification which purports to entrust functions as proper officer under the Customs Act has been issued by the Central Board of Excise and Customs in exercise of non-existing power under Section 2(34) of the Customs Act. The notification is obviously invalid having been issued by an authority which had no power to do so in purported exercise of powers under a section which does not confer any such power. 22. In the above context, it would be useful to refer to the decision of this Court in the case of Commissioner of Customs v. Sayed Ali and Another [(2011) 3 SCC 537 = 2011 (265) E.L.T. 17 (S.C.)] wherein the proper officer in respect of the jurisdictional area was considered. The consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of the material that may be with him that customs duty has not been levied or short levied or erroneously refunded on an import made by any individual for his personal use or by the Government or by any educational, research or charitable institution or hospital, within one year and in all other cases within six months from the relevant date, may cause service of notice on the person chargeable, requiring him to show cause why he should not pay the amount specified in the notice. It is evident that the notice under the said provision has to be issued by the proper officer . 19. Section 2(34) of the Act defines a proper officer , thus : 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 Commissioner of Customs; It is clear from a mere look at the provision that only such officers of customs who have been assigned specific functions would be proper officers in terms of Section 2(34) the Act. Specific entrustment of function by either the Board or the Commissioner of Customs is therefore, the governing test to determine whether an officer of customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice dated 16.04.1994, calling upon the importer to show cause as to why the goods seized should not be confiscated, why the customs duty amounting to Rs.5,07,274/- should not be levied in terms of Section 28(1) of the Act, 1962, by invoking the extended period of limitation, and why the penalties under Sections 112(a) and (b)(i) and (ii) of the Act, 1962, should not be imposed on the said importer. 76. The jurisdiction of the Collector of Customs (Preventive) to issue the show cause notice was questioned in the reply to the show cause notice by referring to Notification No. 251/83 and Notification No.250/83. The Collector of Customs (Preventive) rejected the submission on the point of jurisdiction. The demand was thus affirmed by the Collector of Customs (Preventive) vide Order dated 19.08.1996. The matter was taken up before the Tribunal, which held that the Commissioner of Customs (Preventive) had no jurisdiction to issue the show cause notice and therefore did not have the jurisdiction to adjudicate the matter when the imports had taken place within the Bombay Customs House. 77. This Court, after referring to Section 28 of the Act, 1962 as it stood during the period in disput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade in Sayed Ali (supra) do not lay down the correct position of law. 82. Even otherwise, the decision in Sayed Ali (supra) could have been arrived at without deciding on the interdependence of Section 17 and Section 28 of the Act, 1962 as the Customs (Preventive) officers, whose jurisdiction to issue show cause notices was under challenge in that case, were not assigned the functions of the proper officer for the purposes of Section 28 through a notification issued by the appropriate authority. As we have observed in the foregoing parts of this judgment, assignment of functions is a mandatory requirement for the exercise of jurisdiction by the proper officer . The observations made in Sayed Ali (supra) on the connection between Sections 17 and 28 of the Act, 1962 are obiter dicta at best and do not constitute the binding ratio decidendi of that judgment. 83. Further, Sayed Ali (supra) could not have been relied upon by this Court in Canon India (supra) as it could not have been applied for the period subsequent to 08.04.2011 in view of the fact that Section 17 of the Act, 1962 has undergone a radical change by virtue of the amendments made by the Finance Act, 2011. iii. Changes to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer may examine or test imported goods or export goods or such part thereof as may be necessary. If required, such an officer can only re-assess the goods under Section 17 of the Act. Thus, a Proper Officer under Section 17(1) 17(4) of the Act is merely required to re-assess the imported goods or export goods where he differs with the self assessment of an importer or an exporter. This important change was not brought to the attention of the Hon'ble Supreme Court in Canon India Pvt Ltd Case. 210. As mentioned above, an importer or an exporter is merely required to make a self-assessment in the Bill(s) of Entry or Shipping Bill(s) as may be in the case of import or export respectively and file the same. 211. Officers who are appointed as Proper Officers for the purpose of Section 17 of the Customs Act, 1962 are Officers of Customs like any Officer of Customs as per Section 3 and 4 read with notification issued under these provisions. There is delegation of functions by the Board and senior officers to different class of officers by the Board. This is an internal arrangement with a view for better tax administration. Thus, officers of Directorate of Revenue Intelligence are al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of Custom have been recognized as a Proper Officer for the aforesaid purpose. 218. The proper officer who is/was involved at the stage of assessment under Section 17 of the Act upto 08.04.2011 and reassessment after 08.04.2011 have rarely been involved in collateral adjudication of notices issued under Section 28 of the Act. However, once again at the stage of recovery of duty or penalty under other provision of the Customs Act, 1962 or redemption fine under Section 125 of the Customs Act, 1962, they are authorized. 219. Mostly, at the time of clearance of imported goods or export goods for the purpose of assessment under Section 17 of the Custom Act,1962, it is the Superintendent/Appraisers of Customs from Group 'B' Executive - Gazetted Officers who act as proper officers . They are merely required to verify the entries made in the Bill(s) of Entry filed under Section 46 of the Act (in case of import) and or Shipping Bill(s) filed under Section 50 of the Act (in case of export). As proper officers are required to merely examine or test any imported or export goods or such parts thereof. Such Officer of Customs under the Scheme of the Act and Notification issued thereun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porter or such other person shall produce such document and furnish such information. (3) For verification of selfassessment under sub-section (2), the proper officer may require the importer, exporter or any other person to produce any contract, broker's note, insurance policy, catalogue or other document, whereby the duty leviable on the imported goods or export goods, as the case may be, can be ascertained, and to furnish any information required for such ascertainment which is in his power to produce or furnish, and thereupon, the importer, exporter or such other person shall produce such document or furnish such information. (4) Notwithstanding anything contained in this section, imported goods or export goods may, prior to the examination or testing thereof, be permitted by the proper officer to be assessed to duty on the basis of the statements made in the entry relating thereto and the documents produced and the information furnished under sub-section (3); but if it is found subsequently on examination or testing of the goods or otherwise that any statement in such entry or document or any information so furnished is not true in respect of any matter relevant to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance Act, 2011 vis - vis the provisions of the old Section 17 as it stood prior to 08.04.2011, highlights the following major changes: (a) Self-assessment of duty: The concept of self-assessment of duty was introduced by way of the amendment to Section 17 wherein there is no role of the proper officer to assess the duty at the first instance. The onus for providing the duty leviable has been shifted to the assessee itself. (b) Discretion to verify: Sub-section (2) of the new Section 17 states that The proper officer may verify the self-assessment of the goods . The use of the word may indicates two things: (i) that the actions to be taken by the proper officer under the old Section 17 are no longer compulsory. The proper officer may choose to accept the self-assessment made by the assessee, thereby becoming functus officio and there is no compulsion on him or her to examine or test any goods for reaching a first instance assessment; (ii) The proper officer is not involved in the assessment of duty under Section 17 at the first instance except for his or her role in accepting or not accepting the self-assessed duty. There can be three situations that may result from such limited ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the new Section 17 and replace the assessment to be done by the proper officer under the old Section 17 with the process of selfassessment . 90. These changes highlight that the competence of the proper officer to conduct assessment is completely taken away by the legislature vide the amendment to Section 17. The new Section 17 empowers the proper officer to perform the functions of verification of self-assessment and subsequent re-assessment, if found necessary. However, such re-assessment is not a mandatory function on the same footing as assessment under the old Section 17. Therefore, in our considered view the scope of the functions of the proper officer under the new Section 17 is limited. 91. It is evident from the aforesaid that the attention of this Court in Canon India (supra) was not drawn to the important changes brought to Section 17 of the Act, 1962 vide Section 38 of the Finance Act, 2011 with effect from 08.04.2011. 92. The observation in paragraph 13 in Canon India (supra) that where one officer has exercised his powers of assessment, the power to order reassessment must also be exercised by the same officer or his successor and not by another officer of another de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 28 is in the nature of a quasi-judicial proceeding with the issuance of the show cause notice by the proper officer followed by adjudication of such notices by the field customs officers. It is also worth noting that in the case of DRI, the proceedings under Section 28 start only after an investigation has been undertaken by DRI. This is reaffirmed by Circular No. 4/99-Cus dated 15.02.1999 and Circular No. 44/2011- Customs dated 23.11.2011. Therefore, the nature of review under Section 28 is significantly different from the nature of assessment and reassessment under Section 17. The ambit of Section 28 has also been restricted to the review of assessments and re-assessments done under Section 17 for ascertaining if there has been a short-levy, non-levy, partpayment, non-payment or erroneous refund. 97. Keeping this statutory scheme in mind, we are unable to subscribe to the view taken in both Sayed Ali (supra) and Canon India (supra), namely, that the vesting of the functions of assessment and re-assessment under Section 17 is a threshold, mandatory condition for a proper officer to perform functions under Section 28. This scheme does not flow from the scheme of the statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Parliament had employed the article the instead of a/an in Section 28 of the Act, 1962 so as to give effect to its intention of specifying that the proper officer referred to in Section 28 is the same officer as the one referred to in Section 17. The Court further observed that the use of a definite article instead of an indefinite article is indicative of the fact that the proper officer referred to in Section 28 is not any proper officer but the proper officer assigned with the function of assessment and reassessment under Section 17. 101. However, there is an error apparent in the aforesaid view. Undoubtedly, a definite article the has been used before proper officer with a view to limit the exercise of powers under Section 28 by a specific proper officer and not any proper officer. But, in the absence of any statutory linkage between Sections 17 and 28 of the Act, 1962 respectively, there was no legal footing for this Court in Canon India (supra) to hold that the proper officer in Section 28 must necessarily be the same proper officer referred to under Section 17 of the Act, 1962. 102. As we have discussed in the foregoing parts of this judgment, the statutory scheme of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld use, it must be borne in mind that a statute consists of two parts, the letter and the sense . It was observed by this Court in State of Andhra Pradesh v. Ganesweara Rao, reported in AIR 1963 SC 1850 that the aforesaid rule of construction that the provisions of a statute are to be read together and given effect to and that it is the duty of the court to construe a statute harmoniously has gained general acceptance. In Management, S.S.L. Rly. Co. v. S.S.R.W. Union reported in AIR 1969 SC 513, this Court observed that the principle that literal meaning of the word in a statute is to be preferred is subject to the exception that if such literal sense would give rise to any anomaly or would result in something which would defeat the purpose of the Act, a strict grammatical adherence to the words should be avoided as far as possible. The above principles would help us to desist from affording undue stress on the definite article the used before the expression proper officer in Section 28 of the Act, 1962. vi. DRI officers as proper officers under section 2(34) 106. In Canon India (supra), this Court erroneously concluded that an officer from the Directorate of Revenue Intelligence ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to appoint such persons as it thinks fit to be officers of customs . 113. Under sub-section (1) to Section 4(1) of the Act, 1962, the Board may appoint such person as Officers of Customs as it thinks fit. Under Section 4(2) of the Act, 1962 the Board can even authorize a Chief Commissioner of Customs or a Joint or Assistant or Deputy Commissioner of Customs to appoint any officers below the rank of Assistant Commissioner of Customs as an officer of customs . It appears that this aspect was also not brought to the notice of this Court in Canon India (supra). vii. Section 4 of the Act, 1962 114. For an easy reference, Section 4 of the Act, 1962 is reproduced below: Section 4 : Appointment of Officers of Customs : 1) The Board may appoint such persons as it thinks fit to be Officers of Customs. 2) Without prejudice to the provisions of subsection (1), [Board may authorise a Principal Chief Commissioner of Customs or a Chief Commissioner of Customs Principal Commissioner of Customs or Commissioner of Customs) or Joint or Assistant Commissioner of Customs or Joint or Assistant Commissioner of Customs or Deputy Commissioner of Customs to appoint officers of customs below the rank of Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be the Additional Commissioners or Joint Commissioners of Customs and Officers mentioned in column(4) thereof to be the Deputy Commissioners or Assistant Commissioners of Customs for the areas mentioned in the corresponding entry in column(1) of the said Table with effect from the date to be notified by the Central Government in the Official Gazette:- Area of Jurisdiction Designation of the Officers (1) (2) (3) (4) Whole of India Additional Director Additional Directors or Joint Deputy Directors, or General, Directorate General of Revenue Intelligence posted at Headquarters and Zonal/region al units Directors, of Directorate of Revenue Intelligence posted at Headquarters and Zonal/region al units. Assistant Directors of Directorate of Revenue Intelligence posted at Headquarters and Zonal/region al units 239. Notification No.17/2002-Cus. (N.T.), dated 07.03.2002 came into force on 25.10.2002 vide Notification No.63/2002-Cus. (N.T.) dated 03.10.2002. Notification No.17/2002-Cus. (N.T.), dated 07.03.2002 was further amended by Notification No.82/2014-Cus. (N.T.), dated 16.09.2014. 240. Thus, the officers from the Directorate of Revenue Intelligence have been appointed as Officers o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms Act, 1962. 246. Now, under the amended Section 2(34), the word under Section 5 has been inserted. Thus, what was implicit in the Customs Act, 1962 has now been made explicit in the amendment to the Customs Act, 1962 vide Finance Act, 2022. 247. As per Section 5(1) of the Act, an Officer of Customs may exercise the powers and discharge the duties conferred or imposed on him under the Customs Act, 1962, subject to such conditions and limitations as the Board may impose. 248. The power to be exercised may be subject to such conditions and limitations as the Board may impose on such an Officer of Customs . Such officers can also exercise the powers and discharge the duties conferred or imposed on any other officers of customs who is subordinate to such officers. This aspect was also not brought to the attention of the Hon ble Supreme Court in Canon India Private Limited Vs. Commissioner of Customs case referred to supra. 249. Only exception that has been provided was in Sub- Section (3) to Section 5 of the Act. As per Sub-Section 3 to Section 5 of the Act, a Commissioner (Appeals) cannot exercise the power and discharge the duties conferred or imposed on an Officer of Customs othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion No.40/2012-Cus. (N.T.), dated 02.05.2012. This notification fell for consideration in Canon India Private Limited Vs. Commissioner of Customs, 2021 (376) E.L.T.3(S.C). However, No.40/2012-Cus. (N.T.), dated 02.05.2012 cannot be read in isolation. It had to be read along with notifications issued under Section 4 of the Customs Act, 1962. 252. Notification No.40/2012-Cus. (N.T.), dated 02.05.2012 was also amended from time to time and has now been eventually rescinded/superseded by Notification No.26/2022-Cus. (N.T.), dated 31- 3-2022 in tune with the amendment proposed in the Finance Bill, 2022 and passed by Finance Act, 2022. 253. Both Notification No.44/2011-Cus. (N.T.), dated 06.07.2011 and Notification No. 40/2012-Cus. (N.T.), dated 02.05.2012 as amended from time to time have also not been challenged directly by any of the petitioners. 254. Although, the vires of Notification No.40/2012- Cus. (N.T.), dated 02.05.2012 was neither challenged or questioned before the Court in Canon India Private Limited Vs. Commissioner of Customs, 2021 (376) E.L.T.3(S.C) nor the issue of jurisdiction was canvassed before the Tribunal, the Hon ble Supreme has held that the officers of the Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 functions of the Board or any officer of customs under this Act. [Emphasis supplied] 120. It is evident on a plain reading of Section 6 of the Act, 1962 referred to above that the same contemplates the entrustment of the functions of the Board or any officer of customs under the Act, 1962 to any of the officers of the Central or the State Government or a local authority. Such entrustment could be either conditional or unconditional. As per Section 6 of the Act, 1962, the Central Government may by notification in the Official Gazette entrust the functions of the Board or the officers of Customs to any of the following officers, namely, any officer of: (i) The Central Government; or (ii) The State Government; or (iii) A local authority. 121. Section 6 replaced Section 8 of the erstwhile Sea Customs Act, 1878 under which the powers of officers of customs, at places where there is no Customs House, are exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment, these officers of other Departments do not become Officers of Customs. They can merely function as such officers. Since entrustment under Section 6 is on the officers from other department, the Parliament by design has given the powers to the Central Government and not to the Board. 270. As the Officers from the Directorate of Revenue Intelligence, Ministry of Finance (MOF) are already Officers of Customs before their induction and deputation to the Board in various Directorates, there is no impediment on their being appointed as proper officers for the purpose of Section 2(34) of the Customs Act, 1962. 271. Merely because the Officers of the Customs and Central Excise Department are selected and are deputed in the respective Directorates does not mean that they cease to be Officers of the respective Departments as these Directorates are created only to assist the Board to implement the object of respective fiscal enactments. It is an internal arrangement within the Ministry of Finance, Department of Revenue (DRI). 272. If Section 3 and Section 4 of the Act and the Notification issued thereunder referred to supra were perhaps brought to the attention of the Hon ble Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner of the assessment under the Customs Act, 1962 with effect from 08.04.2011 appear to have not been brought to the attention of the Hon'ble Supreme Court and therefore the assumption in the paragraph Nos.12 to 15 in the case of Canon India Private Limited Vs. Commissioner of Customs, 2021 (376) E.L.T.3(S.C.) may require a re-consideration insofar as pending cases before the Hon'ble Supreme Court and other Courts. [Emphasis supplied] 127. Mr. N. Venkataraman, the Ld. ASG is correct in his submission that the distinction sought to be made between Section 5 and Section 6 of the Act, 1962 (powers and duties vis- -vis functions) could be said to be imaginary and may have very serious legal implications. 128. The assignment of functions of the proper officer for the purposes of any section under the Act to an officer of customs is expressly mentioned in Section 2(34). Section 5 empowers the customs officer to discharge the duties of proper officer so conferred. Even prior to the amendment to Sections 2(34) and 5, this could be the only understanding with respect to the question of entrustment of functions of the proper officer to a customs officer. 129. In our view, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refunded, the proper officer may,- (a) in the case of any import made by any individual for his personal use or by government or by any educational, research or charitable institution or hospital, within one year; (b) in any other case, within six months, from the relevant date, serve notice on the person chargeable with the duty or interest which has not been levied or charged or which has been short-levied or part 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: Provided that where any duty has been levied or has been short-levied or the interest has not been charged or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts by the importer or the exporter or the agent or employee of the importer or exporter, the provisions of this sub-section shall have effect as if for the words one year and six months , the words five years were substituted. Provided further that where the amount of duty which has not been levied or has been short-levied or erroneously refunded or the interest payable has not bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not serve any notice under sub-section (1) in respect of the duty or the interest so paid: Provided that the proper officer may determine the amount of short-payment of duty or interest, if any, which in his opinion has not been paid by such person and, then, the proper officer shall proceed to recover such amount in the manner specified in this section, and the period of one year or six months as the case may be, referred to in sub-section (1) shall be counted from the date of receipt of such information of payment. Explanation 2. For the removal of doubts, it is hereby declared that the interest under Section 28AB shall be payable on the amount paid by the person under this sub-section and also on the amount of short-payment of duty, if any, as may be determined by the proper officer, but for this sub-section. (2C) The provisions of sub-Section (2B) shall not apply to any case where the duty or the interest had become payable or ought to have been paid before the date on which the Finance Bill 2001 receives the assent of the President. (3) For the purposes of sub-section (1), the expression relevant date means,- (a) in a case where duty is not levied, or interest is not charged, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the manner specified under that sub-section and the period of one year shall be computed from the date of receipt of information under sub-section (2). (4) Where any duty has not been levied or has been short-levied or erroneously refunded, or interest payable has not been paid, part-paid or erroneously refunded, by reason of,- (a) collusion; or (b) any wilful 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 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. (5) Where any duty has not been levied or has been short-levied or the interest has not been charged or has been part-paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts by the importer or the exporter or the agent or the employee of the importer or the exporter, to whom a notice ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder determining the duty is passed by the proper officer under this section, the person liable to pay the said duty shall pay the amount so determined along with the interest due on such amount whether or not the amount of interest is specified separately. Explanation 1 -- For the purposes of this section, relevant date means,- (a) in a case where duty is not levied, or interest is not charged, the date on which the proper officer makes an order for the clearance of goods; (b) in a case where duty is provisionally assessed under section 18, the date of adjustment of duty after the final assessment thereof; (c) in a case where duty or interest has been erroneously refunded, the date of refund; (d) in any other case, the date of payment of duty or interest. Explanation 2. - For the removal of doubts, it is hereby declared that any non-levy, short-levy or erroneous refund before the date on which the Finance Bill, 2011 receives the assent of the President, shall continue to be governed by the provisions of Section 28 as it stood immediately before the date on which such assent is received. 135. Parliament, therefore, made changes to the scheme of Section 28 and added the Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Sunil Gupta (supra) on the grounds that it is violative of Articles 14, 19 and 21 of the Constitution and that it fails to take note of Explanation 2 to Section 28. Relying on Sayed Ali (supra), the petitioners therein challenged the Validation Act on the ground that it is only the officers of customs who are assigned functions of assessment including the reassessment and they alone are competent to issue notice under Section 28. x. Bombay High Court decision in Sunil Gupta (supra) 141. Similar grounds were taken by the petitioners before the High Court of Delhi in the case of Mangali Impex (supra) wherein it was submitted that there was an apparent conflict between Explanation 2 and Section 28(11) which rendered the Validation Act inapplicable to show cause notices issued prior to 08.04.2011 i.e., the date on which the new Section 28 came into force. It was further submitted that Section 28(11), by conferring powers of the proper officer to multiple sets of customs officers without any territorial or pecuniary jurisdictional limit, would result in utter chaos and confusion as envisaged in Sayed Ali (supra) and therefore, does not cure the defects pointed out therein. 142. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any interest payable has not been paid, part paid or erroneously refunded, the proper officer may , (a) in the case of any import made by any individual for his personal use or by government or by any educational, research or charitable institution or hospital, within one year; (b) in any other case, within six months , from the relevant date, serve notice on the person chargeable with the duty or interest which has not been levied or charged or which has been short-levied or part 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: (1) Where any duty has not been levied or has been short-levied or erroneously refunded, or any interest payable has not been paid, part-paid or erroneously refunded, for any reason other than the reasons of collusion or any wilful mis-statement or suppression of facts, (a) the proper officer shall , within one year from the relevant date, serve notice on the person chargeable with the duty or interest which has not been so levied or which has been shortlevied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rter or the agent or the employee of the importer or the exporter, as the case may be, has paid duty with interest and penalty under sub-section (5), the proper officer shall determine the amount of duty or interest and on determination, if the proper officer is of the opinion- (i) that the duty with interest and penalty has been paid in full, then, the proceedings in respect of such person or other persons to whom the notice is served under subsection (1) or sub- section (4), shall, without prejudice to the provisions of sections 135, 135A and 140 be deemed to be conclusive as to the matters stated therein; or (ii) that the duty with interest and penalty that has been paid falls short of the amount actually payable, then the proper officer shall proceed to issue the notice as provided for in clause (a) of subsection (1) in respect of such amount which falls short of the amount actually payable in the manner specified under that subsection and the period of one year shall be computed from the date of receipt of information under subsection (5). In respect of the provision relating to issuance of show cause notice for non-levy, short-levy, notpaid, part-paid and erroneous refund of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined. (8) The proper officer shall, after allowing the concerned person an opportunity of being heard and after considering the representation, if any, made by such person, determine the amount of duty or interest due from such person not being in excess of the amount specified in the notice. This is an analogous provision and pertains to the adjudication / determination of the amount specified in the show-cause notice when issued under sub-section (1) of the new Section 28. (2A) Where any notice has been served on a person under subsection (1), the proper officer - (i) in case any duty has not been levied or has been shortlevied, or the interest has not been paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful misstatement or suppression of facts, where it is possible to do so, shall determine the amount of such duty or the interest, within a period of one year: and (ii) in any other case, where it is possible to do so, shall determine the amount of duty which has not been levied or has been short-l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w Section 28, the law has provided an opportunity to the person chargeable with duty or interest to make payment before the show cause notice is issued to him and inform the proper officer of such payment in writing. The legislature, in the new Section 28(1)(b) has clarified the basis for ascertainment of amount to be paid prior to issuance of show cause notice. Provided that the proper officer may determine the amount of short-payment of duty or interest, if any, which in his opinion has not been paid by such person and, then, the proper officer shall proceed to recover such amount in the manner specified in this section, and the period of one year or six months as the case may be, referred to in sub-section (1) shall be counted from the date of receipt of such information of payment. (3) Where the proper officer is of the opinion that the amount paid under clause (b) of sub-section (1) falls short of the amount actually payable, then, he shall proceed to issue the notice as provided for in clause (a) of that sub-section in respect of such amount which falls short of the amount actually payable in the manner specified under that sub-section and the period of one year shall be comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubts, it is hereby declared that any non-levy, short-levy or erroneous refund before the date on which the Finance Bill, 2011 receives the assent of the President, shall continue to be governed by the provisions of Section 28 as it stood immediately before the date on which such assent is received. 146. What is discernible from the aforesaid modifications made by the Parliament is as under : (a) Distinction in the time-period: In sub-section (1) of new Section 28, the difference in the purpose of the duty has been removed and for all cases of short-levy, non-levy, part-payment, non-payment and erroneous refund except for cases falling under new Section 28(4), the period of one year has been provided for the service of the show cause notice, which under the old provision was six months. (b) Additional provision in respect of short-levy, non-levy, partpayment, non-payment and erroneous refund by reasons of collusion, willful misstatement and suppression of facts: An additional provision has been inserted by way of Section 28(5) stipulating that, to the extent the amount mentioned in the show cause notice has been accepted by the person chargeable with payment of such duty, the paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the above discussion and finding that Explanation 2 has not been dealing with the case, which was specifically dealt with by sub- section (11) of section 28 of the Act, that we are of the opinion that the challenge in the writ petition is without any merit. The Explanation removes the doubts and states that 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 the Finance Bill therein denotes the Bill by the section itself was substituted by Act 8 of 2011 with effect from April 8, 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. Explanation 2 clarifies that they will proceed in terms of the unamended provision. The position dealt with by insertion of section 28 (11) is distinct and that is about competence of the officer. The officers namely those from the Directorate of Revenue Intelligence having been entrusted and assig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o say that they may not also be exercised unreasonably and treating this as a ground for holding the statute invalid Viscount Simonds observed in Belfast Corporation v. O.D. Commission [ 1960 AC 490 at pp. 520-521] : It appears to me that the short answer to this contention (and I hope its shortness will not be regarded as disrespect) is that the validity of a measure is not to be determined by its application to particular cases.... If it is not so exercised (i.e. if the powers are abused) it is open to challenge and there is no need for express provision for its challenge in the statute. The possibility of abuse of a statute otherwise valid does not impart to it any element of invalidity. The converse must also follow that a statute which is otherwise invalid as being unreasonable cannot be saved by its being administered in a reasonable manner. The constitutional validity of the statute would have to be determined on the basis of its provisions and on the ambit of its operation as reasonably construed. If so judged it passes the test of reasonableness, possibility of the powers conferred being improperly used is no ground for pronouncing the law itself invalid and similarly if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne of Article 14 of the Constitution: (i) The Finance Act, 2022 does not cure the defect pointed out in Canon India (supra) and no notification or amendment of law deeming DRI officers to be the proper officers would cure the defect of ouster of jurisdiction of DRI once the original act of assessment has been undertaken by a different group of officers. The Finance Act, 2022 is manifestly arbitrary as no attempt has been made to cure the defect highlighted in Canon India (supra). (ii) This Court in Canon India (supra) made a determination of fact that the DRI officers did not have jurisdiction to perform functions under Section 28 of the Act, 1962. Such judicial determination of fact relating to actual exercise of jurisdiction cannot be retrospectively overruled. (iii) The legislature has selectively adhered to the legal findings made in Canon India (supra) only for future actions by enactment of Section 110AA and has proceeded to ignore the findings for past show cause notices by validating the same vide Section 97 of the Finance Act, 2022. Such a distinction creates two classes of assessees without any reasonable basis for this differentiation. (iv) Section 97 of the Finance Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest in the retroactive curing of such a defect in the administration of government outweighs the individual's interest in benefiting from the defect .... The Court has been extremely reluctant to override the legislative judgment as to the necessity for retrospective taxation, not only because of the paramount governmental interest in obtaining adequate revenues, but also because taxes are not in the nature of a penalty or a contractual obligation but rather a means of apportioning the costs of government among those who benefit from it [ Emphasis supplied ] /8 162. This Court has laid down the tests for determining whether a validating law is enacted within permissible limits in the case of Indian Aluminium Company Co. vs. State of Kerala reported in (1996) 7 SCC 637 and the relevant observations therein are reproduced below: 56. From a resume of the above decisions the following salient principles would emerge: (3) In a democracy governed by rule of law, the Legislature exercises the power under Articles 245 and 246 and other companion Articles read with the entries in the respective Lists in the Seventh Schedule to make the law which includes power to amend the law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 section must therefore be construed as conferring the power of such review on the same officer or his successor or any other officer who has been assigned the function of assessment. In other words, an officer who did the assessment, could only undertake re-assessment [which is involved in Section 28 (4)] [Emphasis supplied] b) According to Canon India (supra), only the proper officer empowered to undertake the exercise of assessment or re-assessment under Section 17 in a jurisdictional area can perform the functions of the proper officer under Section 28 of the Act, 1962 as the exercise involved in Section 28 is the re-assessment of duty. The defect pointed out by the Court in Canon India (supra) is that the DRI officers were not the proper officers who undertook the exercise of assessment under Section 17. Hence, they lacked the jurisdiction to issue show cause notices under Section 28. The reasoning given by the Court was that any other rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 28. It cannot be challenged on the ground that it does not cure the defect pointed out in Canon India (supra) when no defect can be made out therein as a result of this review petition. 164. The contention that Section 97 could not have overruled the finding of fact relating to the actual exercise of jurisdiction in Canon India (supra) is untenable for the following reasons: (a) The argument that once a particular officer has exercised the function of assessment, it is a jurisdictional fact that has occurred to the exclusion of all other groups in the Customs Department and therefore, only that officer or his superiors, who had undertaken assessment under Section 17 in the first place, shall have the jurisdiction to issue notices for recovery of duty under Section 28, does not hold water. (b) As discussed above, the functions of assessment and re-assessment under Section 17 and the recovery of duty under Section 28 are distinct. Therefore, the exercise of functions under Section 17 can only act as a jurisdictional fact for the purpose of excluding the jurisdiction of other proper officers empowered under that section for the exercise of the rest of the functions specified there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should not be lightly interfered with. The consequences of such interdiction can have large-scale ramifications and can put the clock back for a number of years. The process of rationalisation station of the infirmities in the economy can be put in serious jeopardy and, therefore, it is necessary that while dealing with economic legislations, this Court, while not jettisoning its jurisdiction to curb arbitrary action or unconstitutional legislation, should interfere only in those few cases where the view reflected in the legislation is not possible to be taken at all. [Emphasis supplied] b) A Constitution Bench of this Court in the case of Shri Prithvi Cotton Mills Ltd. and Ors. v. Broach Borough Municipality Ors., reported in (1969) 2 SCC 283 set out the modus of validation of tax through validating statutes and observed as follows: 4. Validation of a tax so declared illegal may be done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometimes this is done by providing for jurisdiction where jurisdiction had not been properly invested before. Sometimes this is done by re-enacting retrospectively a v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such reasoning, we are of the view that Section 97 is not manifestly arbitrary and discriminatory and is not disproportional to the object sought to be achieved by it. 166. It is also the contention of the writ petitioners that Section 97 (iii) gives retrospective effect to the amendments made in Section 5 thereby making previous show cause notices subject to the provisions of the newly inserted provisions, i.e., sub-sections (4) and (5) of Section 5. It is their case that the previous notifications empowering DRI officers to issue show cause notices under Section 28 do not fulfil the mandate of Section 5(4) as they cannot be placed in any of the criteria envisaged therein. We find no merit in the said contention: a) Section 5(4) reads as follows: (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 noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the legislation, we should avoid a construction which would reduce the legislation to futility and should rather accept the bolder construction based on the view that Parliament would legislate only for the purpose of bringing about an effective result. [Emphasis supplied] f) A seven-Judge Bench of this Court in the case of Abhiram Singh v. C.D. Commachen (Dead) By Lrs. Ors., reported in (2017) 2 SCC 629 has held that: 36. The conflict between giving a literal interpretation or a purposive interpretation to a statute or a provision in a statute is perennial. It can be settled only if the draftsman gives a long-winded explanation in drafting the law but this would result in an awkward draft that might well turn out to be unintelligible. The interpreter has, therefore, to consider not only the text of the law but the context in which the law was enacted and the social context in which the law should be interpreted. This was articulated rather felicitously by Lord Bingham of Cornhill in R. (Quintavalle) v. Secy. of State for Health [R. (Quintavalle) v. Secy. of State for Health, 2003 UKHL 13 : (2003) 2 AC 687 : (2003) 2 WLR 692 (HL)] when it was said : (AC p. 695 C-H, paras 8-9) 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges. (ii) The petition seeking review of the decision in Canon India (supra) is allowed for the following reasons : a. Circular No. 4/99-Cus dated 15.02.1999 issued by the Central Board of Excise Customs, New Delhi which empowered the officers of DRI to issue show cause notices under Section 28 of the Act, 1962 as well as Notification No. 44/2011 dated 06.07.2011 which assigned the functions of the proper officer for the purposes of Sections 17 and 28 of the Act, 1962 respectively to the officers of DRI were not brought to the notice of this Court during the proceedings in Canon India (supra). In other words, the judgment in Canon India (supra) was rendered without looking into the circular and the notification referred to above thereby seriously affecting the correctness of the same. b. The decision in Canon India (supra) failed to consider the statutory scheme of Sections 2(34) and 5 of the Act, 1962 respectively. As a result, the decision erroneously recorded the finding that since DRI officers were not entrusted with the functions of a proper officer for the purposes of Section 28 in accordance with Section 6, they did not possess the jurisdiction to issue show cause notices fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is issued. It could be said that this policy provides a sufficient safeguard against the apprehension of the issuance of multiple show cause notices to the same assessee under Section 28 of the Act, 1962. Further, the High Court could not have applied the doctrine of harmonious construction to harmonise Section 28(11) with Explanation 2 because Section 28(11) and Explanation 2 operate in two distinct fields and no inherent contradiction can be said to exist between the two. Therefore, we set aside the decision in Mangali Impex (supra) and approve the view taken by the High Court of Bombay in the case of Sunil Gupta (supra). (v) Section 97 of the Finance Act, 2022 which, inter-alia, retrospectively validated all show cause notices issued under Section 28 of the Act, 1962 cannot be said to be unconstitutional. It cannot be said that Section 97 fails to cure the defect pointed out in Canon India (supra) nor is it manifestly arbitrary, disproportionate and overbroad, for the reasons recorded in the foregoing parts of this judgment. We clarify that the findings in respect of the vires of the Finance Act, 2022 is confined only to the questions raised in the petition seeking review of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility due to lack of jurisdiction of the proper officer to issue show cause notices, this Court or the respective High Court shall dispose of such appeals or writ petitions in accordance with the ruling in this judgment and restore such notices to the CESTAT for hearing the matter on merits. f. Where appeals against the orders-in-original involving issues pertaining to the jurisdiction of the proper officer to issue show cause notices under Section 28 are pending before the CESTAT, they shall now be decided in accordance with the observations made in this decision. 169. In view of the aforesaid, we allow the Review Petition No. 400/2021 titled Commissioner of Customs v. M/s Canon India Pvt. Ltd. and the connected Review Petition Nos. 401/2021, 402/2021 and 403/2021 insofar as the issue of jurisdiction of the proper officer to issue show cause notice under Section 28 is concerned. As discussed, the findings of this Court in Canon India (supra) in respect of the show cause notices having been issued beyond the limitation period remain undisturbed. 170. We set aside the decision of the High Court of Delhi rendered in the case of Mangali Impex (supra) and uphold the view taken by the H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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