DRI Not 'Proper Officer' Under Section 28(4) Customs Act; Has No Power To Recover Duties : Supreme Court

The Supreme Court has held that the officers of Directorate of Revenue Intelligence(DRI) are not 'proper officers' within the meaning of Section 28(4) of the Customs Act, who are empowered to undertake process or recovery of duties.

The Court observed that only an officer who did the assessment, can undertake re-assessment under Section 28 (4) of the Customs Act.

The issue considered by the Court in this case was whether the Directorate of Revenue Intelligence had authority in law to issue a show cause notice under Section 28(4) of the 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.  In this case, a show cause notice was issued under Section 28 (4) to Canon India Private Limited alleging that the Customs Authorities had been induced to clear the cameras by wilful mis-statement and suppression of facts about the cameras.

Section 28(4) empowers the recovery of duty not paid, part paid or erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts and confers the power of recovery on "the proper officer".

The bench comprising CJI SA Bobde, AS Bopanna and V. Ramasubramanian observed that where one officer has exercised his powers of assessment, the power to order re-assessment must also be exercised by the same officer or his successor and not by another officer of another department though he is designated to be an officer of the same rank. In our view, this would result into an anarchical and unruly operation of a statute which is not contemplated by any canon of construction of statute, the bench observed.  Referring to the provisions of the Act, the bench observed:

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 re-open assessment or recover duties which have escaped assessment has been conferred on an officer other than the officer of the rank of the officer who initially took the decision to assess the goods...

We find it completely impermissible to allow an officer, who has not passed the original order of assessment, to re-open the assessment on the grounds that the duty was not paid/not levied, by the original officer who had decided to clear the goods and who was competent and authorised to make the assessment. The nature of the power conferred by Section 28 (4) to recover duties which have escaped assessment is in the nature of an administrative review of an act. The 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)].

The court therefore held that the Additional Director General of DRI was not "the" proper officer to exercise the power under Section 28(4) and the initiation of the recovery proceedings in the present case is without any jurisdiction and liable to be set aside. The court also considered the matter on merits and allowed the appeal.

Case: Canon India Private Limited Vs. Commissioner Of Customs [CA 1827 OF 2018]
Coram: CJI SA Bobde, AS Bopanna and V. Ramasubramanian
Citation: LL 2021 SC 152

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