The Supreme Court while giving relief to Canon India ruled that Additional Director General of the Directorate of Revenue Intelligence (DRI) was not the proper officer to exercise the power under Section 28(4) and initiate recovery proceedings.
The appellant, Canon India filed the batch of statutory appeals under Section 130E of the Customs Act, 1962 arising from a common final order of the Central Excise and Service Tax Appellate Tribunal (CESTAT).
A show cause notice was issued under Section 28 (4) of the Customs Act, 1962 alleging that the Customs Authorities had been induced to clear the cameras by wilful mis-statement and suppression of facts about the cameras. In particular; that the cameras were capable of recording more than a single video sequence of less than 30 minutes.
In other words, after one sequence of less than 30 minutes was recorded, the camera had sufficient memory (extendable) to record more such sequences.
While the decision to clear the goods for import because they were exempted from customs duties under Notification No.15/2012, was taken by Deputy Commissioner, Appraisal Group, Delhi Air Cargo, the show cause notice was issued by the Additional Director General, Directorate of Revenue Intelligence.
The question that arises is 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. It is necessary that the answer must flow from the power conferred by the statute i.e. under Section 28(4) of the Act.
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 obvious intention is to confer the power to recover such duties not on any proper officer but only on “the proper officer”.
The three judge bench headed by the CJI, S.A.Bobde noted that parliament has employed the article “the” not accidental but with the intention to designate the proper officer who had assessed the goods at the time of clearance.
It must be clarified that the proper officer need not be the very officer who cleared the goods but maybe his successor in office or any other officer authorised to exercise the powers within the same office. In this case, anyone authorised from the Appraisal Group.
Assessment is a term that includes determination of the duty of any goods and the amount of duty payable with reference to, inter alia, exemption or concession of customs duty vide Section 2 (2) (c) of the Customs Act, 1962. The Apex court 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.
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