# Commissioner of Customs v. M/s Canon India Pvt. Ltd

- **Citation:** 2024 INSC 854
- **Court:** Supreme Court of India
- **Decided:** 2024-11-07
- **Case number:** Civil Appeal No. 1827 of 2018
- **Bench:** Dr Dhananjaya Y Chandrachud, J.B. Pardiwala, Manoj Misra
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/commissioner-of-customs-v-m-s-canon-india-pvt-ltd-37433
- **Pages:** 133

## Headnote

Issue arose whether there was an "error apparent on the face
of the record" for the purpose of entertaining the review petition;
whether law laid down in Canon India's case as regards the power
of the DRI to issue show cause notices could be said to be the
correct statement of law; whether officers of DRI are the proper
officers for the purposes of s.28 of the Customs Act, 1962; whether
the introduction of s.28(11) vide the Validation Act of 2011 which
retrospectively validates the show cause notices issued u/s.28
with effect from 06.07.2011, is discriminatory and arbitrary for
not curing the defect highlighted in Sayed Ali's case and, thus,
is violative of Art.14 of the Constitution; whether the judgment
delivered by the High Court in the case of Mangali Impex's case
expounds the correct interpretation of s.28(11) and whether s.97
of the Finance Act, 2022, which retrospectively validates the show
cause notices with effect from 01.04.2023, is manifestly arbitrary
and thus, violative of Art.14 of the Constitution of India.
Headnotes†
Customs Act, 1962 - ss.2(34), 28, 17 - Proper officer -
Directorate of Revenue Intelligence - DRI officers, if proper
officers u/s.28 - Review of judgement in Canon India's case
which held DRI officers were not proper officers u/s.28 and
thus lacked the jurisdiction to issue show cause notice in terms
of s.28, since only officers directly involved in assessment
u/s.17 could initiate show cause notice proceedings u/s.28 -
Maintainability:
*Author
[2024] 12 S.C.R.
203
Commissioner of Customs v. M/s Canon India Pvt. Ltd.
Held: DRI officers are 'proper officers' to issue show cause
notice u/s.28 - Review petition seeking review of the decision in
Canon India's case allowed - DRI officers came to be appointed
as the officers of customs vide Notification No. 19/90-Cus (N.T.)
dated 26.04.1990 - This notification later came to be superseded
by Notification No. 17/2002 dated 07.03.2002, to account for
administrative changes - Circular No. 4/99-Cus dated 15.02.1999
which empowered the officers of DRI to issue show cause notices
u/s.28 as well as Notification No. 44/2011 dated 06.07.2011 which
assigned the functions of the proper officer for the purposes of ss.17
and 28 respectively to the officers of DRI were not brought to the
notice of this Court during the proceedings in Canon India's case,
thus the judgment was rendered without looking into the circular
and the notification thereby seriously affecting the correctness of
the same - Decision in Canon India's case failed to consider the
statutory scheme of ss.2(34) and 5 respectively, thus the decision
erroneously recorded the finding that since DRI officers were not
entrusted with the functions of a proper officer for the purposes of
s.28 in accordance with s.6, they did not possess the jurisdiction to
issue show cause notices for the recovery of duty u/s.28 - Reliance
placed in Canon India's on the decision in Sayed Ali's case is
misplaced - Decision in Canon India's case is reviewed only to the
extent that the jurisdiction of the DRI officers to issue show cause
notices u/s.28 - 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 s.28 and are competent to issue show cause
notice thereunder - Any challenge made to the maintainability of
the 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, to be dealt
with in the manner stipulated. [Para 168]
Customs Act, 1962 - ss.17 and 28 - Issue as regards the proper
officer to issue show cause notice in terms of s.28 - Sayed
Ali's case held that the Commissioner of Customs (Preventive)
is not a "proper officer" as defined in s.2(34) and thus, did not
have the jurisdiction to issue a sh

## Text

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[2024] 12 S.C.R. 202 : 2024 INSC 854
Commissioner of Customs
v.
M/s Canon India Pvt. Ltd.
(Review Petition No. 400 of 2021)
In
(Civil Appeal No. 1827 of 2018)
07 November 2024
[Dr Dhananjaya Y Chandrachud, CJI, J.B. Pardiwala*
and Manoj Misra, JJ.]
Issue for Consideration
Issue arose whether there was an "error apparent on the face
of the record" for the purpose of entertaining the review petition;
whether law laid down in Canon India's case as regards the power
of the DRI to issue show cause notices could be said to be the
correct statement of law; whether officers of DRI are the proper
officers for the purposes of s.28 of the Customs Act, 1962; whether
the introduction of s.28(11) vide the Validation Act of 2011 which
retrospectively validates the show cause notices issued u/s.28
with effect from 06.07.2011, is discriminatory and arbitrary for
not curing the defect highlighted in Sayed Ali's case and, thus,
is violative of Art.14 of the Constitution; whether the judgment
delivered by the High Court in the case of Mangali Impex's case
expounds the correct interpretation of s.28(11) and whether s.97
of the Finance Act, 2022, which retrospectively validates the show
cause notices with effect from 01.04.2023, is manifestly arbitrary
and thus, violative of Art.14 of the Constitution of India.
Headnotes†
Customs Act, 1962 - ss.2(34), 28, 17 - Proper officer -
Directorate of Revenue Intelligence - DRI officers, if proper
officers u/s.28 - Review of judgement in Canon India's case
which held DRI officers were not proper officers u/s.28 and
thus lacked the jurisdiction to issue show cause notice in terms
of s.28, since only officers directly involved in assessment
u/s.17 could initiate show cause notice proceedings u/s.28 -
Maintainability:
*Author
[2024] 12 S.C.R.
203
Commissioner of Customs v. M/s Canon India Pvt. Ltd.
Held: DRI officers are 'proper officers' to issue show cause
notice u/s.28 - Review petition seeking review of the decision in
Canon India's case allowed - DRI officers came to be appointed
as the officers of customs vide Notification No. 19/90-Cus (N.T.)
dated 26.04.1990 - This notification later came to be superseded
by Notification No. 17/2002 dated 07.03.2002, to account for
administrative changes - Circular No. 4/99-Cus dated 15.02.1999
which empowered the officers of DRI to issue show cause notices
u/s.28 as well as Notification No. 44/2011 dated 06.07.2011 which
assigned the functions of the proper officer for the purposes of ss.17
and 28 respectively to the officers of DRI were not brought to the
notice of this Court during the proceedings in Canon India's case,
thus the judgment was rendered without looking into the circular
and the notification thereby seriously affecting the correctness of
the same - Decision in Canon India's case failed to consider the
statutory scheme of ss.2(34) and 5 respectively, thus the decision
erroneously recorded the finding that since DRI officers were not
entrusted with the functions of a proper officer for the purposes of
s.28 in accordance with s.6, they did not possess the jurisdiction to
issue show cause notices for the recovery of duty u/s.28 - Reliance
placed in Canon India's on the decision in Sayed Ali's case is
misplaced - Decision in Canon India's case is reviewed only to the
extent that the jurisdiction of the DRI officers to issue show cause
notices u/s.28 - 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 s.28 and are competent to issue show cause
notice thereunder - Any challenge made to the maintainability of
the 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, to be dealt
with in the manner stipulated. [Para 168]
Customs Act, 1962 - ss.17 and 28 - Issue as regards the proper
officer to issue show cause notice in terms of s.28 - Sayed
Ali's case held that the Commissioner of Customs (Preventive)
is not a "proper officer" as defined in s.2(34) and thus, did not
have the jurisdiction to issue a show cause notice in terms
of s.28; and that only such officers who are vested with the
power of assessment u/s.17 can be empowered to issue show
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cause notices u/s.28 or else this would result in a state of
chaos and confusion - Reconsideration of Sayed Ali's case:
Held: Decision in Sayed Ali proceeds on the assumption that
for the "proper officer" to exercise the functions u/s.28, such
officer must necessarily possess the power of assessment
and reassessment u/s.17 - However, a plain reading of ss.17
and 28 does not bring out any such inter-dependence between
the two provisions - Observations pertaining to interlinkage
between ss.17 and 28 respectively made in Sayed Ali's case
do not lay down the correct position of law - Even otherwise,
decision in Sayed Ali's case could have been arrived at without
deciding on the interdependence of ss.17 and 28 as the Customs
(Preventive) officers, whose jurisdiction to issue show cause
notices was under challenge in that case, were not assigned
the functions of the "proper officer" for the purposes of s.28
through a notification issued by the appropriate authority -
Assignment of functions is a mandatory requirement for the
exercise of jurisdiction by the "proper officer" - Observations made
in Sayed Ali's case on the connection between ss.17 and 28 are
obiter dicta and do not constitute the binding ratio decidendi of
that judgment - Sayed Ali's case could not have been relied upon
in Canon India's case as it could not have been applied for the
period subsequent to 08.04.2011 since s.17 has undergone a
radical change by virtue of the amendments made by the Finance
Act, 2011. [Paras 81-83]
Customs Act, 1962 - s.17 - Assessment of duty - Changes
to s.17 w.e.f. 11.04.2011 - Amendment altered the method of
assessment of bills of entry and shipping bills - Functions
of the proper officer u/s.17 also underwent changes, the
assessment of bill of entry and shipping bill no longer the
task of the "proper officer", they were to be self-assessed,
which is to be accepted or rejected by the proper officer
subject to verification in certain cases - Said changes not
brought to the notice of this Court while Canon India's case
was heard - Effect:
Held: On basis of the amendment to s.17, the competence of the
proper officer to conduct "assessment" was completely taken away
by the legislature - New s.17 empowers the proper officer to perform
the functions of verification of self-assessment and subsequent reassessment, if found necessary - However, such re-assessment
[2024] 12 S.C.R.
205
Commissioner of Customs v. M/s Canon India Pvt. Ltd.
is not a mandatory function on the same footing as "assessment"
under the old s.17 - Thus, the scope of the functions of the proper
officer under the new s.17 is limited - However, the attention of this
Court in Canon India's case not drawn to the important changes
brought to s.17 vide s.38 of the Finance Act, 2011 with effect from
08.04.2011 - Conclusion that an officer who did the assessment,
could only undertake reassessment u/s.28(4) was arrived at without
taking note of the amendment to s.17 - Judgment in Canon
India's case also recorded an erroneous finding that the function
of re-assessment is with reference to s.28(4) when in fact it is an
exercise of function u/s.17 - In Canon India's case the show cause
notice was dated 19.09.2014 in respect of the Bill of Entry filed
on 20.03.2012 - This Court erroneously applied the provisions of
s.17, as they stood prior to 08.04.2011 as opposed to the amended
s.17 which ought to have been applied. [Paras 90-94]
Customs Act, 1962 - ss.17 and 28 - Assessment of duty -
Notice for payment of duties, interest - Scheme of ss.17
and 28:
Held: s.17 read with ss.46 and 47 deals with the assessment
and re-assessment at the first instance that is, upon entry of the
consignments and clearance of bills of entry - Amendment to
s.17 introduces the process of self-assessment and subsequent
re-assessment upon verification by the proper officer, if so required,
for undertaking a check at the first instance - Proceedings
u/s.28 are subsequent to the completion of the process set
out in s.17 - Procedure envisaged u/s.28 is in the nature of a
quasi-judicial proceeding with the issuance of the show cause notice
by the proper officer followed by adjudication of such notices by
the field customs officers - In the case of DRI, the proceedings
u/s.28 start only after an investigation has been undertaken by
DRI - This is reaffirmed by Circular No. 4/99-Cus dated 15.02.1999
and Circular No. 44/2011-Customs dated 23.11.2011 - Thus, the
nature of review u/s.28 significantly different from the nature of
assessment and reassessment u/s.17 - Ambit of s.28 has also been
restricted to the review of assessments and re-assessments done
u/s.17 for ascertaining if there has been a short-levy, non-levy, part
payment, non-payment or erroneous refund - Scheme of ss.17
and 28 indicates that there cannot be a mandatory condition linking
the two provisions and the interpretation of this Court in the Sayed
Ali's case and Canon India's case that vesting of the functions of
assessment and re-assessment u/s.17 is a threshold, mandatory
206
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condition for proper officer to perform functions u/s.28, patently
erroneous. [Paras 95-99]
Customs Act, 1962 - s.28 - Notice for payment of duties,
interest - Use of article 'the' in the expression "the proper
officer" - Interpretation:
Held: In Canon India's case it was held that the Parliament had
employed the article "the" instead of "a/an" in s.28 so as to give
effect to its intention of specifying that the proper officer referred
to in s.28 is the same officer as the one referred to in s.17 and the
use of a definite article instead of an indefinite article is indicative
of the fact that the proper officer referred to in s.28 is not "any"
proper officer but "the" proper officer assigned with the function
of assessment and reassessment u/s.17 - There was an error
apparent in the said view - Definite article "the" has been used
before "proper officer" with a view to limit the exercise of powers
u/s.28 by a specific proper officer and not any proper officer -
However, in the absence of any statutory linkage between ss.17
and 28 respectively, there was no legal footing for this Court in
Canon India's case to hold that "the proper officer" in s.28 must
necessarily be the same proper officer referred to u/s.17 - Statutory
scheme of the 1962 Act necessitates that an officer of Customs
can only perform the functions u/s.28 if such officer has been
designated as "the proper officer" for the purposes of s.28 by an
appropriate notification - Use of the article "the" in the expression
"the proper officer" should be read in the context of that proper
officer who has been conferred with the powers of discharging the
functions u/s.28 by conferment u/s.5 - Proper officer is qua the
function or power to be discharged or exercised - Use of article
"the" in s.28 has no apparent relation with the proper officer referred
to u/s.17. [Paras 100-103]
Customs Act, 1962 - s.2(34) - Proper officer - DRI officers as
proper officers u/s 2(34):
Held: In Canon India's case, this Court erroneously concluded that
officer from the Directorate of Revenue Intelligence (DRI) was not an
officer of customs and thus, cannot function as a "Proper Officer" -
Finding that the power conferred by the Board under Notification
No. 40/2012-Customs (N.T.) dated 02.05.2012 was ill-founded is
an error apparent - By way of Notification No. 40/2012-Customs
[2024] 12 S.C.R.
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Commissioner of Customs v. M/s Canon India Pvt. Ltd.
(N.T.), the Board appointed several persons including the Officers
of Directorate of Revenue Intelligence (DRI) as "Proper Officers"
u/s.2(34) - Notification No. 40/2012-Customs (N.T.) issued u/s.2(34)
cannot be read in isolation - It has to be read in conjunction with
s.4(1) and the Notification issued thereunder - View that the
"Proper Officer" for the purpose of s.28 and other provisions of
the 1962 Act could only mean the person who cleared the goods
or the officer who succeeds such officer and not any other officer
from any other department requires reconsideration in view of the
changes to the 1962 Act vide the Finance Act, 2011 and s.4 and
the notification issued thereunder - Court in Canon India's case
proceeded on the footing that under the provisions of the Act, 1962,
the Board has no power to appoint "Proper Officers" - As per
s.4(1), the Board is vested with the power to appoint such persons
as it thinks fit to be "officers of customs", u/s.4(2) the Board can
even authorize a Chief Commissioner of Customs or a Joint or
Assistant or Deputy Commissioner of Customs to appoint any
officers below the rank of Assistant Commissioner of Customs as
an "officer of customs" - This aspect was not brought to the notice
in Canon India's case. [Paras 106-113]
Customs Act, 1962 - s.4 - Appointment of "Officers of
Customs:
Held: It is only an officer of customs, appointed u/s.4(1) who can
be designated as the "proper officer" as defined in s.2(34) by a
notification - Notifications issued u/ss.2(34) and 4(1) are nothing
but an internal arrangement for the purpose of allocation of work
among the officers of customs. [Para 115]
Customs Act, 1962 - s.6 - Entrustment of functions of Board
and customs officers on certain other officers - Application
of s.6:
Held: s.6 contemplates the entrustment of the functions of the
Board or any officer of customs under the Act to any of the officers
of the Central or the State Government or a local authority - Such
entrustment could be either conditional or unconditional - Object
of this Section is to confer powers of search, seizure, arrest and
recording of statements, to the officers working in border states
as also officers working in the coast guard or the navy as they
may be involved in anti smuggling operations - Plain reading of
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s.6 makes it abundantly clear that it applies only to officers from
departments other than the officers of the customs u/s.4 - Officers
of DRI are not any other officers of the Central Government or the
State Government or the local authority to be entrusted with the
functions of the Board and the Customs Officers - Post 07.03.2002,
a notification of the Central Government u/s.6 is not required to
recognise the officers from DRI as officers of customs - Assignment
of functions of proper officers as mentioned in s.2(34) and
entrustment of functions of customs officers as mentioned in s.6
operate on different planes - Assignment of functions of proper
officer is to be done only to officers of customs (whether appointed
u/s.4 or entrusted with certain functions u/s.6) - There may be
some overlap between assignment of functions of proper officers
u/s.2(34) rw s.5 and entrustment of functions of officers of customs
u/s.6 in some instances but there can be no scenario where it can
be held that "functions" u/s.6 and s.2(34) are congruent - One
of the basis for the decision in Canon India's case was that no
entrustment of functions u/s.6 was done in favour of DRI officers,
which is a misapplication of s.6 and is in ignorance of the applicable
law, ss.2(34) rw s.5 of the Act. [Paras 120-122, 125, 129, 130]
Customs Act, 1962 - s.28 (11) - Recovery of duties not levied or
short-levied or erroneously refunded - Constitutional validity
of s.28(11) - Introduction of s.28(11) vide the Validation Act of
2011 which retrospectively validates the show cause notices
issued u/s.28 with effect from 06.07.2011, if discriminatory and
arbitrary for not curing the defect highlighted in Sayed Ali's
case and, thus, violative of Art.14 of the Constitution of India:
Held: s.28(11) is constitutionally valid and its application is not
limited to the period between 08.04.2011 and 16.09.2011 - None
of the changes made by the amendments to s.28 has any impact
on the competence of the proper officer for the purposes of
fulfilment of functions u/s.28 - Only major change that warrants
the clarification provided under Explanation 2 is the distinction with
respect to the limitation period for the issuance of show cause
notices - Thus, the application of sub-section (11), which pertains
only to the empowerment of proper officers to issue show cause
notices u/s.28, cannot be said to be limited only to new s.28 but
also to the provision as it stood prior to 08.04.2011 - Legislative
intent is that sub-section (11) was meant to apply to s.28 without
[2024] 12 S.C.R.
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Commissioner of Customs v. M/s Canon India Pvt. Ltd.
any restriction as to time - Enactment of sub-section (11) of s.28
cures the defect pointed out in Sayed Ali's case. [Paras 147, 148,
151, 154, 155]
Customs Act, 1962 - ss.17 and 28 - Proper officer to issue
show cause notice in terms of s.28 - Judgment by the High
Court in the case of Mangali Impex', if expounds the correct
interpretation of s.28(11):
Held: High Court in Mangali Impex's case observed that
s.28(11) could not be said to have cured the defect pointed out
in Sayed Ali's case as the possibility of chaos and confusion
would continue to subsist despite the introduction of the said
section with retrospective effect - High Court declined to give
retrospective operation to s.28(11) for the period prior to 08.04.2011
by harmoniously construing it with Explanation 2 to s.28 of the
1962 Act - Decision in Mangali Impex's case 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 particular
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 u/s.28 -
Further, the High Court could not have applied the doctrine of
harmonious construction to harmonise s.28(11) with Explanation 2
because s.28(11) and Explanation 2 operate in two distinct fields
and no inherent contradiction can be said to exist between the two -
Thus, the decision in Mangali Impex's case set aside. [Para 168]
Finance Act, 2022 - s.97, Amendments made by Finance Act -
Constitutional validity of ss.86, 87, 88, 94 and 97 - s.97 which
retrospectively validates the show cause notices with effect
from 01.04.2023, if manifestly arbitrary and thus, violative of
Art.14 of the Constitution of India:
Held: s.97 which, inter-alia, retrospectively validated all show
cause notices issued u/s.28 of the Act, 1962 cannot be said to be
unconstitutional - It cannot be said that s.97 fails to cure the defect
pointed out in Canon India's case nor is it manifestly arbitrary and
discriminatory and is not disproportional to the object sought to be
achieved by it. [Para 168]
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Constitution of India - Art.137 - Review of judgments or orders
by the Supreme Court - Grounds of review as stipulated by
the statute:
Held: Grounds of review are discovery of new and important matter
or evidence which, after the exercise of due diligence, was not
within the knowledge of the petitioner or could not be produced
by him at the time when the decree was passed or order made;
mistake or error apparent on the face of the record; or any other
sufficient reason - Thus, when a court disposes of a case without
due regard to a provision of law or when its attention was not
invited to a provision of law, it may amount to an error analogous
to one apparent on the face of record sufficient to bring the case
within the purview of Ord. XLVII r.1 CPC - If a court is oblivious
to the relevant statutory provisions, the judgment would in fact
be per incuriam - In such circumstances, a judgment rendered in
ignorance of the applicable law must be reviewed - Code of Civil
Procedure, 1908 - Ord. XLVII r.1 - Supreme Court Rules, 2013 -
Ord. XLVII Part IV. [Paras 60, 67]
Legislation - Validation of legislation to validate earlier acts
declared illegal - Power of:
Held: Legislature is empowered to enact validating legislations to
validate earlier acts declared illegal and unconstitutional by courts
by removing the defect or lacuna which led to the invalidation of
the law - With the removal of the defect or lacuna resulting in the
validation of any act held invalid by a competent court, the act may
become valid, if the validating law is lawfully enacted - Possibility
of misuse or abuse of a law which is otherwise valid cannot be a
ground for invalidating it. [Paras 152, 160]
Case Law Cited
Sunil Gupta v. Union of India and Others (2014) SCC Online
Bom 1742 - approved.
Mangali Impex Ltd. v. Union of India (2016) SCC Online Del
2597 - disapproved.
Commissioner of Customs v. Sayed Ali and Another [2011] 2
SCR 1045 : (2011) SCC 537; Union of India and Another v.
[2024] 12 S.C.R.
211
Commissioner of Customs v. M/s Canon India Pvt. Ltd.
Godrej and Boyce Manufacturing, SLP (C) No. 1513/2022; Daikin
Air Conditioning India Pvt. Ltd v. Union of India, W.P. (C) 526
of 2022; S.K. Srivastava v. Union of India, 1971 SCC OnLine
Del 134; Consolidated Coffee Ltd. and Anr. v. Coffee Board,
Bangalore [1980] 3 SCR 625 : 1980 AIR 1468; Collector of
Customs v. Nathella Sampathu Chetty [1962] 3 SCR 786 : 1962
SCC OnLine SC 30; Shreya Singhal v. Union of India [2015] 5
SCR 963 : (2015) 5 SCC 1; Commissioner of Customs v. Dilip
Kumar & Co. [2018] 7 SCR 1191 : (2018) 9 SCC 1; Goodyear
India Ltd. v. State of Haryana [1989] Supp. 1 SCR 510 : (1990)
2 SCC 71; Col. Avtar Singh Sekhon v. Union of India [1981]
1 SCR 168 : (1980) Supp SCC 562; Lily Thomas v. Union of
India [2000] 3 SCR 1081 : (2000) 6 SCC 224; Champsey Bhara
& Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd. (1923)
SCC OnLine PC 10; State of Telangana v. Mohd. Abdul Qasim
[2024] 5 SCR 81 : (2024) 6 SCC 461; Chhajju Ram v. Neki,
1922 SCC OnLine PC 11; Moran Mar Basselios Catholicos v.
Mar Poulose Athanasius [1955] 1 SCR 520 : 1954 SCC OnLine
SC 49; Tinkari Sen v. Dulal Chandra Das, 1966 SCC OnLine
Cal 103; Girdhari Lal Gupta v. D. H. Mehta [1971] 3 SCR 748 :
(1971) 3 SCC 189; M/s Northern India Caterers (India) Ltd. v.
LT. Governor of Delhi [1979] 1 SCR 557 : (1980) 2 SCC 167;
Yashwant Sinha v. CBI [2019] 5 SCR 638 : (2020) 2 SCC 338;
Sow Chandra Kant and Anr. v. Sheikh Habib [1975] 3 SCR 933 :
(1975) 1 SCC 674; M/s. N.C. Alexander v. The Commissioner of
Customs, Chennai, W.P. Nos. 33099 of 2015; State of Andhra
Pradesh v. Ganesweara Rao [1964] 3 SCR 297 : AIR 1963 SC
1850; Management, S.S.L. Rly. Co. v. S.S.R.W. Union [1969]
2 SCR 131 : AIR 1969 SC 513; Dish TV India Ltd. v. Union
of India and Ors., WP (C) No. 520 of 2022; Empire Industries
Ltd. v. Union of India [1985] Supp. 1 SCR 292 : (1985) 3 SCC
314; Indian Aluminium Company Co. v. State of Kerala [1996]
2 SCR 23 : (1996) 7 SCC 637; Bhavesh D. Parish v. Union and
India [2000] Supp. 1 SCR 291 : (2000) 5 SCC 471; Shri Prithvi
Cotton Mills Ltd. and Ors. v. Broach Borough Municipality & Ors.
[1970] 1 SCR 388 : (1969) 2 SCC 283; Vivek Narayan v. Union
of India [2023] 1 SCR 1 : (2023) 3 SCC 1; Abhiram Singh v.
C.D. Commachen (Dead) By Lrs. & Ors. [2017] 1 SCR 158 :
(2017) 2 SCC 629 - referred to.
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Books and Periodicals Cited
Craies on Statute Law 17th Ed., Page 83 - referred to.
List of Acts
Customs Act, 1962; Finance Act, 2022; Customs (Amendment
and Validation) Act, 2011; Finance Act, 1995; Central Sales Tax
Act, 1956; Finance Act, 2011; Finance Act, 2022; Central Board
of Revenue Act, 1963; Customs Act, 1878; Supreme Court Rules,
2013; Code of Civil Procedure, 1908.
List of Keywords
Error apparent on face of record; Review petition; Canon India's
case; Power of DRI to issue show cause notice; Officers of
Directorate of Revenue Intelligence-DRI, if proper officers for
s.28 of Customs Act, 1962; Retrospectively validating show
cause notices; Sayed Ali's case; Mangali Impex's case; s.97
of the Finance Act, 2022; Proper officer; Review of judgement
in Canon India's case; Notification No. 19/90-Cus (N.T.)
dated 26.04.1990; Notification No. 17/2002 dated 07.03.2002;
Administrative changes; Circular No. 4/99- Cus dated 15.02.1999;
Proper officer to issue show cause notice in terms of s.28;
Commissioner of Customs (Preventive) not "proper officer";
Reconsideration of Sayed Ali's case; Inter-dependence between
two provisions; Assessment of duty; Method of assessment
of bills of entry and shipping bills; Assessment; Verification of
self-assessment; Re-assessment; Notice for payment of duties,
interest; Entry of consignments and clearance of bills of entry;
Quasi-judicial proceeding; Circular No. 44/2011-Customs dated
23.11.2011; Short-levy, non-levy, part payment, non-payment or
erroneous refund; Notice for payment of duties, interest; Use of
article 'the' in the expression "the proper officer"; DRI officers as
proper officers u/s 2(34); Notification No. 40/2012-Customs (N.T.)
dated 02.05.2012; Finance Act, 2011; Appointment of "Officers of
Customs; Entrustment of functions of Board and customs officers
on certain other officers; Recovery of duties not levied or shortlevied or erroneously refunded; Constitutional validity of s.28(11);
Review of judgments or orders by the Supreme Court; Grounds
[2024] 12 S.C.R.
213
Commissioner of Customs v. M/s Canon India Pvt. Ltd.
of review; Validation of legislation to validate earlier acts declared
illegal; Possibility of misuse or abuse of law.
Case Arising From
INHERENT JURISDICTION: Review Petition (Civil) No. 400 of 2021
In
Civil Appeal No. 1827 of 2018
From The Judgment And Order Dated 09.03.2021 of The Supreme
Court of India In C.A. No. 1827 of 2018
With
C.A. Nos. 6142, 6161,6160 and 6159 of 2019, C.A. No. 8828 of
2016, C.A. Nos. 6157 and 6158 of 2019, C.A. No. 9313 and 9406
of 2016, C.A. No. 6153 of 2019, C.A. Nos. 9315, 10140, 9436,
9317, 10012, 10739, 10422, 10421, 10991, 10952 and 12345 of
2016, C.A. No. 6149-6152 of 2019, C.A. No. 430 of 2017, C.A. No.
8749 of 2016, C.A. No. 6127 of 2019, C.A. No. 8752 of 2017, C.A.
Nos. 6139-6140, 6143, 6148, 6248, 6156 and 7292 of 2019, C.A.
No. 2666-2695 of 2020, C.A. No. 1738 of 2021, R.P.(C) No. 402
of 2021 In C.A. No. 1875 of 2018, R.P.(C) No. 403 of 2021 In C.A.
No. 1832 of 2018, R.P.(C) No. 401 of 2021 In C.A. No. 3213 of
2018, SLP(C) No. 2504 of 2022, C.A. No. 2367-2368 of 2022, C.A.
No. 10788 of 2024, C.A. No. 3253 of 2017, C.A. Nos. 10873 and
10819 of 2024, C.A. No. 4559 of 2022, SLP(C) No. 12970 of 2022,
W.P.(C) Nos. 501, 499, 502, 504, 522, 507, 526, 534, 537, 548,
575, 566 and 568 of 2022, C.A. Nos. 10698, 10693, 10752, 10697,
10753, 10754, 10755, 10712, 10756, 10757, 10710 - 10711, 10758,
10759, 10760, 10709, 10761, 10762, 10763, 10764, 10765, 10766,
10767, 10768, 10769, 10770, 10771, 10772 and 10774 of 2024,
C.A. No. 4566 of 2022, Diary No. 33597 of 2022, C.A. Nos.10707 -
10708, 10781, 10854 and 10694-10695 of 2024, R.P.(C) No. 155
of 2022 In C.A. No. 3411 of 2020, R.P.(C) No. 1289 of 2021 In
C.A. No. 5053 of 2021, C.A. Nos. 10782, 10784, 10785, 10706
and 10705 of 2024, Diary No. 30895 of 2022, C.A. Nos. 10699 -
10704, 10786, 10787 of 2024, Diary. No. 38691 of 2022, C.A.
Nos. 10845 and 10809 of 2024, T.P.(C) No. 1576-1597/2023 and
WP (C) D. No. 37678 and 37700 of 2024
214
[2024] 12 S.C.R.
Digital Supreme Court Reports
Appearances for Parties
N. Venkataraman, A.S.G., A. K. Panda, S. Nandakumar,
Arshad Hidayatullah, Rupesh Kumar, Dr. Purvish Malkan, R.K.
Sanghi, Sr. Advs., Gurmeet Singh Makker, Kartikeya Asthana,
Ms. Nisha Bagchi, Merusagar Samantaray, Shovan Mishra,
Ms. Charanya Lakshmikumaran, Mukesh Kumar Maroria, Ms.
Sharmila Upadhyay, Sarvjit Pratap Singh, Pawan R Upadhyay,
Ms. Shobha Ramamoorthy, Shilp Vinod, Gokulakrisnan, Ms.
Deepika Nandakumar, Naresh Kumar, Raja S, Aakash Elango, Ms.
Rohini Musa, B. Krishna Prasad, Brajesh Kumar, Deepak Agrawal,
Shivam Singh, Shubham Janghu, Gopal Singh, S. Hariharan, Ms.
Jaikriti S. Jadeja, Shivang Goel, K M Kalidharun, Ishaan Aggarwal,
A.R. Madhav Rao, Mukunda Rao Angara, Krishna Rao, Tushar
Joshi, Siddhant Buxy, Ms. Pankhuri Shrivastava, Ms. Neelam
Sharma, Makarand Joshi, Alekshendra Sharma, Shariq Ahmed,
Tariq Ahmed, Vinay Vats, Sunil Kumar Verma, Shekhar Vyas,
Ms. Mrinal Kanwar, Ms. Neha Warrier, Vaibhav, Pulkit Srivastava,
Ms. Khushboo Aakash Sheth, Ms. Dharita Malkan, Alok Kumar,
Kush Goel, Suraj Pandey, Ms. Qurratulain, Ms. Aakriti Mathur,
Ms. Shagun Mishra, V Lakshmikumaran, Ms. Apeksha Mehta,
Ms. Umang Motiyani, Ms. Neha Choudhary, Ms. Falguni Gupta,
S Vasudevan, Ayush Agarwal, Rachit Jain, Dhruv Matta, Nikhil Jain,
Ram Krishna, Rahul Yadav, Dinesh Bahadur Singh, Nitish Messy,
Ms. Rashi Bansal, Ravi Bharuka, Prateek Gattani, Rohit Agarwal,
Mrs. Vanita Bhargava, Ajay Bhargava, Ms. Nandita Chauhan, Ms.
Tijil Thakur, M/s. Khaitan & Co., Ms. Shilpa Singh, Jitendra Singh,
Saurabh Suman Sinha, Chitray Parande, M/s. Ap & J Chambers,
Somanadri Goud Katam, Ashok K. Mahajan, Rameshwar Prasad
Goyal, Satyendra Kumar, Ambuj Ojha, Rajeev Singh, Manoj
Chauhan, Vikramaditya Singh, Ujjawal Parmar, Ms. Neha Raj
Singh, Sajal Singhai, Hardeep, Yashika Gupta, Ms. Poornima Ojha,
K. Paari Vendhan, Pawanshree Agrawal, Kumar Visalaksh, Rahul
Khurana, Udit Jain, Arihant Tater, Ms. Akanksha Dikshit, Abhishek
Vikas, M. P. Devanath, T. L. Garg, Rajat Bose, Ankit Sachdeva,
Ms. Shohini Bhattacharya, Neeladri Chakrabarty, S. S. Shroff,
Raj Bahadur Yadav, Ms. Manju Jetley, Prasannan Namboodiri,
Ms. Prathiibha Namboodiri, Deepak Goel, Ms. Alka Goyal, Aditya
Goel, Mrs. Anjali Jha Manish, Rajat Mittal, Suprateek Neogi, Vivek
Singh, Ritik Dwivedi, Rajesh Kumar Chaurasia, Sahil Tagotra,
Prabhakar Mishra, Sujay Jain, Advs. for the appearing parties.
[2024] 12 S.C.R.
215
Commissioner of Customs v. M/s Canon India Pvt. Ltd.
Judgment / Order of the Supreme Court
Judgment
J.B. Pardiwala, J.
For the convenience of exposition, this judgment is divided into the
following parts: -
INDEX*
A.
FACTUAL BACKGROUND OF THE REVIEW PETITION...........
10
B.
SUBMISSIONS ON BEHALF OF THE DEPARTMENT................
18
i.
Error apparent in the judgment under review.........................
18
ii.
Why the decision in Sayed Ali (supra) requires
reconsideration.................................................................
30
iii.
The decision in Mangali Impex (supra) is liable to be set
aside and the decision in Sunil Gupta (supra) ought to be
affirmed.............................................................................
36
iv.
Changes introduced by the Finance Act, 2022 are in the
nature of surplusage...........................................................
42
C.
SUBMISSIONS ON BEHALF OF THE RESPONDENTS.............
48
D.
ISSUES FOR CONSIDERATION...............................................
57
E.
ANALYSIS................................................................................
59
i.
Review jurisdiction.............................................................
59
ii.
The decision in Commissioner of Customs v. Sayed Ali.....
74
iii.
Changes to Section 17 w.e.f. 11.04.2011 - the assessment
of bill(s) of entry and shipping bill(s)......................................
78
iv.
Scheme of Sections 17 and 28 of the Act, 1962......................
90
v.
Use of the article 'the' in the expression "the proper
officer" ..............................................................................
93
vi.
DRI officers as proper officers under section 2(34)...............
96
vii.
Section 4 of the Act, 1962..................................................
98
viii. Section 6 of the Act, 1962.................................................. 106
ix.
Observations on the constitutional validity of Section
28(11) of the Act, 1962....................................................... 114
x.
Bombay High Court decision in Sunil Gupta (supra)............. 123
xi.
Amendments made by the Finance Act, 2022....................... 138
F.
CONCLUSION.......................................................................... 154
* Ed. Note: Pagination as per the original Judgment.
216
[2024] 12 S.C.R.
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1.
Since the pivotal question of law involved in all the captioned petitions
is the same, they were taken up for hearing analogously and are
being disposed of by this common judgment and order.
2.
For the sake of convenience, the Review Petition No. 400 of 2021
filed by the Customs Department is treated as the lead matter.
3.
This Review Petition has been filed by the Customs Department
through the Commissioner of Customs, New Delhi (the "Department")
under Order XLVII of the Supreme Court Rules, 2013 seeking review
of the judgment and order dated 09.03.2021 passed by this Court in
Civil Appeal No. 1827 of 2018 titled M/s Canon India Private Ltd.
v. Commissioner of Customs.
A.
FACTUAL BACKGROUND OF THE REVIEW PETITION
4.
A two-Judge Bench of this Court in the case of Commissioner of
Customs v. Sayed Ali and Another reported in (2011) SCC 537,
had held that the Commissioner of Customs (Preventive) is not a
"proper officer" as defined in Section 2(34) of the Customs Act, 1962
("the Act, 1962") and therefore did not have the jurisdiction to issue
a show cause notice in terms of Section 28 of the Act, 1962. The
Court observed that while all proper officers must be "officers of
customs", all "officers of customs" are not proper officers. It also held
that only those officers of customs who were assigned the functions
of assessment, which would include re-assessment, working under
the jurisdictional collectorate within whose jurisdiction the bills of
entry or baggage declarations had been filed and consignments had
been cleared for home consumption, would have the jurisdiction to
issue show cause notice under Section 28 or else it would lead to a
situation of utter chaos and confusion, in as much as all officers of
customs in a particular area, be it under the Collectorate of Customs
(Imports) or the Preventive Collectorate, would fall under the definition
of "proper officers". Section 2(34) is extracted below:
"(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"
5.
As a result of the decision in Sayed Ali (supra), the Central
Board of Excise and Customs (the "Board") issued Notification
No. 44/2011-Cus-NT dated 06.07.2011 under Section 2(34) of the
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Commissioner of Customs v. M/s Canon India Pvt. Ltd.
Act, 1962, assigning the functions of the "proper officers" to the
Commissioners of Customs (Preventive), Directorate of Revenue
Intelligence ("DRI"), Directorate General of Anti Evasion ("DGAE")
and Officers of Central Excise. The notification specified that it would
operate prospectively. With a view to account for the past periods,
Section 28(11) was introduced vide the Customs (Amendment
and Validation) Act, 2011 (Act No.14 of 2011) dated 16.09.2011 by
virtue of which all persons appointed as Officers of Customs under
sub-section (1) of Section 4 before the 06.07.2011 were deemed to
have and always had the power of assessment under Section 17
and were deemed to be and always have been "proper officers" for
the purpose of the said section.
6.
The constitutional validity of Section 28(11) of the Act, 1962, came to
be challenged before the High Court of Delhi in the case of Mangali
Impex Ltd. v. Union of India reported in (2016) SCC Online Del
2597 and a batch of matters were disposed of by the High Court
vide a common judgment on 03.05.2016.
7.
The High Court held that although Section 28(11) of the Act, 1962
begins with a non-obstante clause, it neither explicitly nor implicitly
seeks to overcome the legal position brought about by Explanation
2 which states that the cases of non-levy, short-levy or erroneous
refund prior to 08.04.2011 would continue to be governed by the
unamended Section 28 of the Act, 1962 as it stood prior to said
date. On this basis, it held that the newly enacted Section 28(11)
would not empower officers of DRI or DGAE to either to adjudicate
the show-cause notices already issued by them for the period prior
to 08.04.2011 or to issue fresh show-cause notices for said period.
8.
The High Court also held that Section 28(11) of the Act, 1962 is
overbroad in as much as it confers jurisdiction on a plurality of
officers on the same subject matter which may result in utter chaos,
unnecessary harassment and conflicting decisions. It held that such
untrammelled power would be arbitrary and violative of Article 14 of
the Constitution. The issue as to the constitutional validity and effect
of Section 28(11) of the Act, 1962 was answered accordingly. The
Department preferred an appeal against the decision in Mangali
Impex (supra) in Civil Appeal No. 6142 of 2019 before this Court
and vide order dated 01.08.2016, a two-Judge Bench of this Court
stayed the operation of that decision.
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9.
The constitutional validity of Section 28(11) of the Act, 1962 was
also challenged before the High Court of Bombay in the case of
Sunil Gupta v. Union of India and Others reported in (2014) SCC
Online Bom 1742. The two-Judge Bench vide its Judgement dated
03.11.2014 held thus:
"25. As a result of the above discussion and finding
that Explanation 2 has not been dealing with the case,
which was specifically dealt with by sub- section (11) of
section 28 of the Act, that we are of the opinion that the
challenge in the writ petition is without any merit. The
Explanation removes the doubts and states that even
those cases which are governed by section 28 and
whether initiated prior to the Finance Bill 2011 receiving
the assent of the President shall continue to be governed
by section 28, as it stood immediately before the date
on which such assent is received. The reference to
the Finance Bill therein denotes the Bill by the section
itself was substituted by Act 8 of 2011 with effect from
April 8, 2011. Prior to this Bill by which the section was
substituted receiving the assent of the President of
India, some cases were initiated and section 28 was
resorted to by the authorities. Explanation 2 clarifies that
they will proceed in terms of the unamended provision.
The position dealt with by insertion of section 28(11) is
distinct and that is about competence of the officer. The
officers namely those from the Directorate of Revenue
Intelligence having been entrusted and assigned the
functions as noted above, they are deemed to have been
possessing the authority, whether in terms of section 28
unamended or amended and substituted as above. In
these circumstances, for these additional reasons as
well, the challenge to this sub-section must fail."
10. Since the decision in Sunil Gupta (supra) was anterior in time, the
same was relied upon by the Department before the High Court of
Delhi during the hearing in Mangali Impex (supra). However, the
High Court of Delhi did not agree with the view taken therein.
11. A batch of four statutory appeals came to be decided by this Court
on 09.03.2021 in Canon India (supra) wherein this Court decided
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Commissioner of Customs v. M/s Canon India Pvt.