Canon India (P.) Ltd. v. Commissioner of Customs – [2021] 125 taxmann.com 188 (SC)

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

The Hon’ble Apex Court observed that Section 28(4) (supra) empowers the recovery of duty not paid, part paid or erroneously refunded by reason of collusion or any wilful misstatement or suppression of facts and confers the power of recovery on ‘the proper officer’.

When the statute directs that ‘the proper officer’ can determine duty not levied/not paid, it does not mean any proper officer but that proper officer alone. It is completely impermissible to allow an officer, who has not passed the original order of assessment, to re-open the assessment on the grounds that the duty was not paid/not levied, by the original officer who had decided to clear the goods and who was competent and authorised to make the assessment. The 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.

Further, ‘proper officer’, has been defined under Section 2(34) of the Customs Act, as the officer of customs who is assigned those functions by the Board or the Commissioner of Customs. From a conjoint reading of Sections 2(34) and 28 of the Customs Act, it is derived that only such a Customs officer who has been assigned the specific functions of assessment and reassessment of duty in the jurisdictional area where the import concerned has been affected is competent to issue notice under Section 28 of the Customs Act.

Given the above, the Hon’ble Apex Court held that the show cause notices issued by the Additional Director General of the DRI in the given case are invalid and were without any authority of law. Hence, such notices and ensuing demands are set-aside.

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