M/S CANON INDIA PRIVATE LIMITED versus COMMISSIONER OF CUSTOMS on 9 March 2021

SUPREME COURT REPORTS

[2021] 3 S.C.R.

AM/S CANON INDIA PRIVATE LIMITED

v.

COMMISSIONER OF CUSTOMS

(Civil Appeal No.1827 of 2018)

BMARCH 09, 2021

[S.A. BOBDE, CJI, A. S. BOPANNA ANDV. RAMASUBRAMANIAN, JJ.]

Customs Act, 1962: s.28(4) – Consignment of cameras – Billof Entry submitted to Customs Authorities along with covering letterCand literature containing specifications of the cameras – Afterverification of the Bill of Entry by the Inspector and theSuperintendent, the Deputy Commissioner of Customs checked thegoods and took a decision to clear the goods on 24.3.2012, asbeing exempt from duty in terms of the Notification No.15/2012D(issued on 17.3.2012) – On 19.8.2014, show cause notice issuedunder s.28(4) by Additional Director General, Directorate ofRevenue Intelligence alleging that the Customs Authorities had beeninduced to clear the cameras by wilful mis-statement and suppressionof facts about the cameras – Whether the Directorate of RevenueIntelligence had authority in law to issue a show cause notice underEs.28(4) of the Act for recovery of duties allegedly not levied or paidwhen the goods have been cleared for import by a DeputyCommissioner of Customs who decided that the goods were exempted– Held: s.28(4) empowers the recovery of duty not paid, part paidor erroneously refunded by reason of collusion or any wilful mis-Fstatement or suppression of facts and confers the power of recoveryon “the proper officer” – The obvious intention is to confer thepower to recover such duties not on any proper officer but only on“the proper officer” – There is no doubt that, if Parliament intendedthat any proper officer could have exercised power under s.28(4),it could have used the word ‘any’ – Parliament has employed theGarticle “the” not accidentally but with the intention to designate theproper officer who had assessed the goods at the time of clearance– The proper officer need not be the very officer who cleared thegoods but may be his successor in office or any other officerauthorised to exercise the powers within the same office – The powerhas been so conferred specifically on “the proper officer” which H

must necessarily mean the proper officer who, in the first instance,assessed and cleared the goods i.e. the Deputy CommissionerAppraisal Group and not the Director General of the DRI.

Customs Act, 1962: s.28(4) – Power to review – The nature ofthe power to recover the duty, not paid or short paid after the goodshave been assessed and cleared for import, is broadly a power toreview the earlier decision of assessment – Such a power is notinherent in any authority – The power has been so conferredspecifically on “the proper officer” which must necessarily meanthe proper officer who, in the first instance, assessed and clearedthe goods – It is completely impermissible to allow an officer, whohas not passed the original order of assessment, to re-open theassessment on the grounds that the duty was not paid/not levied, bythe original officer who had decided to clear the goods and whowas competent and authorised to make the assessment – The natureof the power conferred by s.28(4) to recover duties which haveescaped assessment is in the nature of an administrative review ofan act – The section must, therefore, be construed as conferring thepower of such review on the same officer or his successor or anyother officer who has been assigned the function of assessment –In other words, an officer who did the assessment, could onlyundertake re-assessment – It is, therefore, clear that the AdditionalDirector General of DRI was not “the” proper officer to exercisethe power under s.28(4) and the initiation of the recoveryproceedings in this case is without any jurisdiction and liable to beset aside – Tax/Taxation.

Customs Act, 1962: s.6 – Import of cameras – DeputyCommissioner of Customs checked the goods and took a decisionto clear the goods as being exempt from duty – Show cause noticeissued under s.28(4) by Additional Director General, Directorateof Revenue Intelligence alleging that the Customs Authorities hadbeen induced to clear the cameras by wilful mis-statement andsuppression of facts about the cameras – Whether the AdditionalDirector General of the DRI was even a proper officer – Held: TheAdditional Director General can be considered to be a proper officeronly if it is shown that he was a Customs officer under the CustomsAct – It is obvious that the re-assessment and recovery of duties i.e.contemplated by s.28(4) is by the same authority and not by any ABC

D

E

F

G

H

Asuperior authority such as Appellate or Revisional Authority – It is,therefore, clear that the Additional Director General of DRI wasnot “the” proper officer to exercise the power under s.28(4) – If itwas intended that officers of the Directorate of Revenue Intelligencewho are officers of Central Government should be entrusted withfunctions of the Customs officers, it was imperative that the CentralBGovernment should have done so in exercise of its power under s.6of the Act – The entire proceeding in the present case initiated bythe Additional Director General of the DRI by issuing show causenotices in all the matters are invalid without any authority of lawand liable to be set-aside and the ensuing demands are also set-Caside.

Customs Act, 1962: s.28(4) – Limitation – Suppression of facts– Invocation of extended period of limitation – Held: On facts,importer had asked for a first check and had shown the camerasalong with Bill of Entry and literature detailing specifications ofDmodels – The custom authorities could have operated the camerasto see the length of time of the single sequence and whetherrecording of the single sequence exhausted the total memory of thecamera (including extended memory) and whether the cameras wereeligible for exemption – In such circumstances, it cannot be saidthat there was any wilful mis-statement of facts – It must, therefore,Efollow that the extended period of limitation of five years was notavailable to any authority to re-open under s.28(4).

Interpretation of statutes: It is well known that when a statutedirects that the things be done in a certain way, it must be done inthat way alone – Customs Act, 1962 – s.28(4).F

Interpretation of statutes: Use of article ‘the’ in a provision –Interpretation of the provision.

Allowing the appeals, the Court

HELD: 1.1 Section 28(4) of the Customs Act empowersGthe recovery of duty not paid, part paid or erroneously refundedby reason of collusion or any wilful mis-statement or suppressionof facts and confers the power of recovery on “the proper officer”.The obvious intention is to confer the power to recover suchduties not on any proper officer but only on “the proper officer”.[Para 9][786-B-C]H

Consolidated Coffee Ltd. and Another v. Coffee Board,Bangalore (1980) 3 SCC 358 : [1980] 3 SCR 625; ShriIshar Alloy Steels Ltd. v. Jayaswals Neco Ltd. (2001) 3SCC 609 : [2001] 2 SCR 36 – relied on.

1.2 There are only two articles ‘a (or an)’ and ‘the’. `A (oran)’ is known as the Indefinite Article because it does notspecifically refer to a particular person or thing. On the otherhand, ‘the’ is called the Definite Article because it points out andrefers to a particular person or thing. There is no doubt that, ifParliament intended that any proper officer could have exercisedpower under Section 28 (4), it could have used the word ‘any’.[Para 10][786-F-G]

1.3 Parliament has employed the article “the” notaccidentally but with the intention to designate the proper officerwho had assessed the goods at the time of clearance. It must beclarified that the proper officer need not be the very officer whocleared the goods but may be his successor in office or any otherofficer authorised to exercise the powers within the same office.In this case, anyone authorised from the Appraisal Group.Assessment is a term which includes determination of thedutiability of any goods and the amount of duty payable withreference to, inter alia, exemption or concession of customsduty vide Section 2 (2) (c) of the Customs Act, 1962. [Para 11][786-G-H; 787-A-B]

1.4 The nature of the power to recover the duty, not paidor short paid after the goods have been assessed and cleared forimport, is broadly a power to review the earlier decision ofassessment. 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 properofficer” which must necessarily mean the proper officer who, inthe first instance, assessed and cleared the goods i.e. the DeputyCommissioner Appraisal Group. Indeed, this must be so becauseno fiscal statute has been shown to us where the power to re-open assessment or recover duties which have escapedassessment has been conferred on an officer other than the officerof the rank of the officer who initially took the decision to assessthe goods. [Para 12][787-B-D]

A

BC

D

EF

G

H

A

A1.5 Where the statute confers the same power to performan act on different officers, as in this case, the two officers,especially when they belong to different departments, cannotexercise their powers in the same case. Where one officer hasexercised his powers of assessment, the power to order re-assessment must also be exercised by the same officer or hisBsuccessor and not by another officer of another department thoughhe is designated to be an officer of the same rank. This wouldresult into an anarchical and unruly operation of a statute whichis not contemplated by any canon of construction of statute.[Para 13][787-E-F]C

1.6 It is well known that when a statute directs that thethings be done in a certain way, it must be done in that way alone.As in this case, when the statute directs that “the proper officer”can determine duty not levied/not paid, it does not mean anyproper officer but that proper officer alone. It is completelyDimpermissible to allow an officer, who has not passed the originalorder of assessment, to re-open the assessment on the groundsthat the duty was not paid/not levied, by the original officer whohad decided to clear the goods and who was competent andauthorised to make the assessment. The nature of the powerconferred by Section 28 (4) to recover duties which have escapedEassessment is in the nature of an administrative review of an act.The section must therefore be construed as conferring the powerof such review on the same officer or his successor or any otherofficer who has been assigned the function of assessment. Inother words, an officer who did the assessment, could onlyFundertake re-assessment [which is involved in Section 28 (4)].[Para 14][788-A-C]

1.7 It is obvious that the re-assessment and recovery ofduties i.e. contemplated by Section 28(4) is by the same authorityand not by any superior authority such as Appellate or RevisionalGAuthority. It is, therefore, clear that the Additional DirectorGeneral of DRI was not “the” proper officer to exercise the powerunder Section 28(4) and the initiation of the recovery proceedingsin the present case is without any jurisdiction and liable to be setaside. [Para 15][788-D-E]

H

2. Whether the Additional Director General of the DRI whoissued the recovery notice under Section 28(4) was even a properofficer?

2.1 The Additional Director General can be considered tobe a proper officer only if it is shown that he was a Customs officerunder the Customs Act. In addition, that he was entrusted withthe functions of the proper officer under Section 6 of the CustomsAct. The Additional Director General of the DRI can be consideredto be a Customs officer only if he is shown to have been appointedas Customs officer under the Customs Act. [Para 16][788-F]

2.2 A Deputy Commissioner or Assistant Commissioner ofCustoms has been entrusted with the functions under Section28, vide Sl. No.3 above. By reason of the fact that the functionsare assigned to officers referred to in Column (3) and those officersabove the rank of officers mentioned in Column (2), theCommissioner of Customs would be included as an officer entitledto perform the function under Section 28 of the Act conferred ona Deputy Commissioner or Assistant Commissioner but thenotification appears to be ill-founded. The notification is purportedto have been issued in exercise of powers under sub-Section(34) of Section 2 of the Customs Act. This section does not conferany powers on any authority to entrust any functions to officers.The sub-Section is part of the definitions clause of the Act, itmerely defines a proper officer. Section 6 is the only Section whichprovides for entrustment of functions of Customs officer on otherofficers of the Central or the State Government or local authority.[Paras 19, 20][790-A-C, E]

2.3 If it was intended that officers of the Directorate ofRevenue Intelligence who are officers of Central Governmentshould be entrusted with functions of the Customs officers, itwas imperative that the Central Government should have doneso in exercise of its power under Section 6 of the Act. The reasonwhy such a power is conferred on the Central Government isobvious and that is because the Central Government is theauthority which appoints both the officers of the Directorate ofRevenue Intelligence which is set up under the Notification dated04.12.1957 issued by the Ministry of Finance and Customs officerswho, till 11.5.2002, were appointed by the Central Government.

AB

CD

EF

GH

AThe notification which purports to entrust functions as properofficer under the Customs Act has been issued by the CentralBoard of Excise and Customs in exercise of non-existing powerunder Section 2 (34) of the Customs Act. The notification isobviously invalid having been issued by an authority which hadno power to do so in purported exercise of powers under a sectionBwhich does not confer any such power. [Para 21][790-G-H;791-A-B]

Commissioner of Customs v. Sayed Ali and Another

(2011) 3 SCC 537 : [2011] 2 SCR 1045 – relied on.

2.4 The entire proceeding in the present case initiated byCthe Additional Director General of the DRI by issuing show causenotices in all the matters are invalid without any authority of lawand liable to be set-aside and the ensuing demands are also set-aside. [Para 23][793-E]

3.1 The show cause notice was issued on 19.8.2014. UnderDSection 28(4), such a show cause notice must be issued withinfive years from the relevant date which means the date on whichthe goods were assessed and cleared, in case the duty was notpaid or short paid or erroneously refunded by reason of collusionor any wilful mis-statement or suppression of facts. It is, therefore,necessary to examine whether there is suppression of facts.E[Para 24][793-F-G]

3.2 The case was presented for scrutiny of the Customsofficers on 20.3.2012 along with the Bill of Entry and literatureconsisting of specifications of the cameras. The Bill of Entry madea statement that these are Digital Still Image Video CameraFpacked for retail sale (COOLPIX S4300, S2600 etc.). This wassupported by literature which clearly stated that “… the singlemaximum recording time for a single movie is 29 minutes, evenwhen there is sufficient free space on the memory card for longerrecording”. This meant that even if the camera could record moreGthan 29 minutes when it had sufficient free space (which dependson the capacity of the card providing extended memory) themaximum time for which it could record a single sequence was29 minutes. [Paras 25, 26][793-H; 794-A-B]

3.3 In other words, the camera could record more than onesingle sequence but not 30 minutes and more in a single sequence.H

AB

It is obvious that the Deputy Commissioner took the view thatthe camera complied with the requirement of exemption i.e. itcould only record up to less than 30 minutes in a single sequence.At this juncture, it is not relevant to see whether the DeputyCommissioner was right or not in taking this decision to clearthe goods as exempted goods. What is important is to see whetherthe importers made any wilful mis-statement or suppression offacts and induced the delivery of goods. [Para 27][794-C-D]

3.4 The importer had asked for a first check and had shownthe cameras and the cameras were offered on 20.3.2012 alongwith Bill of Entry and literature detailing specifications of models.The camera could have been operated to see the length of timeof the single sequence and whether recording of the singlesequence exhausts the total memory of the camera (includingextended memory) and whether the cameras were eligible forexemption. It is difficult in such circumstances to infer that therewas any wilful mis-statement of facts. In these circumstances, itmust, therefore, follow that the extended period of limitation offive years was not available to any authority to re-open underSection 28(4). [Para 28][794-E-F]

C

D

Case Law Reference

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1827of 2018.

F

From the Judgment and Order No. 58448 of 2017 dated 19.12.2017of the Customs, Excise and Service Tax Appellate Tribunal, New Delhiin Customs Appeal No. 50099 of 2017.

With

G

Civil Appeal No. 1875, 1832, 3213 of 2018.

V. Lakshmikumaran, L. Badri Narayanan, Ms. CharanyaLakshmikumaran, Aditya Bhattacharya, Pavan Bhushan, Ms. UjwalaUppaluri, Ms. Apeksha Mehta, Ms. Mounica Kasturi, Sachin Sharma, H

ARupender Sinhmar, K. Gurumurthy, Ms. Udita Singh, Advs. for theAppellant.

Sanjay Jain, ASG, N. Venkataraman, ASG, A.K.Panda, Sr. Adv.,Ms. Nisha Bagchi, Merusagar Samantaray, Shovan Mishra, B.V.Balramdas, B. Krishna Prasad, Advs. for the Respondent.

B

The Judgment of the Court was delivered by

S. A. BOBDE, CJI

1. This batch of statutory appeals (being Civil Appeal Nos. 1827/2018, 1875/2018, 1832/2018 and 3213/2018) under Section 130E of theCCustoms Act, 1962 arises from a common final order of the CentralExcise and Service Tax Appellate Tribunal (‘CESTAT’) dated 19[th]December 2017 (‘impugned order’).

2. Vide the impugned order an exemption of basic customs dutyaccorded to the Digital Still Image Video Cameras (‘DSIC’) importedDby the Nikon India Pvt. Ltd, Canon India Pvt. Ltd., Sony India Pvt. Ltd.and Samsung India Electronics Pvt. Ltd (hereinafter referred to as‘appellants’ or ‘importers’), in terms of exemption Notification No. 20/2005 dated 01.03.2005 (as amended by Notification No. 15/2012 dated17.03.2012) came to be denied and the consequential confiscation ofgoods, demand of interest and imposition of penalty as provided for underEvarious sections of the Customs Act, 1962, was upheld by the CESTAT.

3. Since the appeals involve common questions, these are beingdecided together and for sake of convenience we shall be referring tothe events which took place in the case of Nikon.

4. The main issue is whether after clearance of the cameras onFthe basis that they were exempted from levy of basic Customs dutyunder Notification No.15/2012, the proceedings initiated by the Directorateof Revenue Intelligence for recovery of duty not paid under Section28(4) of the Customs Act, 1962 are valid in law.

Exemption NotificationG

5. Exemption to Digital Still Image Video Cameras was issued on1.3.2005 vide Notification No.25/2005 (and amended vide NotificationNo.15/2012 on 17.3.2012).

Arrival and decision to clear the goods on payment of nilHduty

6. The consignment of cameras arrived at Delhi on 15.3.2012.The importer submitted a Bill of Entry to the Customs Authorities on20.3.2012. Along with the Bill of Entry, the importer submitted a coveringletter and literature containing specifications of the cameras. Afterverification of the Bill of Entry by the Inspector and the Superintendent,the importer requested the Deputy Commissioner of Customs for a firstcheck on 21.3.2012. The Customs Authorities checked the goods on24.3.2012. They compared the goods with the description given in theliterature and took a decision to clear the goods on 24.3.2012, as beingexempt from duty in terms of the Notification No.15/2012 which wasissued on 17.3.2012.

Recovery of Duties

7. On 19.8.2014, a show cause notice was issued underSection 28 (4) of the Customs Act, 1962[1] alleging that the CustomsAuthorities had been induced to clear the cameras by wilful mis-statementand suppression of facts about the cameras. In particular; that the cameraswere capable of recording more than a single video sequence of lessthan 30 minutes. In other words, after one sequence of less than 30minutes was recorded, the camera had sufficient memory (extendable)to record more such sequences.

8. It is significant to note that while the decision to clear the goodsfor import because they were exempted from customs duties underNotification No.15/2012, was taken by Deputy Commissioner, AppraisalGroup, Delhi Air Cargo, the show cause notice was issued by theAdditional Director General, Directorate of Revenue Intelligence.

9. The question that arises is whether the Directorate of RevenueIntelligence had authority in law to issue a show cause notice under 1 Section 28 (4) Where any duty has not been [levied or not paid or has been short-levied or short-paid] 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 orexporter, the proper officer shall, within five years from the relevant date, serve noticeon the person chargeable with duty or interest which has not been [so levied or notpaid] or which has been so short-levied or short-paid or to whom the refund haserroneously been made, requiring him to show cause why he should not pay theamount specified in the notice.

A

B

C

D

E

F

G

H

ASection 28(4) of the Act for recovery of duties allegedly not levied orpaid when the goods have been cleared for import by a DeputyCommissioner of Customs who decided that the goods are exempted. Itis necessary that the answer must flow from the power conferred bythe statute i.e. under Section 28(4) of the Act. This Section empowersthe recovery of duty not paid, part paid or erroneously refunded by reasonBof collusion or any wilful mis-statement or suppression of facts and confersthe power of recovery on “the proper officer”. The obvious intention isto confer the power to recover such duties not on any proper officer butonly on “the proper officer”. This Court in Consolidated Coffee Ltd.

and Another vs. Coffee Board, Bangalore[2] has held:-C“14. ...Secondly, and more importantly, the user of the definitearticle ‘the’ before the word ‘agreement’ is, in our view, verysignificant. Parliament has not said ‘an agreement’ or ‘anyagreement’ for or in relation to such export and in the contextthe expression ‘the agreement’ would refer to that agreementDwhich is implicit in the sale occasioning the export.”

In Shri Ishar Alloy Steels Ltd. vs. Jayaswals Neco Ltd.[3] has held:- “9. ...’The’ is the word used before nouns, with a specifyingor particularising effect as opposed to the indefinite orEgeneralizing force of ‘a’ or ‘an’. It determines what particularthing is meant; that is, what particular thing we are to assumeto be meant. ‘The’ is always mentioned to denote a particularthing or a person.”

10. There are only two articles ‘a (or an)’ and ‘the’. `A (or an)’ isFknown as the Indefinite Article because it does not specifically refer toa particular person or thing. On the other hand, ‘the’ is called the DefiniteArticle because it points out and refers to a particular person or thing.There is no doubt that, if Parliament intended that any proper officercould have exercised power under Section 28 (4), it could have used theGword ‘any’.

11. Parliament has employed the article “the” not accidently butwith the intention to designate the proper officer who had assessed thegoods at the time of clearance. It must be clarified that the proper officer 2 (1980) 3 SCC 358H3 (2001) 3 SCC 609

need not be the very officer who cleared the goods but may be hissuccessor in office or any other officer authorised to exercise the powerswithin the same office. In this case, anyone authorised from the AppraisalGroup. Assessment is a term which includes determination of thedutiability of any goods and the amount of duty payable with referenceto, inter alia, exemption or concession of customs duty vide Section 2 (2)(c) of the Customs Act, 1962[4].

12. The nature of the power to recover the duty, not paid or shortpaid after the goods have been assessed and cleared for import, is broadlya power to review the earlier decision of assessment. Such a power isnot inherent in any authority. Indeed, it has been conferred by Section 28and other related provisions. The power has been so conferred specificallyon “the proper officer” which must necessarily mean the proper officerwho, in the first instance, assessed and cleared the goods i.e. the DeputyCommissioner Appraisal Group. Indeed, this must be so because no fiscalstatute has been shown to us where the power to re-open assessment orrecover duties which have escaped assessment has been conferred onan officer other than the officer of the rank of the officer who initiallytook the decision to assess the goods.

13. Where the statute confers the same power to perform an acton different officers, as in this case, the two officers, especially whenthey belong to different departments, cannot exercise their powers inthe same case. Where one officer has exercised his powers ofassessment, the power to order re-assessment must also be exercisedby the same officer or his successor and not by another officer of anotherdepartment though he is designated to be an officer of the same rank. Inour view, this would result into an anarchical and unruly operation of astatute which is not contemplated by any canon of construction of statute.

4 Section 2. Definitions – In this Act, unless the context otherwise requires, - …

(2) “assessment” means determination of the dutiability of any goods and theamount of duty, tax, cess or any other sum so payable, if any, under this Act or underthe Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as the CustomsTariff 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, consequentupon any notification issued therefor under this Act or under the Customs Tariff Act orunder any other law for the time being in force; A

B

C

D

E

F

G

H

A14. It is well known that when a statute directs that the things bedone in a certain way, it must be done in that way alone. As in this case,when the statute directs that “the proper officer” can determine dutynot levied/not paid, it does not mean any proper officer but that properofficer alone. We find it completely impermissible to allow an officer,who has not passed the original order of assessment, to re-open theBassessment on the grounds that the duty was not paid/not levied, by theoriginal officer who had decided to clear the goods and who wascompetent and authorised to make the assessment. The nature of thepower conferred by Section 28 (4) to recover duties which have escapedassessment is in the nature of an administrative review of an act. TheCsection must therefore be construed as conferring the power of suchreview on the same officer or his successor or any other officer whohas been assigned the function of assessment. In other words, an officerwho did the assessment, could only undertake re-assessment [which isinvolved in Section 28 (4)].15. It is obvious that the re-assessment and recovery of duties i.e.Dcontemplated by Section 28(4) is by the same authority and not by anysuperior authority such as Appellate or Revisional Authority. It is, therefore,clear to us that the Additional Director General of DRI was not “the”proper officer to exercise the power under Section 28(4) and the initiationof the recovery proceedings in the present case is without any jurisdictionEand liable to be set aside.

16. At this stage, we must also examine whether the AdditionalDirector General of the DRI who issued the recovery notice under Section28(4) was even a proper officer. The Additional Director General canbe considered to be a proper officer only if it is shown that he was aFCustoms officer under the Customs Act. In addition, that he was entrustedwith the functions of the proper officer under Section 6 of the CustomsAct. The Additional Director General of the DRI can be considered tobe a Customs officer only if he is shown to have been appointed asCustoms officer under the Customs Act.

17. Shri Sanjay Jain, learned Additional Solicitor General, reliedGon a Notification No.17/2002 - Customs (NT) dated 7.3.2002 to showall Additional Directors General of the DRI have been appointed asCommissioners of Customs. At the relevant time, the Central Governmentwas the appropriate authority to issue such a notification. This notificationshows that all Additional Directors General, mentioned in Column (2),Hare appointed as Commissioners of Customs.

18. The next step is to see whether an Additional Director Generalof the DRI who has been appointed as an officer of Customs, under thenotification dated 7.3.2002, has been entrusted with the functions underSection 28 as a proper officer under the Customs Act. In support of thecontention that he has been so entrusted with the functions of a properofficer under Section 28 of the Customs Act, Shri Sanjay Jain, learnedAdditional Solicitor General relied on a Notification No.40/2012 dated2.5.2012 issued by the Central Board of Excise and Customs. Thenotification confers various functions referred to in Column (3) of thenotification 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 II, Section 3, Sub-section (ii)]

Government of India

Ministry of Finance

(Department of Revenue)

Notification No.40/2012-Customs (N.T.)

New Delhi, dated the 2[nd] May, 2012

S.O. (E). – In exercise of the powers conferred by sub-section(34) of section 2 of the Customs Act, 1962 (52 of 1962), theCentral Board of Excise and Customs, hereby assigns theofficers and above the rank of officers mentioned in Column(2) of the Table below, the functions as the proper officers inrelation to the various sections of the Customs Act, 1962, givenin the corresponding entry in Column (3) of the said Table: - A

B

C

D

E

F

G

H

A19. It appears that a Deputy Commissioner or AssistantCommissioner of Customs has been entrusted with the functions underSection 28, vide Sl. No.3 above. By reason of the fact that the functionsare assigned to officers referred to in Column (3) and those officersabove the rank of officers mentioned in Column (2), the Commissionerof Customs would be included as an officer entitled to perform theBfunction under Section 28 of the Act conferred on a Deputy Commissioneror Assistant Commissioner but the notification appears to be ill-founded.The notification is purported to have been issued in exercise of powersunder sub-Section (34) of Section 2 of the Customs Act. This sectiondoes not confer any powers on any authority to entrust any functions toCofficers. The sub-Section is part of the definitions clause of the Act, itmerely defines a proper officer, it reads as follows:- “2. Definitions – In this Act, unless the context otherwiserequires, - D…

(34) ‘proper officer’, in relation to any functions to beperformed under this Act, means the officer of customs whois assigned those functions by the Board or the [PrincipalCommissioner of Customs or Commissioner of Customs]. “

E20. Section 6 is the only Section which provides for entrustmentof functions of Customs officer on other officers of the Central or theState Government or local authority, it reads as follows:- “6. Entrustment of functions of Board and customs officerson certain other officers – The Central Government may, byFnotification in the Official Gazette, entrust either conditionallyor unconditionally to any officer of the Central or the StateGovernment or a local authority any functions of the Boardor any officer of customs under this Act.”

21. If it was intended that officers of the Directorate of RevenueIntelligence who are officers of Central Government should be entrustedGwith functions of the Customs officers, it was imperative that the CentralGovernment should have done so in exercise of its power under Section6 of the Act. The reason why such a power is conferred on the CentralGovernment is obvious and that is because the Central Government isthe authority which appoints both the officers of the Directorate ofHRevenue Intelligence which is set up under the Notification dated 04.12.1957 issued by the Ministry of Finance and Customs officers who,till 11.5.2002, were appointed by the Central Government. The notificationwhich purports to entrust functions as proper officer under the CustomsAct has been issued by the Central Board of Excise and Customs inexercise of non-existing power under Section 2 (34) of the CustomsAct. The notification is obviously invalid having been issued by anauthority which had no power to do so in purported exercise of powersunder a section which does not confer any such power.

22. In the above context, it would be useful to refer to the decisionof this Court in the case of Commissioner of Customs vs. Sayed Aliand Another[5] wherein the proper officer in respect of the jurisdictionalarea was considered. The consideration made is as hereunder:-

“16. It was submitted that in the instant case, the importmanifest and the bill of entry were filed before the AdditionalCollector of Customs (Imports), Mumbai; the bill of entry wasduly assessed, and the benefit of the exemption was extended,subject to execution of a bond by the importer which wasduly executed undertaking the obligation of export. Thelearned counsel argued that the function of the preventivestaff is confined to goods which are not manifested as inrespect of manifested goods, where the bills of entry are to befiled, the entire function of assessment, clearance, etc. iscarried out by the appraising officers functioning under theCommissioner of Customs (Imports).

17. Before adverting to the rival submissions, it would beexpedient to survey the relevant provisions of the Act. Section28 of the Act, which is relevant for our purpose, provides forissue of notice for payment of duty that has not been paid, orhas been short-levied or erroneously refunded, and providesthat:

“28. Notice for payment of duties, interest, etc. – (1) Whenany duty has not been levied or has been short-levied orerroneously refunded, or when any interest payable hasnot been paid, part paid or erroneously refunded, theproper officer may,- A

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(a) in the case of any import made by any individualfor his personal use or by Government or by anyeducational, research or charitable institution orhospital, within one year; (b) in any other case, within six months, from the relevant date, serve notice on the personchargeable with the duty or interest which has not beenlevied or charged or which has been so short-levied orpart paid or to whom the refund has erroneously beenmade, requiring him to show cause why he should not paythe amount specified in the notice:

Provided that where any duty has not been levied orhas been short-levied or the interest has not been chargedor has been part paid or the duty or interest has beenerroneously refunded by reason of collusion or any wilfulmis-statement or suppression of facts by the importer orthe exporter or the agent or employee of the importer orexporter, the provisions of this sub-section shall have effectas if for the words ‘one year’ and ‘six months’, the words‘five years’ were substituted.”

18. It is plain from the provision that the ‘proper officer’ beingsubjectively satisfied on the basis of the material that may bewith him that customs duty has not been levied or short leviedor erroneously refunded on an import made by any individualfor his personal use or by the Government or by anyeducational, research or charitable institution or hospital,within one year and in all other cases within six months fromthe relevant date, may cause service of notice on the personchargeable, requiring him to show cause why he should notpay the amount specified in the notice. It is evident that thenotice under the said provision has to be issued by the ‘properofficer’.

19. Section 2(34) of the Act defines a ‘proper officer’, thus:

‘2. Definitions.-

(34) ‘proper officer’, in relation to any functions to beperformed under this Act, means the officer of customs who is assigned those functions by the Board or theCommissioner of Customs;’

It is clear from a mere look at the provision that only suchofficers of customs who have been assigned specific functionswould be ‘proper officers’ in terms of Section 2(34) the Act.Specific entrustment of function by either the Board or theCommissioner of Customs is therefore, the governing test todetermine whether an ‘officer of customs’ is the ‘properofficer’.

20. From a conjoint reading of Sections 2(34) and 28 of theAct, it is manifest that only such a Customs Officer who hasbeen assigned the specific functions of assessment and re-assessment of duty in the jurisdictional area where the importconcerned has been affected, by either the Board or theCommissioner of Customs, in terms of Section 2(34) of theAct is competent to issue notice undersection 28 of the Act.Any other reading of Section 28 would render the provisionsof Section 2(34) of the Act otiose inasmuch as the testcontemplated under Section 2(34) of the Act is that of specificconferment of such functions.”

23. We, therefore, hold that the entire proceeding in the presentcase initiated by the Additional Director General of the DRI by issuingshow cause notices in all the matters before us are invalid without anyauthority of law and liable to be set-aside and the ensuing demands arealso set-aside.

Limitation

24. It is strictly not necessary to decide the question on limitationbut we intend to do so since parties have elaborately relied on disclosuresmade before the Customs officer on that issue. The show cause noticewas issued on 19.8.2014. Under Section 28(4), such a show cause noticemust be issued within five years from the relevant date which means thedate on which the goods were assessed and cleared, in case the dutywas not paid or short paid or erroneously refunded by reason of collusionor any wilful mis-statement or suppression of facts. It is, therefore,necessary for us to examine whether there is suppression of facts.

25. The case was presented for scrutiny of the Customs officerson 20.3.2012 along with the Bill of Entry and literature consisting ofspecifications of the cameras.

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A26. The Bill of Entry made a statement that these are Digital StillImage Video Camera packed for retail sale (COOLPIX S4300, S2600etc.). This was supported by literature which clearly stated that “… thesingle maximum recording time for a single movie is 29 minutes, evenwhen there is sufficient free space on the memory card for longerrecording”. This meant that even if the camera could record more thanB29 minutes when it had sufficient free space (which depends on thecapacity of the card providing extended memory) the maximum time forwhich it could record a single sequence was 29 minutes.

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27. In other words, the camera could record more than one singlesequence but not 30 minutes and more in a single sequence. It is obviousCthat the Deputy Commissioner took the view that the camera compliedwith the requirement of exemption i.e. it could only record up to lessthan 30 minutes in a single sequence. At this juncture, it is not relevant tosee whether the Deputy Commissioner was right or not in taking thisdecision to clear the goods as exempted goods. What is important is toDsee whether the importers made any wilful mis-statement or suppression of facts and induced the delivery of goods.

of facts and induced the delivery of goods.

28. It is pertinent to note that the importer had asked for a firstcheck and had shown the cameras and the cameras were offered on20.3.2012 along with Bill of Entry and literature detailing specificationsEof models. The camera could have been operated to see the length oftime of the single sequence and whether recording of the single sequenceexhausts the total memory of the camera (including extended memory)and whether the cameras were eligible for exemption. It is difficult insuch circumstances to infer that there was any wilful mis-statement offacts. In these circumstances, it must, therefore, follow that the extendedFperiod of limitation of five years was not available to any authority to re-open under Section 28(4).

29. In this view of the matter, we consider it unnecessary to answerthe issue whether the cameras that were cleared on the basis that theywere exempted from customs duty under Exemption Notification No.15/G2012 were in fact eligible for the exemption or not. The goods must betaken to have been validly cleared by the Customs officer.

30. We might note that cameras with similar specifications havebeen treated as exempted under the Explanatory Note to the CombinedNomenclature of the European communities. It is important to add thatH

M/S CANON INDIA PRIVATE LIMITED v. COMMISSIONEROF CUSTOMS [S. A. BOBDE, CJI]

the same cameras have been considered to be eligible for exemptionbefore 17.03.2012 and after 30.04.2015 under the exemption Notificationsissued under the Customs Act read with Chapter 84 & 85 (First Schedule)of Customs Tariff Act, 1975.

31. In the result, these appeals are allowed. The common orderdated 19.12.2017 passed by the CESTAT, New Delhi in Customs AppealNos. 50098, 50099, 50100 and 50280/2017 is set aside. Consequently,the impugned demand notices issued against all the three appellants hereinare also set aside.

32. Parties to bear their own costs.

Devika Gujral

Appeals allowed.

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