Punjab-Haryana High Court
Gursam International vs Commissioner Of Customs, Ludhiana on 9 January, 2025
Author: Sudeepti Sharma
Bench: Arun Palli, Sudeepti Sharma
CUSAP-8-2021
2021 and Connected Cases -1-
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
-.-
Decided on 09.01.2025
1. CUSAP-88-2021 (O&M)
Gursam International ....Appellant
VERSUS
Commissioner of Customs ....Respondent
2. CUSAP-12
12-2016 (O&M)
M/s Sundesh Springs Pvt. Ltd. ....Appellant
VERSUS
Commissioner of Customs ....Respondent
3. CUSAP-11-2017 (O&M)
M/s Girnar Impex Ltd. ....Appellant
VERSUS
Commissioner of Customs ....Respondent
4. CUSAP-66-2016 (O&M)
M/s Siri Amar Exports. ....Appellant
VERSUS
Commissioner of Customs ....Respondent
5. CUSAP-88-2016 (O&M)
Adhishwar Jain ....Appellant
VERSUS
Commissioner of Customs ....Respondent
CORAM : HON'BLE MR. JUSTICE ARUN PALLI
HON'BLE MRS. JUSTICE SUDEEPTI SHARMA
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Present: For the Appellants
Mr. Anurag Sharma, Advocate
Mr. Deepak Gupta, Advocate
For the respondents
Mr. Sourabh Goel, Sr. Standing Counsel with
Ms. Geetika Sharma, Advocate for the respondents
respondents-DRI.
Mr. Rajesh Sethi, Advocate for the respondents
respondents-Customs
-.-
SUDEEPTI SHARMA, J.
1. Since common question of law is involved in the above-numbered
numbered
appeals,, therefore, we decide these appeals vide this common judgment.
2. The challenge in the present appeals under Section 130 of the
Customs Act, 1962 is to the orders passed in the appeals by the learned Customs,
Excise and Service Tax Appellate Tribunal
Tribu (CESTAT)
(CESTAT),, whereby the appellants are
directed to deposit 25% of the penalty as pre-deposit
pre deposit to hear the appeals, on the
ground that the show cause notices issued under Section 28 of the Customs Act,
1962, are without jurisdiction,
jurisdiction in view of judgment pa
passed
ssed by the Hon’ble Supreme
Court in M/s Canon India Private Limited Vs. Commissioner of Customs [2021
SCC Online SC 200] Civil Appeal No.1827
.1827 of 2018 decided on 09.03.2021.
3. Relevant portion of the judgment of Hon’ble Supreme Court in the
case of M/s Canon India Private Limited (supra)
(supra), is reproduced as under:-
“4.
4. The main issue is whether after clearance of the cameras on the
basis that they were exempted from levy of basic Customs duty
under Notification No.15/2012, the proceedings initiated by the
Directorate of Revenue Intelligence for recovery of duty not paid
under section 28(4) of the Customs Act, 1962 are valid in law
law.
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9. 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
must flow from the power conferred by
the statute i.e. under Section 28(4) of the Act. This Section empowers
the recovery of duty not paid, part paid or erroneously refunded by
reason of collusion or any wilful mis
mis-statement or suppression of facts
and confers
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”. This Court in
Consolidated Coffee Ltd. and Another v. Coffee Board, Bangalore,
(1980) 3 SCC 358 has held:-
“14. …Secondly, and more importantly, the user of the definite
article `the’ before the word `agreement’ is, in our view, very
significant. Parliament has not said `an agreement’ or `any
agreement’ for or in relation to such export and in the context
the expression `the agreement’ would refer to that agreement
which is implicit in the sale occasioning the export.”
In Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd., (2001) 3 SCC
609 has held:-
“9. …’The’ is the word used before nouns, with a specifying or
particularising effect as opposed to the indefinite or
generalizing force of `a’ or `an’. It determines what particular
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thing is meant; that is, what particular thing we are to assume
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thing or a person.”
* * * * *
16. At this stage, we must also examine whether the Additional
Director General of the DRI who issued the recovery notice under
Section 28(4) was even a proper officer. The Additional Dire
Director
ctorGeneral can be considered to be a proper officer only if it is shown
that he was a Customs officer under the Customs Act. In addition, that
he was entrusted with the functions of the proper officer under section
6 of the Customs Act. The Additional Di
Director
rector General of the DRI canbe considered to be a Customs officer only if he is shown to have been
appointed as Customs officer under the Customs Act.
* * * * *
18.. The next step is to see whether an Additional Director General of
the DRI who has been appointed as an officer of Customs, under the
notification dated 7.3.2002, has been entrusted with the functions
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:-
follows:
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“[To be published in the Gazette of India, Extraordinary, Part II,
Section 3, Sub-section
Sub (ii)]Government of India
Ministry of Finance
(Department of Revenue)
Notification No.40/2012
No.40/2012-Customs (N.T.)New Delhi, dated the 2nd May, 2012
S.O. (E). – In exercise of the powers conferred by sub
sub-section
section (34) ofsection 2 of the Customs Act, 1962 (5
(52
2 of 1962), the Central Board ofExcise 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
g in the corresponding entry in Column (3) of the saidTable: –
Sr. Designation of the Functions under Section of the
No. officers Customs Act, 1962
(1) (2) (3)1 Commissioner of Customs (i) Section 33
2. Additional Commissioner (i) Sub-section(5)
section(5) of Section 46;
or Joint Commissioner of and
Customs (ii) Section 149
3. Deputy Commissioner or (i) ....
Assistant Commissioner of (ii)....
Customs and Central (iii)....
Excise (iv)....
(v)....
(vi) Section 28; .....
19. It appears that a Deputy Commissioner or Assistant
Commissioner of Customs has been entrusted with the functions under
Section 28, vide Sl. No.3 above. By reason of the fact that the
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functions are assigned to officers referred to in Column (3) and those
officers
fficers above the rank of officers mentioned in Column (2), the
Commissioner of Customs would be included as an officer entitled to
perform the function under Section 28 of the Act conferred on a
Deputy Commissioner or Assistant Commissioner but the notification
cation
appears to be ill-founded.
ill founded. The notification is purported to have been
issued in exercise of powers under sub
sub-Section
Section (34) of section 2 of the
Customs Act. This section does not confer any powers on any
authority to entrust any functions to officers. The sub-Section is part
of the definitions clause of the Act, it merely defines a proper officer,
it reads as follows:-
follows:
“2.
2. Definitions – In this Act, unless the context otherwise requires, –
…
(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 [Principal Commissioner of Customs or
Commissioner of Customs].”
20. Section 6 is the only Section which provides for entrustment of
functions of Customs
Cus officer on other officers of the Central or the
State Government or local authority, it reads as follows:
follows:-
“6.
6. Entrustment of functions of Board and customs officers on
certain other officers – The Central Government may, by notification
in the Official
Official Gazette, entrust either conditionally or unconditionallyto any officer of the Central or the State Government or a local
authority any functions of the Board or any officer of customs under
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this Act.”
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21.. If it was intended that officers of the Directo
Directorate
rate of Revenue
Intelligence who are officers of Central Government should be
entrusted with functions of the Customs officers, it was imperative
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 04.12.1957
04.12.1957 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
Board of Excise and Customs in exercise of non
non-existing
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
es 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 wherein the proper officer in respect of
the jurisdictional area was considered. The consideration made is as
hereunder:
hereunder:-
“16. It was submitted that in the instant case, the import
manifest and the bill of entry were filed before the Additional
Collector of Customs (Imports), Mumbai; the bill of entry was
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duly assessed,
ssed, and the benefit of the exemption was extended,
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executed undertaking the obligation of export. The learned
counsel argued that the function of the preventive staff is
confined to goods whichh are not manifested as in respect of
manifested goods, where the bills of entry are to be filed, the
entire function of assessment, clearance, etc. is carried out by
the appraising officers functioning under the Commissioner of
Customs (Imports).
17. Before adverting to the rival submissions, it would be
expedient to survey the relevant provisions of the Act. Section
28 of the Act, which is relevant for our purpose, provides for
issue of notice for payment of duty that has not been paid, or
has been short-levied
levied or erroneously refunded, and providesthat:
“28.
28. Notice for payment of duties, interest, etc. – (1) When any
duty has not been levied or has been short-levied
levied orerroneously refunded, or when 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 so
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short-levied
levied or part paid or to whom the refund has erroneously
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been made, requiring him to show ccause
ause why he should not pay
the amount specified in the notice:
Provided that where any duty has not been levied or has been
short-levied
levied or the interest has not been charged or has beenpart paid or the duty or interest has been erroneously refunded
by reason
son of collusion or any wilful mis
mis-statement
statement orsuppression of facts by the importer or the exporter or the
agent or employee of the importer or exporter, the provisions of
this subsection shall have effect as 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’ being
subjectively satisfied on the basis of the material that may be
with him that customs duty has not been levied or short levied
or erroneously refunded
ded on an import made by any individualfor 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
otice on the personchargeable, 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
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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 therefo
therefore, the governing test to
determine whether an `officer of customs’ is the `proper officer’.
20. From a conjoint reading of Sections 2(34) and 28 of the
Act, it is manifest that only such a Customs Officer who has
been assigned the specific functions of as
assessment
sessment and
reassessment of duty in the jurisdictional area where the import
concerned has been affected, by either the Board or the
Commissioner of Customs, in terms of Section 2(34) of the Act
is competent to issue notice under Section
ection 28 of the Act. Any
An
other reading of Section 28 would render the provisions of
Section 2(34) of the Act otiose inasmuch as the test
contemplated under Section 2(34) of the Act is that of specific
conferment of such functions.”
23.. We, therefore, hold that the entire proceeding in the present case
initiated by the Additional Director General of the DRI by issuing
show cause notices in all the matters before us are invalid without
any authority of law and liable to be set
set-aside
aside and the ensuing
demands are also set-aside.”
set
4. Hon’ble Supreme Court in the case of M/s Canon India Private
Limited (supra) held that the show cause notices in all the matters are invalid,
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without any authority of law and liable to be set aside and the ensuing demands are
also set aside.
5. The Commissioner of Customs filed Review Petition
etition No.400 of 2021
of Civil appeal No. 1827 of 2018 titled as Commissioner of Customs Vs. M/s
Canon India Pvt. Ltd.
Ltd [2024 SCC Online SC 3188]
3188], and the same was decided on
07.11.2024. The relevant portion of the
the same is reproduced as under:
under:-
“F.
F. CONCLUSION
168. In view of the aforesaid discussion, we conclude that:
(i) DRI officers came to be appointed as the officers of customs vide
Notification No. 19/90-Cus
19/90 (N.T.) dated 26.04.1990 issued by theDepartment 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.
chang
(ii) The petition seeking review of the decision in Canon India (supra)
is allowed for the following reasons:
a. Circular No. 4/99-Cus
4/99 Cus dated 15.02.1999 issued by the CentralBoard of Excise & Customs, New Delhi which empowered the officers
of DRI to issue
issue show cause notices under Section 28 of the Act, 1962as 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 weree not
brought to the notice of this Court during the proceedings in Canon
India (supra). In other words, the judgment in Canon India (supra)
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was rendered without looking into the circular and the notification
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referred to above thereby seriously affecting the correctness of the
same
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
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 for the recovery of
duty under Section 28 of the Act, 1962.
c. The reliance placed
placed in Canon India (supra) on the decision in
Sayed Ali (supra) is misplaced for two reasons – first, Sayed Ali
(supra) dealt with the case of officers of customs (Preventive), who,
on the date of the decision in Sayed Ali (supra) were not empowered
to issue show cause notices under Section 28 of the Act, 1962 unlike
the officers of DRI; and secondly, the decision in Sayed Ali (supra)
took into consideration Section 17 of the Act, 1962 as it stood prior to
its amendment by the Finance Act, 2011. However, the assessment
orders, in respect of which the show cause notices under challenge in
Canon India (supra) were issued, were passed under Section 17 of the
Act, 1962 as amended by the Finance Act, 2011.
(iii) This Court in Canon India (supra) based its judgment on two
grounds:
(1) the show cause notices issued by the DRI officers were invalid for
want of jurisdiction; and (2) the show cause notices were issued after
the expiry of the prescribed limitation period. In the present judgment,
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we have only considered and
and reviewed the decision in Canon India
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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
India (supra) on the aspect of limitation have neither beenconsidered 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.
(iv) The Delhi High Court in Mangali Impex (supra) 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
wretrospective 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 considere
considered
d 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 a particu
particular
lar proper officer 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 nott 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
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inherent contradiction can be said to exist between the two.
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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
inter-alia,
alia,
retrospectively validated all show cause notices issued under
der 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 judgment in Canon India (supra). The challenge to the
Finance Act, 2022 on grounds other than those dealt with herein, if
Finance
any, are kept open.
(vi) Subject to the observations made in this judgment, the officers
of Directorate of Revenue Intelligence, Commissionerates of
Customs (Preventive), Directorate General of Central Excise
Intelligence and Commissionerates of Central Excise and other
similarly situated officers are proper officers for the purposes of
Section 28 and are competent to issue show cause notice
thereunder. Therefore, any challenge made to the mainta
maintainability
inability of
such show cause notices issued by this particular class of officers,
on the ground of want of jurisdiction for not being the proper
officer, which remain pending before various forums, shall now be
dealt with in the following manner
manner:
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the Act, 1962 have been challenged before the High Courts
directly by way of a writ petition, the respective High Court
shall dispose of such writ petitions in accordance with the
observations made in this judgment and restore such notices
for adjudication by the proper officer under Section 28.
b. 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 Cou
Court,
rt, they shall bedisposed 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.
c. Where the orders-in-original
original passed by the adjudicatingauthority 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
efer appropriate appeal before theCustoms Excise and Service Tax Appellate Tribunal
(CESTAT).
d. 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
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appeals before the CESTAT.
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e. Where the orders of CESTAT have been challenged before
this Court or the respective High Court on the ground of
maintainability 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 judgmen
judgmentt and restore suchnotices to the CESTAT for hearing the matter on merits.
f. Where appeals against the orders
orders-in-original
original involvingissues 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
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
undisturbed.”
6. In view of the above we dispose of all the above referred to appeals in
accordance with the decision of Hon’ble Supreme Court in Review Petition No
400/2021 titled Commissioner of Customs v. M/s Canon India Pvt. Ltd. and other
connected review petitions
p [2024 SCC Online SC 3188]
3188].
7. Since
ince in all the above referred to appeals orders passed by the
CESTAT are under challenge, therefore, in view of the judgment passed by the
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Hon’ble Supreme Court in Review Petition No 400/2021 titled Commissioner of
Customs v. M/s Canon India Pvt. Ltd. and other connected review petition
etitions
[2024 SCC Online SC 3188],
3188] the appellants are directed to pursue their appeals
before CESTAT after pre-deposit
pre deposit and the learned Tribunal shall decide the same in
accordance with law and the observations made by the Hon’ble Supreme Court in
the above-referre
referred to review petition.
8. Disposed of accordingly.
9. Pending applications, if any, also stand disposed of.
(ARUN
ARUN PALLI)
PALLI (SUDEEPTI SHARMA)
JUDGE JUDGE
January 09, 2025
tripti
Whether speaking/non-speaking
speaking/non speaking : Speaking
Whether reportable :YYes
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