2024 INSC 854 REPORTABLE

IN THE SUPREME COURT OF INDIA

INHERENT JURISDICTION

REVIEW PETITION NO. 400 OF 2021

IN

CIVIL APPEAL NO. 1827 OF 2018

COMMISSIONER OF CUSTOMS ...PETITIONER

VERSUS

M/S CANON INDIA PVT. LTD. ...RESPONDENT

WITH

C.A. No. 6142 OF 2019

C.A. No. 6161 OF 2019

C.A. No. 6160 OF 2019

C.A. No. 6159 OF 2019

C.A. No. 8828 OF 2016

Signature Not Verified

Digitally signed by
SANJAY KUMAR
Date: 2024.11.07
17:37:44 IST
Reason:
C.A. No. 6157 OF 2019
 C.A. No. 6158 OF 2019

C.A. No. 9313 OF 2016

C.A. No. 9406 OF 2016

C.A. No. 6153 OF 2019

C.A. No. 9315 OF 2016

C.A. No. 10140 OF 2016

C.A. No. 9436 OF 2016

C.A. No. 9317 OF 2016

C.A. No. 10012 OF 2016

C.A. No. 10739 OF 2016

C.A. No. 10422 OF 2016

C.A. No. 10421 OF 2016

C.A. No. 10991 OF 2016

C.A. No. 10952 OF 2016

C.A. No. 12345 OF 2016

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 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. No. 6139-6140 OF 2019

C.A. No. 6143 OF 2019

C.A. No. 6148 OF 2019

C.A. No. 6248 OF 2019

C.A. No. 6156 OF 2019

C.A. No. 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

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 R.P.(C) No. 401 OF 2021 in C.A. No. 3213 OF 2018

S.L.P.(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. No. 10873 OF 2024

C.A. No. 10819 OF 2024

C.A. No. 4559 OF 2022

C.A. NO. OF 2024 @ SLP(C) No. 12970 OF 2022

W.P.(C) No. 501 OF 2022

W.P.(C) No. 499 OF 2022

W.P.(C) No. 502 OF 2022

W.P.(C) No. 504 OF 2022

W.P.(C) No. 522 OF 2022

W.P.(C) No. 507 OF 2022

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 W.P.(C) No. 526 OF 2022

W.P.(C) No. 534 OF 2022

W.P.(C) No. 537 OF 2022

W.P.(C) No. 548 OF 2022

W.P.(C) No. 575 OF 2022

W.P.(C) No. 566 OF 2022

W.P.(C) No. 568 OF 2022

C.A. No. 10698 OF 2024

C.A. No. 10693 OF 2024

C.A. NO. 10752 OF 2024

C.A. NO. 10697 OF 2024

C.A. No. 10753 OF 2024

C.A. No. 10754 OF 2024

C.A. No. 10755 OF 2024

C.A. No. 10712 OF 2024

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 C.A. No. 10756 OF 2024

C.A. No. 10757 OF 2024

C.A. No. 10710 – 10711 OF 2024

C.A. No. 10758 OF 2024

C.A. No. 10759 OF 2024

C.A. No. 10760 OF 2024

C.A. No. 10709 OF 2024

C.A. No. 10761 OF 2024

C.A. No. 10762 OF 2024

C.A. No. 10763 OF 2024

C.A. No. 10764 OF 2024

C.A. No. 10765 OF 2024

C.A. No. 10766 OF 2024

C.A. No. 10767 OF 2024

C.A. No. 10768 OF 2024

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 C.A. No. 10769 OF 2024

C.A. No. 10770 OF 2024

C.A. No. 10771 OF 2024

C.A. No. 10772 OF 2024

C.A. No. 10774 OF 2024

C.A. No. 4566 OF 2022

C.A. No. OF 2024 @ S.L.P. OF 2024 @ Diary No. 33597/2022

C.A. No. 10707 - 10708 OF 2024

C.A. No. 10781 OF 2024

C.A. No. 10854 OF 2024

C.A. No. 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. No. 10782 OF 2024

C.A. No. 10784 OF 2024

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 C.A. No. 10785 OF 2024

C.A. No. 10706 OF 2024

C.A. No. 10705 OF 2024

C.A. No. OF 2024 @ SLP(C) No. OF 2024 @ Diary No. 30895 OF

2022

C.A. No. 10699 - 10704 OF 2024

C.A. No. 10786 OF 2024

C.A. No. 10787 OF 2024

C.A. No. OF 2024 @ S.L.P.(C) No. OF 2024 D. No. 38691 OF 2022

C.A. NO.10845 OF 2024

C.A. No. 10809 OF 2024

T.P.(C) No. 1576-1597/2023

WP (C) D. No. 37678 OF 2024

WP (C) D. No. 37700 OF 2024

JUDGMENT

Review Petition No. 400 of 2021 Page 7 of 161

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

Review Petition No. 400 of 2021 Page 8 of 161

 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

Review Petition No. 400 of 2021 Page 9 of 161

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

Review Petition No. 400 of 2021 Page 10 of 161

 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 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)

Review Petition No. 400 of 2021 Page 11 of 161

 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

Review Petition No. 400 of 2021 Page 12 of 161

 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.

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

Review Petition No. 400 of 2021 Page 13 of 161

 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 the

following two issues – first, whether the officers of DRI would be “proper

officers” under Section 2(34) for the purposes of Sections 17 and 28 of the

Act, 1962 respectively; and second, whether such officers are empowered to

issue show cause notices demanding customs duty under section 28 of the

Act, 1962. To elaborate:

(a) Whether the Directorate of Revenue Intelligence (DRI) had the legal

authority to issue a show cause notice under Section 28(4) of the Act,

1962, when the goods were cleared for import by a Deputy

Commissioner of Customs (who had decided that the goods are exempted

from being taxed on import)?

Review Petition No. 400 of 2021 Page 14 of 161

 (b) Whether an Additional Director General of DRI, who has been appointed

as an “officer of Customs” under the Notification dated 07.03.2002, has

been entrusted with the functions of “the proper officer” for the purpose

of Section 28 of the Act, 1962?

12. This Court while disposing of the aforesaid batch of matters proceeded to

reiterate the principles laid down in Sayed Ali (supra) that only such officers

who are vested with the power of assessment under Section 17 can be

empowered to issue show cause notices under Section 28 or else this would

result in a state of chaos and confusion. It also held that unless it is shown

that the officers of DRI are at the first instance, customs officers under the

Act, 1962 and are entrusted with the functions of a proper officer under

Section 6 of the Act, 1962, they would not be competent to issue show-cause

notices. It was held that, since no entrustment was made under Section 6 of

the Act, 1962, the officers of DRI who were not otherwise officers of

customs, could not have been assigned as the “proper officers”.

13. It also observed that from a conjoint reading of Section 2(34) and Section

28 respectively of the Act, 1962, it is manifest that only such a custom

officer who has been assigned the specific functions of assessment and

reassessment in the jurisdictional area where the import concerned has been

affected, either by the Board or the Commissioner of Customs, in terms of

Review Petition No. 400 of 2021 Page 15 of 161

 Section 2(34) of the Act, 1962, was competent to issue notice under Section

28 of the Act, 1962.

14. It appears from the decision in Canon India (supra) that the Notification

No. 44/2011-Cus-NT dated 06.07.2011 designating officers of DRI as

“proper officers” for the purposes of both Sections 17 and 28 of the Act,

1962 respectively; the introduction of Section 28(11) vide the Validation

Act, 2011 introducing Section 28(11) empowering such officers for the

period prior to 06.07.2011; the statutory scheme as envisaged under Sections

3, 4, 5 and 2(34) of the Act, 1962 respectively; and the pendency of the

appeal against the decision in Mangali Impex (supra) and the stay of the

operation of the said decision by this Court was either not noticed or not

brought to the notice of the Court.

15. The Department preferred the present Review Petition against the judgement

delivered in Canon India (supra) on 09.03.2021. This judgement was

followed in other cases adjudicated by this Court and the High Courts,

resulting in various other Review Petitions, Special Leave Petitions and

Civil Appeals. This Court vide order dated 15.02.2022 in the present Review

Petition allowed an open court hearing to be conducted and after hearing the

parties, issued notice on the Review Petition vide order dated 19.05.2022. A

co-ordinate Bench of this Court later in Union of India and Another v.

Review Petition No. 400 of 2021 Page 16 of 161

 Godrej and Boyce Manufacturing (SLP (C) No. 1513/2022) through order

dated 11.02.2022 also issued notice.

16. The aforesaid developments led to a hiatus. As a result, the appeals pending

before the Tribunals and other authorities could not be decided. This

necessitated the introduction of the following provisions by Parliament:

Sections 86, 87 and 88 in the Finance Act, 2022 (Act No. 6 of 2022) to

amend Sections 2(34), 3 and 5 of the Act, 1962 respectively. Further,

Sections 94 and 97 of the Finance Act, 2022 introduced a new Section

110AA and a validation enactment respectively. These amendments came

to be challenged before this Court in W.P. (C) 526 of 2022 titled Daikin Air

Conditioning India Pvt. Ltd v. Union of India.

17. The present batch comprises of three clusters of matters:

(i) The Review Petitions in the Canon India (supra) batch;

(ii) The Mangali Impex (supra) appeal and other appeals pending before

this Court on the issue of whether the officers of DRI would be proper

officers in light of Section 28(11); and

(iii) The petitions challenging the constitutional validity of Section 97 of

the Finance Act, 2022.

Review Petition No. 400 of 2021 Page 17 of 161

 B. SUBMISSIONS ON BEHALF OF THE DEPARTMENT

18. Mr. N. Venkataraman, the learned Additional Solicitor General of India,

made extensive submissions on the following broad issues –

(i) The Review Petitions filed in the case of Canon India (supra) are

maintainable as there is an error apparent on the face of the record.

(ii) The decision rendered by this Court in Sayed Ali (supra) requires

reconsideration.

(iii) The decision rendered by the Delhi High Court in Mangali Impex

(supra) should be overruled and the view expressed by the Bombay

High Court in Sunil Gupta (supra) should be upheld.

(iv) The changes introduced by the Finance Act, 2022 are merely

clarificatory in nature and the crux of the issue before the Court can

be answered without reference to and reliance upon the changes

introduced by the said Act.

i. Error apparent in the judgment under review

19. It was submitted that the judgement rendered by this Court in Canon India

(supra) requires review as there are errors apparent on the face of the record.

The Ld. ASG submitted that it is equally important that the legality and

validity of the decision rendered by the High Court of Delhi in Mangali

Impex (supra) which is a part of the present batch of pending appeals be

considered since the issues in both Canon India (supra) and Mangali Impex

Review Petition No. 400 of 2021 Page 18 of 161

 (supra) are one and the same. He submitted that the fact that an appeal

against Mangali Impex (supra) was pending before this Court and that the

operation of the said judgement was stayed went unnoticed in Canon India

(supra). He submitted that this would have a direct bearing both in the

review and in the batch of appeals before this Court.

20. He submitted that Canon India (supra) proceeded on the assumption that

DRI officers are not officers of Customs and therefore need to be entrusted

with such powers under Section 6 of the Act, 1962 and only upon such

entrustment, the functions of a proper officer can be assigned to them. This,

he submitted, is in the teeth of the provisions of the Act, 1962 more

particularly Sections 3, 4, and 5 thereof. He further submitted that there is

no discussion worth the name on these provisions as regards its applicability

to the DRI officers who are none other than a class of officers of customs

under Section 3 appointed pursuant to Section 4 and consequently, no

entrustment is required under Section 6. He submitted that Section 6 would

come into play for such of those officers of the Central or State Government

or Local Authority, who are not a class of officers of customs under Section

3 appointed in accordance with Section 4 of the Act, 1962. He explained this

clear distinction between the two provisions by relying on the notifications

issued under Section 4 of the Act, 1962 proclaiming DRI officers to be a

class of officers of Customs under Section 3 of the Act.

Review Petition No. 400 of 2021 Page 19 of 161

21. He submitted that this Court erred in not taking into consideration Sections

3, 4 and 5 of the Act, 1962 respectively and its interplay, if any, with Section

6, as duly indicated by the notifications issued from time to time. More

particularly, the Court did not take into account the origin and history of the

DRI and how it was always a part of the Ministry of Finance since its

inception except for a brief period between 1970 and 1977.

22. He adverted to Sections 3, 4, 5 and 6 of the Act, 1962 respectively along

with the relevant notifications issued under the respective provisions. The

provisions and relevant notifications are reproduced hereinbelow:

Section 3 as introduced in 1962:

“3. There shall be the following classes of officers of custom

namely: —
(a) Collectors of Customs;
(b) Appellate Collectors of Customs;
(c) Deputy Collectors of Customs;
(d) Assistant Collectors of Customs; and
(e) such other class of officers of customs as may be appointed for
the purposes of this Act.”

The provision was amended by the Finance Act, 1995 and underwent only

one change wherein the expression ‘collector’ was replaced by the

expression ‘commissioner’. The amended provision reads as under:

"3. Classes of officers of customs.-

There shall be the following classes of officers of customs, namely.-
(a) Chief Commissioners of Customs;
(b) Commissioners of Customs;
(c) Commissioners of Customs (Appeals);

Review Petition No. 400 of 2021 Page 20 of 161

 (d) Deputy Commissioners of Customs;”

23. He submitted that Section 3 refers to the class of officers of customs. All

officers of the same rank irrespective of the functions and roles they play

would fall under Section 3 as class of officers of customs. Class in this sense

would refer to the same rank.

24. Sections 4 and 5 of the Act, 1962 are extracted below:

Section 4:
“(1) The Board may appoint such persons as it thinks fit
to be officers of customs.

(2) Without prejudice to the provisions of sub-section

(7), the Board may authorise a Commissioner of
Customs or a Deputy or Assistant Commissioner of
Customs to appoint officers of customs below the rank
of Assistant Commissioner of Customs.”

Section 5:
“(1) Subject to such conditions and limitations as the
Board may impose, an officer of customs may exercise
the powers and discharge custom the duties conferred
or imposed on him under this Act.

(2) An officer of customs may exercise the powers and

discharge the duties conferred or imposed under this Act
on any other officer of customs who is subordinate to
him.

(3) Notwithstanding anything contained in this section,

an Appellate Collector of Customs shall not exercise the
powers and discharge the duties conferred or imposed
on an officer of customs other than those specified in
Chapter XV and section 108.”

Review Petition No. 400 of 2021 Page 21 of 161

25. Section 4 relates to appointment of officers of customs and Section 5 deals

with the powers and duties of officers of customs. There is only one

significant change carried out in Section 4 on 11.05.2002. Prior to that date,

the appointing Authority was the Central Government and post 11.05.2002,

the Board became the appointing Authority.

26. Some of the relevant notifications issued under Sections 4 and 5 of the Act,

1962 respectively are reproduced below:

“G.S.R. 214 ̶ In exercise of the powers conferred by

sub-section (1) of Section 4 of the Customs Act, 1962
(52 of 1962), the Central Government hereby
appoints—

(a) the officers specified below to be Collectors of Customs

within their respective jurisdictions, namely:—

1. Director, Directorate of Revenue Intelligence.

2. Collector of Customs and Central Excise, Cochin.

3. Collectors of Land Customs and Central Excise,

Delhi, Calcutta and Shillong.

4. Collectors of Central Excise, Baroda, Bombay,

Poona, Bangalore, Madras, Hyderabad, Calcutta,
Nagpur, Patna, Allahabad and Kanpur.

(b) the Deputy Collectors posted under the Collectors

specified in clause (a) to be Deputy Collectors of
Customs within their respective jurisdictions;

(b) the Assistant Collectors posted under the Collectors

specified in clause (a) to be Assistant Collectors of
Customs within their respective jurisdictions.
[No. 37/F. No. 4/1/63-CAR]

Review Petition No. 400 of 2021 Page 22 of 161

 G.S.R. 215-In exercise of the powers conferred by sub-
section (1) of section 4 of the Customs Act, 1962 (52 of
1962), the Central Government hereby appoints the
following persons to be officers of Customs, namely:-

1. Principal Appraisers, Appraisers, Examiners, Chief

Inspectors, Additional Chief Inspectors, Inspectors,
Preventive Officers, Women searches, Mnisterial
officers and Class IV officer in the Customs Department
at Bombay, Calcutta, Madras, Cochin, Visakhapatnum
and Kandla.

2. Reverificadors, Verficiadores, Appraisers,

Preventive Inspectors, Preventive Officers, Officials
Probationary Officials, Fiscal Guards, Cabos, Sub-
Chefes, and Auxiliaries of the Technical Cadre, borne
on the establishment of Customs and Central Excise
Admnistration, Goa.

3. Superintendents, Deputy Superintendent,

Inspectors, Sub-Inspectors, women searchers,
Ministerial staff and Class IV staff of Central Excise
Department, who are for the time being posted to a
Customs-port, Customs-airport, land-customs station,
coastal port, Customs Preventive post, Customs
Intelligence post or a Customs warehouse.

4. Superintendents, Duty Superintendents and

Inspectors of Central Excise Department in any place in
India.

5. All officers of the Directorate of Revenue

Intelligence.
[No. 38/F. No. 4/1/63-CAR.]”

27. Our attention was specifically drawn to S. No. 1 of GSR 214 as extracted

above wherein the Central Government appointed the Director, Directorate

of Revenue Intelligence as an officer of customs and also to S. No. 5 of GSR

Review Petition No. 400 of 2021 Page 23 of 161

 215 by which the Central Government appointed all the officers of DRI as

officers of customs.

28. He also placed before us the origin and history of the DRI as a part of the

Ministry of Finance. From 04.12.1957 till 24.06.1970, DRI was with the

Ministry of Finance. From 25.06.1970 to 28.07.1970, it was with the

Ministry of Home Affairs. Between 29.07.1970 and 06.04.1977, it was with

the Cabinet Secretariat and from 07.04.1977 onwards, DRI has remained

with the Ministry of Finance.

29. Placing reliance on the decision of the Delhi High Court in the case of S.K.

Srivastava v. Union of India reported in 1971 SCC OnLine Del 134, he

submitted that DRI was always a part of the Customs Department, working

under a common Board and the Ministry of Finance. The relevant

paragraphs from this decision are extracted below:

“(2) Therefore, on 3-12-1970 the order dated 27-7-

1970 was cancelled.
(3) On 16-12-1970 the President was pleased to order
that the petitioner “be posted as Collector of Central
Excise, Hyderabad”.
The petitioner however refused to join his posting at
Hyderabad and has filed the present writ petition
challenging his transfer from the post of Director of
Revenue Intelligence to the post of Collector of Customs
as being illegal and unconstitutional.
Let us first consider the legality of the transfer. Under
Article 310 of the Constitution, the petitioner held office
during the pleasure of the President. The conditions of
service of the petitioner could be regulated by
Parliament by legislation under Article 309 of the

Review Petition No. 400 of 2021 Page 24 of 161

 Constitution. In the absence of such legislation the
President could also frame rules to do so under the
proviso to Article 309. But neither any such legislation
nor any such rules exist. The formation of the Indian
Customs and Central Excise Service Class I was itself
brought about by purely executive action. It is well-
established that the administration of service by the
Government of India can be carried on by executive
instructions and executive action even though no statute
or statutory rules may have been made.
The distinction between the personnel forming a
Service and the posts which may be manned by the
members of such a Service has to be noted at the outset
in this case. The petitioner along with others belong to
the Indian Customs and Central Excise Service Class
I. The members of this Service stood in relation to each
other in a particular order of seniority. There was no
statute or rules, however, restricting the appointments
of the members of the Service to any particular post.
Initially the officers of the Collectorate of Customs
and Excise working under the Ministry of Finance,
Department of Revenue, used to do all the work
relating to customs and excise. In 1939, the work of
inspection in the Departments of Customs and Central
Excise which was till then performed by the
departments themselves as carved out and given to a
separate Directorate of Inspection (Customs and
Central Excise) as a part of the office of the Central
Board of Revenue which was formed by an Act of 1924
and which was split later by an Act of 1963 into two
Boards, namely:—
(a) Board of Direct Taxes under which functions the
Department of Income-tax;
(b) The Central Board of Excise and Customs under
which functioned the Collectorates of Customs and
Central Excise, Directorate of Inspection and
Directorate of Revenue Intelligence.
It was in 1957 that the intelligence work till then
performed by the Central Revenue Intelligence
Bureau functioning as a unit in the Directorate of
Inspection, was constituted as a third unit in the
Department of Revenue, Ministry of Finance styled as

Review Petition No. 400 of 2021 Page 25 of 161

 Directorate of Revenue, Intelligence. All this and more
information is contained in the Government
publication Organisation Set-up and Functions of the
Ministries/Departments of the Government of India “,
4th Edition, 1968, pages 68-70 (Annexure R XIII).
As the work of Directorates of Inspection and Revenue
Intelligence has been carved out from the work
originally performed by the Collectorates of Customs
and Central Excise and as no separate personnel was
recruited to man the posts in these two Directorates,
the members of the Indian Customs and Central
Excise Service Class I have been manning those posts.
There have been therefore numerous transfers of
officers of the Indian Customs and Central Excise
Service Class I from their posts in the Collectorates to
the subsequently created posts in the Directorates.
Equally frequently these officers have been
transferred back to the posts in the Collectorates. The
important fact to be noted is that only one set of
personnel originally recruited for the Customs and
Central Excise Collectorates has been used to fill the
posts not only in the Collectorates but also in the
Directorates. The reason is obvious. The Central
Board of Excise and Customs in 1963 and prior to that
the Central Board of Revenue functioning as a part of
the Department of Revenue, Ministry of Finance of the
Government of India administered and controlled the
work of the Collectorates of Customs and Central
Excise as well as of the Directorates of Inspection and
Revenue Intelligence. These three units form one
whole working under the Board and the Ministry. This
position is reflected in the following documents:—
(1) The Central Civil Services [Revised Pay Rules, 1960
(Annexure R xiv)] have a Schedule in which the
various posts which could be manned by the Central
Civil Services are shown with the emoluments
attached to those posts. In this Schedule section 10
forms the Ministry of Finance (Department of
Revenue).…”
[emphasis supplied]

Review Petition No. 400 of 2021 Page 26 of 161

30. Having adverted to Sections 3, 4 and 5 of the Act, 1962, he submitted that

the officers of DRI would fall under Section 3 as “class of officers” and

under Section 4 as “officers of customs” and that the Board is empowered

to assign and fix powers and assign duties to such DRI officers similar to

other classes of officers and officers of customs.

31. In the aforesaid context, he submitted that having failed to advert to these

three sections and the various notifications referred to above, this Court

erred in placing sole reliance on Section 6 of the Act, 1962 to conclude that

DRI officers are not officers of customs as they belong to a different

department and require specific entrustment under Section 6 of the Act, 1962

by the Central Government before the powers of a proper officer under

Section 2(34) of the Act, 1962 can be assigned to them. Section 6 is

reproduced below:

“(6) The Central Government may, by notification in the

Official Gazette, entrust either conditionally or
unconditionally to any officer of the Central or the State
Government or a local authority any functions of the
Board or any officer of customs under this Act.”

32. He submitted that the question of entrustment would arise only in relation to

an officer of Central or State Government or Local Authority who does not

fall within the class of officers of customs under Section 3 appointed under

Section 4 of the Act, 1962. Some instances of the Central Government

entrusting such functions of customs officers under Section 6 are M.F.

Review Petition No. 400 of 2021 Page 27 of 161

 (D.R.) Notification No. 161-Cus dated 22.06.1963 and M.F.(D.R.&I.)

Notification No. 33-Cus., dated 27.04.1974 which entrusted functions of

customs officer to police officers in a particular jurisdiction and officers of

the Border Security Force respectively. However, in the case of DRI

officers, they would clearly fall under Sections 3, 4 and 5 of the Act, 1962

and the notifications conferring powers and duties are already on record.

33. Our attention was also drawn to Notification 161-Cus dated 22.06.1963

issued under Section 6 entrusting powers of search to DRI officers. As per

Notifications GSR 214 and GSR 215 issued in the same year under Section

4 of the Act, 1962, all officers of DRI were appointed as officers of customs.

Therefore, an inadvertent reference to Section 6 under Notification No. 161

dated 22.06.1963 should not lead to the drawing of any adverse inferences

as at the highest, it may only be a case of misquoting of a Section. Secondly,

till 11.05.2002, it was the Central Government which was the appointing

authority under Section 4 for officers of customs as well as for entrustment

under Section 6. It is only from 11.05.2002 that the powers under Section 4

were delegated to the Board since Notification No. 161 dated 22.06.1963

was issued prior to 11.05.2002 and the authority being the Central

Government under both Sections, any incorrect reference to a provision

would be totally inconsequential.

Review Petition No. 400 of 2021 Page 28 of 161

34. He submitted that by virtue of the aforesaid and also without reference to

the Notification No. 44/2011 – Cus (N.T.) dated 06.07.2011, erroneous

conclusions came to be rendered in paragraphs 17 to 23 of the decision under

review. The findings in Canon India (supra) in paragraphs 13 and 14

respectively that DRI officers belong to a different department and therefore

cannot become proper officers under Section 28, and if done so, would result

in anarchical and unruly operation of the statute, too, is erroneous in light of

the aforesaid submissions.

35. He further submitted that despite being a conceded position that issuance of

a show cause notice under Section 28 is a quasi-judicial exercise of power,

this Court fell in error in holding the same to be an administrative review in

paragraph 15. The Court also erred in concluding that the expression “the

proper officer” can only signify an officer empowered to undertake

assessment and re-assessment under Section 17, by placing unfounded

reliance on the decision in Consolidated Coffee Ltd. and Anr. v. Coffee

Board, Bangalore reported in 1980 AIR 1468 as it relates to a totally

different scenario envisaged under Article 286 read with Section 5 of the

Central Sales Tax Act, 1956.

36. After pointing out the aforesaid aspects as errors apparent on the face of the

record, he prayed that the present review petition be allowed.

Review Petition No. 400 of 2021 Page 29 of 161

 ii. Why the decision in Sayed Ali (supra) requires reconsideration

37. He submitted that there are two fundamental errors in the dictum laid in

Sayed Ali (supra) –

(i) Firstly, it casts an obligation that an officer of customs who is

empowered to undertake assessment or reassessment under Section 17

alone is qualified to become a proper officer under Section 28 for the

purpose of raising demand of short levy, non-levy or erroneous refund.

No other officer can be assigned the functions of the proper officer

under Section 28.

(ii) Secondly, the judgment was rendered in connection with officers of the

Customs (Preventive), who were not assigned the powers and duties of

a proper officer, and no notifications to this effect were produced or

brought to the notice of this Court.

38. It was pointed out by him that Sayed Ali (supra) did not deal with DRI

officers who were indeed vested with the powers of proper officers vide the

Circular No. 437/9/98-Cus.IV dated 15.02.1999 issued by the Board in terms

of Section 2(34). Under Section 2(34), the power of assigning functions of

a proper officer to an officer of customs vests with the Board or the

Commissioner of Customs. Since the Board issued this assignment, the DRI

officers became proper officers with effect from 15.02.1999. As a result, the

decision rendered in Sayed Ali (supra) which was with reference to only

Review Petition No. 400 of 2021 Page 30 of 161

 Customs (Preventive) would have no application to the DRI and DGAE

officers. The circular dated 15.02.1999 is reproduced hereinbelow:

“F. No. 437/9/98-Cus.IV

Circular No. 4/99-Cus

Dated 15/2/1999

Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Excise & Customs, New Delhi

Subject: Issuance of Show Cause Notice by the

Officers of directorate of Revenue Intelligence -
regarding-

A doubt has been recently raised as to whether the

Officers of Directorate of Revenue Intelligence could
issue show cause notices in cases investigated by them
– a practice started last year apparently in tune with the
practice of the Directorate General of Anti Evasion. The
matter has been examined in the Board.

2. It has been observed that in terms of Customs

Notification No. 19/90-Cus (NT.), dated 26.4.90, as
amended from time to time, the Officers of Directorate
of Revenue Intelligence of different categories have
been notified and appointed as Commissioners of
Customs, Deputy Commissioners of Customs or
Assistant Commissioners of Customs for the are
specified. These officers, therefore, can legally be
entrust with discharge of functions normally performed
by Commissioners, Deputy Commissioners or Assistant
Commissioners of Customs in their jurisdiction, as the
case may be. Board can no doubt subject these
powers/functions to certain restrictions/limitations as
may be imposed, as provided under section 5(1) of the
Customs Act.

Review Petition No. 400 of 2021 Page 31 of 161

 3. Directorate of Revenue Intelligence Officer are,
therefore, to undertake investigations of cases detected
by them, and to issue the Show Cause Notices on
completion of investigations. In line with the
instructions issued (vide F.No. 208/23/97-CX-8, dated
20.1.98) in respect of Officers of Directorate General
Anti Evasion, Board has decided that in impact of cases
investigated by the Directorate General of Revenue
intelligence, the officers of said Directorate will be
competent to and may issue show cause notices in cases
investigated by them – though these will continue to be
adjudicated by the concerned jurisdictional
Commissioners, Additional Commissioners, Deputy
Commissioners or Assistant Commissioners of
Customs, as the case may be.

4. The Board has also decided that these instructions

may kindly be brought to the notice of all departmental
officers by issuing suitable standing orders.

Sd/-
(Rajendra Singh)
Under Secretary to the Government of India”

39. As regards the observations in Sayed Ali (supra) on the inter se link between

Sections 17 and 28 of the Act, 1962 respectively, he submitted that no such

mandate flows from either of the two sections and reading any such linkage

into the scheme of the Act, 1962 would directly undermine the powers of

search, seizure and investigation of the DRI officers under the Act, 1962

along with the assignment of functions as proper officers to issue show cause

notices post such search and investigation. Although no disability is to be

found in any provisions of the Act, 1962, yet Sayed Ali (supra) creates such

an embargo and also proceeds to hold that empowering such officers to issue

Review Petition No. 400 of 2021 Page 32 of 161

 show cause notices would result in multiple persons dealing with the same

issue leading to utter chaos and confusion. He submitted that the Board has

been issuing circulars and notifications from time to time with a view to

ensure that no such overlap occurs. He also argued that the respondents have

not adduced any evidence or empirical statistics to even remotely indicate

that an importer has been visited with either multiple show cause notices or

adjudication orders on the same subject.

40. He further submitted that the Board had vested DRI with the power to issue

only show cause notices and the adjudication orders in furtherance of the

show cause notices were to be passed by the respective port officers. In cases

involving multiple ports, common adjudicators were assigned powers by the

Board and later also by the DRI and these adjudicators never involved

themselves either in the investigation of the case or in the issuance of show

cause notices. In such circumstances, he submitted that both the findings in

Sayed Ali (supra) require reconsideration.

41. He further drew our attention to Circular No. 18/2015 – Customs dated

09.06.2015 issued by the Board pertaining to the appointment of common

adjudicating authority and the mode and manner of assignment of functions

for adjudication with a view to avoid multiplicity or plurality. The same is

extracted below:

Review Petition No. 400 of 2021 Page 33 of 161

 “Circular No. 18/2015- Customs
F.No. 450/145/2014- Cus IV
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs

To
All Chief Commissioner of Customs / Customs
(Preventive)
All Chief Commissioners of Customs and Central
Excise
All Commissioners of Customs
All Commissioners of Customs and Central Excise

Sir / Madam,
Subject: Appointment of common adjudicating
authority -regarding
Reference is invited to Notification No 60/2015-
Customs (N.T.), dated 04.06.2015 whereby the power to
appoint common adjudicating authority in cases
investigated by DRI upto the level of Commissioner of
Customs has been delegated to Principal Director
General of Directorate of Revenue Intelligence in terms
of section 152 of the Customs Act, 1962. This
notification was issued in the interest of expediting
decision making with resultant benefits to both trade
and revenue in terms of faster settlement of outstanding
disputes. These appointments were done hitherto by the
Central Board of Excise and Customs under sections 4
and 5 of the Customs Act 1962.
2. In the light of the aforementioned notification, all
cases of appointment of common adjudicating authority
in respect of cases investigated by DRI will be handled
by Principal DG, DRI. In this regard, the Board has
prescribed the following guidelines for Principal DG,
DRI:
(a) The following cases initiated by DRI shall be
assigned to Additional Director General (Adjudication),
DRI:
(i) Cases involving duty of Rs.5 crores and above;

Review Petition No. 400 of 2021 Page 34 of 161

 (ii) Group of cases on identical issues involving
aggregate duty of Rs.5 crores or more;
(iii) Cases involving seizure value of Rs.5 crores or
more;
(iv) Cases of over-valuation irrespective of value
involved; and
(v) Existing DRI cases with erstwhile Commissioner
(Adjudication).
(b) Cases other than at (a) above involving more than
one Customs Commissionerate would be assigned to the
jurisdictional Commissioner of Customs on the basis of
the maximum duty evaded;
(c) Cases other than at (a) above involving a single
Customs Commissionerate would be assigned to the
jurisdictional Commissioner of Customs;
(d) Non-DRI cases pending with erstwhile
Commissioner (Adjudication) would be assigned to
Additional Director General (Adjudication), DRI;
(e) Past DRI cases pending for adjudication with
jurisdictional Commissioners of Customs would
continue with these officers;
(f) Remand cases would be decided by the original
adjudicating authority.
3. All other cases of appointment of common
adjudicator i.e. other than the cases mentioned in
paragraph 2 above would continue to be dealt by the
Board. This would include cases made by
Commissionerates or cases made by DRI wherein the
adjudicating officer is an officer below the level of
Additional Director General (Adjudication), DRI.
4. Board has also decided that all the pending cases
where common adjudicating authorities have not been
appointed so far or where the common adjudicating
authorities have been appointed but adjudications have
not been done should be disposed of expeditiously in
terms of aforementioned guidelines. However, while
doing so in regard to the latter category of cases,
Principal DG, DRI will take into consideration the fact
whether or not personal hearings have taken place and
the stage of passing the adjudication order. This is to
ensure that cases about to be finalized are not
reallocated to another adjudicating authority thereby

Review Petition No. 400 of 2021 Page 35 of 161

 defeating the objective of expediting the finalization of
disputes.
5. Difficulty faced, if any, may be brought to the notice
of the Board at an early date.
Yours faithfully
(Pawan Khetan)

OSD (Customs IV)”

42. He also brought to our notice similar notifications and circulars issued

subsequently to plead that all steps have been taken with a view to ensure

that there is no overlap of jurisdiction. In the absence of any evidence or

proof adduced by the importer, the dictum as laid in Sayed Ali (supra)

declaring that this would result in utter chaos and confusion and only such

officers vested with the power of assessment and re-assessment can issue

notices under Section 28, requires reconsideration.

iii. The decision in Mangali Impex (supra) is liable to be set aside and the
decision in Sunil Gupta (supra) ought to be affirmed
43. He submitted that the decision in Mangali Impex (supra) too observed that

the assignment of powers to DRI officers for issuing show cause notices

under Section 28 of the Act, 1962 would create a situation of utter confusion

and chaos and declared Section 28(11) of the Act, 1962 to be

unconstitutional for being violative of Article 14 owing to its inherent

arbitrariness. The decision also directed the Department to issue suitable

instructions and ensure avoidance of multiplicity or plurality of proceedings.

He submitted that the instructions have been scrupulously followed and

Review Petition No. 400 of 2021 Page 36 of 161

 complied with since 1999 through various notifications and Board circulars,

thereby avoiding any overlap. He submitted that it was because of this

reason that the importers were not able to produce any material to support

such adverse inferences. Thus, he submitted that the decision in Mangali

Impex (supra) also deserved to be set aside.

44. On the correctness of the decision in Mangali Impex (supra), he further

submitted that the reasoning in the decision i.e., the Validation Act, 2011

does not extend its non-obstante clause to anything contained elsewhere in

the same statute or in any other law for the time being in force, is incorrect

and not legally unsustainable. On the finding of the High Court that since

Explanation 2 remains on the statute even after the insertion of Section

28(11), it places an embargo for the period prior to 08.04.2011, for the

application of Section 28(11). The Ld. ASG submitted that Explanation 2,

in no way, had interfered or can interfere with the validating power

introduced vide Section 28(11). He delineated the sequence of events

leading to the insertion of Section 28(11) in the Act, 1962 to make good his

submission.

(i) This Court delivered the judgment in Sayed Ali (supra) on 18.02.2011.

(ii) Parliament vide the Finance Act, 2011 introduced certain amendments

to Section 28 on 08.04.2011.

Review Petition No. 400 of 2021 Page 37 of 161

 (iii) On 06.07.2011, the Central Government issued Notification 44/2011

assigning the functions of proper officers to officers of Customs

(Preventive), DRI, DGAE and officers of Commissioner of Central

Excise. The same is extracted below:

“Proper officers for Customs Sections 17 and 28

In exercise of the powers conferred by sub-section (34)
of section 2 of the Customs Act, 1962 (52 of 1962), the
Central Board of Excise and Customs hereby assigns
the functions of the proper officer to the following
officers mentioned in column (2) of the Table below, for
the purposes of section 17, section 28, section 28AAA
and second proviso to Section 124 of the said Act,
namely:-

TABLE
Sl.No. Designation of the officers
(1) (2)
1. Additional Director
Generals, Additional
Directors or Joint
Directors, Deputy
Directors or Assistant
Directors in the
Directorate General of
Revenue Intelligence.
2. Commissioners of
Customs (Preventive),
Additional
Commissioners or
Joint Commissioners
of Customs
(Preventive), Deputy
Commissioners or
Assistant
Commissioners of
Customs (Preventive).

Review Petition No. 400 of 2021 Page 38 of 161

 3. Additional Director
Generals, Additional
Directors or Joint
Directors, Deputy
Directors or Assistant
Directors in the
Directorate General of
Central Excise
Intelligence.
4. Commissioners of
Central Excise,
Additional
Commissioners or
Joint Commissioners
of Central Excise,
Deputy
Commissioners or
Assistant
Commissioners of
Central Excise.”
[Notification No. 44/2011-Cus. (N.T.), dated 6-7-2011]

(iv) The Validation Bill, 2011, introducing Section 28(11) along with the

Statement of Reasons came to be issued on 02.08.2011 and the same is

extracted below:

“Introduction of Sub-section 11 in Section 28 as per

the Customs (Amendment And Validation) Bill, 2011

“(11) Notwithstanding anything to the contrary

contained in any judgment, decree or order of any court
of law, tribunal or other authority, all persons
appointed as officers of Customs under sub-section (1)
of section 4 before the 6th day of July, 2011 shall be
deemed to have and always had the power of assessment
under section 17 and shall be deemed to have been and
always had been the proper officers for the purposes of
this section.”

Review Petition No. 400 of 2021 Page 39 of 161

 STATEMENT OF OBJECTS AND REASONS
The Customs Act, 1962 consolidates and amends the law
relating to customs. Clause (34) of section 2 of the said
Act defines the expression “proper officer” in relation to
the functions under the said Act to mean the officer of
customs who is assigned those functions by the Central
Board of Excise and Customs or the Commissioner of
Customs. Recently, a question has arisen as to whether
the Commissioner of Customs (Preventive) is competent
to exercise and discharge the powers of a proper officer
for issue of a notice for the demand of duty. The Hon’ble
Supreme Court of India in Commissioner of Customs
versus Sayed Ali and Anr. (Civil Appeal Nos. 4294-4295
of 2002) held that only a customs officer who has been
specifically assigned the duties of assessment and re-
assessment in the jurisdiction area is competent to issue
a notice for the demand of duty as a proper officer. As
such the Commissioner of Customs (Preventive) who has
not been assigned the function of a “proper officer” for
the purposes of assessment or re-assessment of duty and
issue of show cause Notice to demand Customs duty
under Section 17 read with Section 28 of the Act in
respect of goods entered for home consumption is not
competent to function as a proper officer which has not
been the legislative intent.

2. In view of the above the Show Cause Notices issued

over the time by the Customs officers such as those of the
Commissionerates of Customs (Preventive), Directorate
General of Revenue Intelligence and others, who were
not specifically assigned the functions of assessment and
re-assessment of customs duty may be construed as
invalid. The result would be huge loss of revenue to the
exchequer and disruption in the revenue already
mobilized in cases already adjudicated. However,
having regard to the urgency of the matter, the
Government issued notification on 6th July, 2011
specifically declaring certain officers as proper officers
for the aforesaid purposes.

Review Petition No. 400 of 2021 Page 40 of 161

 3. In the circumstances, it has become necessary to
clarify the true legislative intent that Show Cause
Notices issued by Customs officers, i.e., officers of the
Commissionerates of Customs (Preventive), Directorate
General of Revenue Intelligence (DRI), Directorate
General of Central Excise Intelligence (DGCEI) and
Central Excise Commissionerates for demanding
customs duty not levied or short levied or erroneously
refunded in respect of goods imported are valid,
irrespective of the fact that any specific assignment as
proper officer was issued or not. It is, therefore,
purposed to amend the Customs Act, 1962
retrospectively and to validate anything done or any
action taken under the said Act in pursuance of the
provisions of the said Act at all material times
irrespective of issuance of any specific assignment on 6th
July, 2011.

4. The Bill seeks to achieve the above objects.”

(v) Finally, the Validation Act came to be passed on 16.09.2011 and Sub-

Section (11) became part of Section 28.

45. He contended that Explanation 2 and the introduction of Section 28(11) are

for distinct purposes and are not connected to each other in any way. Prior

to 08.04.2011, the period of limitation available under the statute for

demanding short levy, non-levy or erroneous refund was six months.

Whereas after 08.04.2011, it was enhanced to one year. As the amendment

substituted the then-existing Section 28, it provided a saving provision to

protect the notices issued prior to 08.04.2011 from the extension of

limitation period from 6 months to one year. He submitted that the purport

of Explanation 2 was only to ensure that those rights envisaged under old

Review Petition No. 400 of 2021 Page 41 of 161

 Section 28 stand preserved. Explanation 2 did not deal with the jurisdictional

exercise of the power of DRI officers in issuing show cause notices under

Section 28, whereas, the Validation Act, 2011, introducing Section 28(11)

addressed precisely only that issue.

46. He submitted that the conclusion drawn in Mangali Impex (supra) was

legally incorrect for holding that Section 28(11) is overbroad in assuming

every officer of customs to be deemed as proper officers both for Sections

17 and 28. The Validation Act, 2011, was enacted to regularize only past

actions and not future actions, which are governed by Notification No.

44/2011 dated 06.07.2011 which even according to the High Court is valid

and proper. Consequently, the validation has a very limited role to play as it

travels back only to empower such of those officers of customs who had

issued show cause notices in the past and vesting them also with the power

under Section 17.

47. He submitted that the decision in Sunil Gupta (supra) clarifies the correct

legal position and should be held to be so by this Court.

iv. Changes introduced by the Finance Act, 2022 are in the nature of
surplusage

48. Lastly, he referred to the amendments brought about by the Finance Act,

2022, vide Sections 86, 87, 88, 94 and 97. The same are extracted below:

Section 86 - Amendment of section 2 of the Act, 1962

Review Petition No. 400 of 2021 Page 42 of 161

 “86. In the Customs Act, 1962 (52 of 1962), (hereinafter
referred to as the Customs Act), in section 2, in clause
(34), after the words "Principal Commissioner of
Customs or Commissioner of Customs", the words and
figure "under section 5" shall be inserted.”

Section 87 - Substitution of new section for section 3

of the Act, 1962
“87. For section 3 of the Customs Act, the following
section shall be substituted, namely:

3. Classes of officers of customs.-

"There shall be the following classes of officers of
customs, namely:--

(a) Principal Chief Commissioner of Customs or

Principal Chief Commissioner of Customs (Preventive)
or Principal Director General of Revenue Intelligence;

(b) Chief Commissioner of Customs or Chief

Commissioner of Customs (Preventive) or Director
General of Revenue Intelligence;

(c) Principal Commissioner of Customs or Principal

Commissioner of Customs (Preventive) or Principal
Additional Director General of Revenue Intelligence or
Principal Commissioner of Customs (Audit);

(d) Commissioner of Customs or Commissioner of

Customs (Preventive) or Additional Director General of
Revenue Intelligence or Commissioner of Customs
(Audit);

(e) Principal Commissioner of Customs (Appeals);

(f) Commissioner of Customs (Appeals);
(g) Additional Commissioner of Customs or Additional
Commissioner of Customs (Preventive) or Additional

Review Petition No. 400 of 2021 Page 43 of 161

 Director of Revenue Intelligence or Additional
Commissioner of Customs (Audit);

(h) Joint Commissioner of Customs or Joint

Commissioner of Customs (Preventive) or Joint
Director of Revenue Intelligence or Joint Commissioner
of Customs (Audit);

(i) Deputy Commissioner of Customs or Deputy

Commissioner of Customs (Preventive) or Deputy
Director of Revenue Intelligence or Deputy
Commissioner of Customs (Audit);

(j) Assistant Commissioner of Customs or Assistant

Commissioner of Customs (Preventive) or Assistant
Director of Revenue Intelligence or Assistant
Commissioner of Customs (Audit);

(k) such other class of officers of customs as may be

appointed for the purposes of this Act."

Section 88 - Amendment of section 5 of the Act, 1962

“88. In section 5 of the Customs Act,--
(a) after sub-section (1), the following sub-sections shall
be inserted, namely:--
"(1A) Without prejudice to the provisions contained in
sub-section (1), the Board may, by notification, assign
such functions as it may deem fit, to an officer of
customs, who shall be the proper officer in relation to
such functions.
(1B) Within their jurisdiction assigned by the Board, the
Principal Commissioner of Customs or Commissioner
of Customs, as the case may be, may, by order, assign
such functions, as he may deem fit, to an officer of
customs, who shall be the proper officer in relation to
such functions.”;
(b) after sub-section (3), the following sub-sections shall
be inserted, namely:-

Review Petition No. 400 of 2021 Page 44 of 161

 “(4) In specifying the conditions and limitations
referred to in sub-section (1), and in assigning functions
under sub-section (1A), the Board may consider any one
or more of the following criteria, including, but not
limited to--
(a) territorial jurisdiction;
(b) persons or class of persons;
(c) goods or class of goods;
(d) cases or class of cases;
(e) computer assigned random assignment;
(f) any other criterion as the Board may, by notification,
specify.
(5) The Board may, by notification, wherever necessary
or appropriate, require two or more officers of customs
(whether or not of the same class) to have concurrent
powers and functions to be performed under this Act.”

Section 94 - Insertion of new section 110AA to the

Act, 1962
“94. After section 110A of the Customs Act, the
following section shall be inserted, namely:--
110AA. Action subsequent to inquiry, investigation or
audit or any other specified purpose.-
“Where in pursuance of any proceeding, in accordance
with Chapter XIIA or this Chapter, if an officer of
customs has reasons to believe that--
(a) any duty has been short-levied, not levied, short-paid
or not paid in a case where assessment has already been
made;
(b) any duty has been erroneously refunded;
(c) any drawback has been erroneously allowed; or
(d) any interest has been short-levied, not levied, short-
paid or not paid, or erroneously refunded, then such
officer of customs shall, after causing inquiry,
investigation, or as the case may be, audit, transfer the
relevant documents, along with a report in writing.

Review Petition No. 400 of 2021 Page 45 of 161

 (i) to the proper officer having jurisdiction, as assigned
under section 5 in respect of assessment of such duty, or
to the officer who allowed such refund or drawback; or
(ii) in case of multiple jurisdictions, to an officer of
customs to whom such matter is assigned by the Board,
in exercise of the powers conferred under section 5, and
thereupon, power exercisable under sections 28, 28AAA
or Chapter X, shall be exercised by such proper officer
or by an officer to whom the proper officer is
subordinate in accordance with sub-section (2) of
section 5.”

Section 97 - Validation of certain actions taken under

the Act, 1962
“97. Notwithstanding anything contained in any
judgment, decree or order of any court, tribunal, or
other authority, or in the provisions of the Customs Act,
1962 (52 of 1962), (hereinafter referred to as the
Customs Act):-
(i) anything done or any duty performed or any action
taken or purported to have been taken or done under
Chapters V, VAA, VI, IX, X, XI, XII, XIIA, XIII, XIV, XVI
and XVII of the Customs Act, as it stood prior to its
amendment by this Act, shall be deemed to have been
validly done or performed or taken;
(ii) any notification issued under the Customs Act for
appointing or assigning functions to any officer shall be
deemed to have been validly issued for all purposes,
including for the purposes of section 6;
(iii) for the purposes of this section, sections 2, 3 and 5
of the Customs Act, as amended by this Act, shall have
and shall always be deemed to have effect for all
purposes as if the provisions of the Customs Act, as
amended by this Act, had been in force at all material
times.
Explanation. -- For the purposes of this section, it is
hereby clarified that any proceeding arising out of any
action taken under this section and pending on the date
of commencement of this Act shall be disposed of in
accordance with the provisions of the Customs Act, as
amended by this Act.”

Review Petition No. 400 of 2021 Page 46 of 161

49. He submitted that the amendments carried out in the Act, 1962 vide Sections

87 and 88 of the Finance Act, 2022 respectively are a mere surplusage done

ex abundanti cautela and are clarificatory in nature. He further submitted

that Section 3 deals with classes of officers and officers of the same rank

will constitute the same class. The amended Section 5 only expands the very

same class with designation and functions and nothing more.

50. He submitted that Section 94 of the Finance Act, 2022 introducing Section

110AA to the Act, 1962 is only a way forward for the future wherein post

search and investigation by the DRI, certain category of cases have now been

directed to be handed over to the port authorities for issuing necessary show

cause notices and this, in no way, can vitiate notices issued by DRI earlier

especially in the absence of a constitutional or statutory embargo.

51. Finally, he submitted that a provision of law should appear arbitrary or

abusive to be declared illegal or unconstitutional or invalid. A possible

misuse of the provision by the authorities or a perceived misuse or mere

presumptions and conjectures of a possible misuse cannot constitute basis to

hold that a provision is arbitrary and violative of Article 14. He relied on the

following decisions to fortify his submission:

a. Collector of Customs v. Nathella Sampathu Chetty, 1962 SCC

OnLine SC 30

b. Shreya Singhal v. Union of India, (2015) 5 SCC 1

Review Petition No. 400 of 2021 Page 47 of 161

 c. Commissioner of Customs v. Dilip Kumar & Co., (2018) 9 SCC 1

d. Goodyear India Ltd. v. State of Haryana, (1990) 2 SCC 71

C. SUBMISSIONS ON BEHALF OF THE RESPONDENTS

52. Mr. Mukul Rohatgi, Mr. Arvind Datar and Mr. V. Lakshmikumaran, learned

Senior Counsel appeared on behalf of the various importers and vehemently

objected to the review of Canon India (supra) and also contended that both

Sayed Ali (supra) and Mangali Impex (supra) are correct in their

conclusions and need no interference.

53. Mr. Mukul Rohatgi contended that the power of review is extremely

circumscribed and limited. It is not a means to provide a second innings to

anyone. The Department in the guise of a review is seeking to re-argue the

whole matter. Even if a different view is possible, the same cannot give

rise to a review. He relied on the following decisions:

(i) Col. Avtar Singh Sekhon v. Union of India, (1980) Supp SCC 562

(ii) Lily Thomas Vs Union of India, (2000) 6 SCC 224

(iii) Champsey Bhara & Co. v. Jivraj Balloo Spinning and Weaving Co.

Ltd., (1923) SCC OnLine PC 10

(iv) State of Telangana v. Mohd. Abdul Qasim, (2024) 6 SCC 461.

Review Petition No. 400 of 2021 Page 48 of 161

54. Mr. Arvind Datar too submitted that the scope of review is extremely limited

and further contended that Section 97 of the Finance Act, 2022 is a clear

overreach and needs to be considered separately.

55. Mr. V. Lakshmikumaran made the following submissions:

(i) The scheme of the Act, 1962 clearly indicates that Sections 17, 46,

47 and 28 of the Act, 1962 respectively are interlinked to and inter-

dependent on each other. These provisions involve a sequential flow

of events to be processed by a single officer, and therefore,

empowering DRI officers who are not connected to this scheme, is

illegal.

(ii) Section 17 deals with assessment and reassessment. Section 46

obligates filing of bills of entries. Section 47 allows clearance of

goods for home consumption post the assessment under Section 17

and Section 28 pertains to demand of duty in the nature of short levy,

short paid and erroneously refunded. Since all these statutory action

points are interrelated, it is the same proper officer who should be

empowered to perform all of these four functions and the same

cannot be assigned to different sets of officers.

(iii) The amendment to Section 17 in 2011 allowing self-assessment is

inconsequential since the power to assess and reassess and allow

clearances is still with the officer of customs.

Review Petition No. 400 of 2021 Page 49 of 161

 (iv) On the issue of whether there are any statutory limitations to the

assignment of powers under Section 28 only to those officers who

do assessment or re-assessment under Section 17, he submitted that

the scheme of the Act, 1962 as explained in Sayed Ali (supra) and

Mangali Impex (supra), clearly indicates that Sections 17 and 28 of

the Act, 1962 respectively are interconnected and interdependent.

(v) Canon India (supra) is correct in holding that DRI officers should

be entrusted with the functions under Section 6 of the Act, 1962.

Since the Central Government has not done so, they cannot be

assigned the functions of proper officer.

(vi) Section 5 of the Act, 1962 deals only with powers and duties but not

the functions, whereas, Section 6 deals with functions and thus, a

notification under Section 6 is necessary. He emphasised on the

different consequences arising from the use of the words “powers”

and “duties” in Section 5 and use of the word “functions” in Section

6.

(vii) It was contended that Section 28 deals with short levy, non-levy and

erroneous refund. Levy means determination of duty through a

process of assessment/reassessment. Section 28 therefore involves

rendering a finding that the earlier assessment was not correct.

Section 28 is intended to revise or upset the original assessment done

Review Petition No. 400 of 2021 Page 50 of 161

 under Section 17 and once an order gets passed under Section 28, the

original assessment would not survive and therefore, the same

officer can issue the show cause notice.

(viii) The Board’s Circular dated 15.02.1999 cannot come to the rescue of

the Department because there was no assignment of function of

assessment/reassessment as required by Sayed Ali (supra).

According to the learned counsel, both Notification No. 44/2011

dated 06.07.2011 and Section 28(11) were brought to the notice of

this Court in Canon India (supra).

(ix) Having accepted the principles laid down in Sayed Ali (supra) on the

interlinkage between Sections 17 and 28 of the Act, 1962

respectively, both vide Section 28(11) and Notification No. 44/2011

dated 06.07.2011, it is not open to the Department to now contend

the contrary as reaffirmed in Canon India (supra).

(x) All proper officers are officers of customs, but all officers of customs

are not proper officers. Mere conferment of power or assignment of

functions of assessment/reassessment under Sections 17 and 28 of

the Act, 1962 respectively is not enough. Out of the various proper

officers who have been empowered under Sections 17 and 28, only

that proper officer who had actually carried out the assessment will

be the proper officer. There can be concurrent conferment of power

Review Petition No. 400 of 2021 Page 51 of 161

 but there cannot be concurrent exercise of powers as the same may

result in chaos and utter confusion.

(xi) The decision rendered by the High Court in Mangali Impex (supra)

is correct and need not be disturbed for the following reasons:

a. Section 28(11) does not validate the show cause notices issued

by various officers. It merely deems all officers who were

appointed as officers of customs under Section 4(1) to have

always had the powers under Sections 17 and 28 the Act, 1962

respectively. This would not automatically revive the show

cause notices issued by such officers of customs.

b. In order to hold that Section 28(11) validates past actions, this

Court will have to insert words in the statute, that too in a taxing

statute which imposes liabilities on assesses, that too

retrospectively.

c. Several unintended consequences may arise if it is held that

show cause notices issued by other officers of customs will be

revived. There are instances wherein many show cause notices

have been issued after the Sayed Ali (supra) judgment by the

jurisdictional commissionerate wherever the limitation period

permitted for demands to be made. In those cases, assessees will

be faced with two show cause notices. He laid emphasis on the

Review Petition No. 400 of 2021 Page 52 of 161

 need to take an undertaking from the Department to avoid such

a situation if it were to arise.

d. The High Court has correctly held that Section 28(11)

perpetrates the very chaos that the judgment in Sayed Ali

(supra) sought to prevent.

e. Explanation 2 to Section 28 should be given a plain meaning. It

was in the statute before Section 28(11) was introduced, hence

the framers of the statute were well aware of the implications

of the Explanation 2.

f. On 08.4.2011, Section 28 of the Act, 1962 underwent a drastic

change and not just a mere change in terms of time period being

changed from six months to one year. The mode & manner of

issuing the show cause notice, the manner of adjudication and

payment of duty, etc. have been amended making it more

beneficial to the assessee. That is the reason why the old notices

were to be dealt with under the old Section.

g. It is impossible to read Section 28(11) and Explanation 2

together as validating any action prior to 08.04.2011. Such is

the plain meaning and only such an interpretation is warranted

in the present case.

Review Petition No. 400 of 2021 Page 53 of 161

 (xii) Section 97 of the Finance Act, 2022 is liable to be struck down as

manifestly arbitrary and thus violative of Article 14. According to

him, the Finance Act, 2022 does not cure the defects pointed out by

this Court in its decision rendered in Canon India (supra) for the

following reasons:

a. The amendments introduced vide the Finance Act, 2022

continue to violate the principles laid down in the judgment of

this Court in Sayed Ali (supra) wherein it was held that granting

jurisdiction to multiple officers will create utter chaos and

confusion. He highlighted that the review filed against the

decision in Sayed Ali (supra) has already been dismissed.

b. The validation of past actions by way of Section 97(i) of the

Finance Act, 2022 violates the principles enshrined in the

judgment of Canon India (supra) since it will lead to a very

anarchical and unruly operation of a statute which was sought

to be avoided in Canon India (supra).

c. A Validation Act can only validate the law but cannot validate

a fact. Once a particular officer has exercised the function of

assessment, it is a jurisdictional fact that has occurred to the

exclusion of all other groups in the Customs Department.

Thereafter, only that officer or his superiors (known as the

Review Petition No. 400 of 2021 Page 54 of 161

 Customs group) who had undertaken assessment under Section

17 in the first place shall have the jurisdiction to issue notices

for recovery of duty under Section 28.

d. This Court in its judgment in Canon India (supra) found that

factually the assessments were initially not undertaken by

officers of DRI and such a defect cannot be cured

retrospectively by a validating law. Therefore, the present

amendments seek to validate and effectively change a judicially

determined fact, which cannot be done by a legislation.

(xiii) The Finance Act, 2022 also introduced a provision, i.e. Section

110AA, providing a mechanism for actions to be taken subsequent

to inquiry, investigation or audit by any officer of customs. Section

110AA operates only prospectively. This provision is Parliament’s

recognition of the importance of maintaining the jurisdiction for

issuing show cause notices within the assessing group.

(xiv) Further, by retrospectively modifying the scheme of appointment

and assignment of functions to officers of customs, a larger lacuna

has been created as there exist no valid notifications for assignment

of functions of a ‘proper officer’ under Section 5 for the period prior

to 01.04.2022. Thus, all actions performed by any officer of Customs

prior to 01.04.2022 have in fact been performed without jurisdiction.

Review Petition No. 400 of 2021 Page 55 of 161

 In such circumstances referred to above, it was prayed that there

being no merit in the Review Petition filed by the Department, the

same may be dismissed.

Review Petition No. 400 of 2021 Page 56 of 161

 D. ISSUES FOR CONSIDERATION

56. Having heard the learned counsel appearing for the parties and having gone

through the materials on record, the following questions fall for our

consideration:

(i) Whether there is an “error apparent on the face of the record” for the

purpose of entertaining the review petition?

(ii) If the answer to the aforesaid question is in the affirmative, then

whether the exposition of law propounded by this Court in Canon

India (supra) as regards the power of the DRI to issue show cause

notices could be said to be the correct statement of law?

This would entail addressal of the following questions:

a. Whether officers of DRI are the proper officers for the purposes

of Section 28 of the Act, 1962?

b. What would be the extent, scope and domain of Section 6 of the

Act, 1962 vis-à-vis Section 2(34), Section 3, Section 4 and Section

5 of the Act, 1962 and whether an entrustment by the Central

Government under Section 6 of the Act, 1962 is mandatory to

empower the Officers of the DRI for the purpose of issuing show

cause notices?

c. Whether the power under Section 28 can be exercised only by

someone who is empowered to exercise the power under Section

Review Petition No. 400 of 2021 Page 57 of 161

 17 of the Act, 1962 for the goods in question? In other words, how

best the meaning of the expression “proper officer” should be

construed for the purposes of exercise of functions under Section

28?

d. Whether “the proper officer” in Section 28 must necessarily be the

same proper officer referred to under Section 17 of the Act, 1962?

If no, whether the use of the definite article “the” in the expression

“the proper officer” in Section 28 is in the context of that proper

officer who has been assigned the powers of discharging the

functions under Section 28 by virtue of powers conferred under

Section 5 of the Act, 1962?

e. Whether issuance of show cause notices followed by adjudication

under Section 28 of the Act, 1962 is an administrative review as

held in Canon India (supra) or a quasi-judicial exercise of power

under administrative law?

(iii) Whether the introduction of Section 28(11) vide the Validation Act of

2011 which retrospectively validates the show cause notices issued

under Section 28 with effect from 06.07.2011, is discriminatory and

arbitrary for not curing the defect highlighted in Sayed Ali (supra) and,

therefore, is violative of Article 14 of the Constitution of India?

Review Petition No. 400 of 2021 Page 58 of 161

 (iv) Whether the judgment delivered by the High Court of Delhi in the case

of Mangali Impex (supra) expounds the correct interpretation of

Section 28(11)?

(v) Whether Section 97 of the Finance Act, 2022, which retrospectively

validates the show cause notices with effect from 01.04.2023, is

manifestly arbitrary and therefore, violative of Article 14 of the

Constitution of India?

E. ANALYSIS

i. Review jurisdiction

57. Article 137 of the Constitution of India provides for review of judgments or

orders by the Supreme Court. It reads as under:

“137. Review of judgments or orders by the Supreme

Court. — Subject to the provisions of any law made by
Parliament or any rules made under Article 145, the
Supreme Court shall have power to review any judgment
pronounced or order made by it.”

58. Further, Part IV Order XLVII of the Supreme Court Rules, 2013 deals with

the review and consists of five rules. Rule 1 is relevant for our purposes. It

reads as under:

“1. The Court may review its judgment or order, but no

application for review will be entertained in a civil
proceeding except on the ground mentioned in Order 47
Rule 1 of the Code and in a criminal proceeding except

Review Petition No. 400 of 2021 Page 59 of 161

 on the ground of an error apparent on the face of the
record.”

59. Order XLVII Rule 1(1) of the Code of Civil Procedure, 1908 provides for

an application for review which reads as under:

“1. Application for review of judgment. — Any person

considering himself aggrieved—

(a) by a decree or order from which an appeal is

allowed, but from which no appeal has been preferred,

(b) by a decree or order from which no appeal is

allowed, or

(c) by a decision on a reference from a Court of Small

Causes, and who, from the discovery of new and
important matter or evidence which, after the exercise
of due diligence, was not within his knowledge or could
not be produced by him at the time when the decree was
passed or order made, or on account of some mistake or
error apparent on the face of the record, or for any other
sufficient reason, desires to obtain a review of the
decree passed or order made against him, may apply for
a review of judgment to the court which passed the
decree or made the order.”

60. Thus, in view of the above, the following grounds of review are maintainable

as stipulated by the statute:

(i) Discovery of new and important matter or evidence which, after the

exercise of due diligence, was not within the knowledge of the

Review Petition No. 400 of 2021 Page 60 of 161

 petitioner or could not be produced by him at the time when the decree

was passed or order made;

(ii) Mistake or error apparent on the face of the record; or

(iii) Any other sufficient reason.

61. The words “any other sufficient reason” have been interpreted by the Privy

Council in the case of Chhajju Ram v. Neki reported in 1922 SCC OnLine

PC 11 and approved by this Court in Moran Mar Basselios

Catholicos v. Mar Poulose Athanasius reported in 1954 SCC OnLine SC

49 to mean a reason sufficient on grounds, at least analogous to those

specified in the rule.

62. In the case of Tinkari Sen v. Dulal Chandra Das reported in 1966 SCC

OnLine Cal 103, the Calcutta High Court held that if the court overlooks or

fails to consider a legal provision that grants it the authority to act in a

specific manner, this may amount to an error analogous to one apparent on

the face of the record. Such an oversight would fall within the scope of Order

XLVII, Rule 1 of the Code of Civil Procedure, 1908 which allows for

reviews. Relevant parts are extracted below:

“18. Consider, in this context, Sir Hari Sankar

Pal v. Anath Nath Mitter, AIR 1949 FC 106. Mr.
Chittatosh Mookerjee refers me to Mukherjee, J. (as his
Lordship then was), observed, Kania C.J. Fazl Ali,
Patanjali Sastri and Mahajan, JJ. (as their Lordships
then were) agreeing:
“That a decision is erroneous in law is certainly no
ground for ordering review. If the Court has decided a

Review Petition No. 400 of 2021 Page 61 of 161

 point and decided it erroneously, the error could not be
one apparent on the face of the record or even
analogous to it “When, however, the Court disposes of
a case without adverting to or applying its mind to a
provision of law which gives it jurisdiction to act in a
particular way that may amount to an error analogous
to one apparent on the face of the record sufficient to
bring the case within the purview of Order 47, rule 1
of the CPC.”
[Emphasis supplied]

63. In Girdhari Lal Gupta v. D. H. Mehta reported in (1971) 3 SCC 189, this

Court allowed the review on the ground that its attention was not given to a

particular provision of the statute. The relevant observations read as follows:

“15. The learned counsel for the respondent State

urges that this is not a case fit for review because it is
only a case of mistaken judgment. But we are unable
to agree with this submission because at the time of the
arguments our attention was not drawn specifically to
sub-section 23-C(2) and the light it throws on the
interpretation of sub-section (1).

16. In the result the review petition is partly allowed and

the judgment of this Court in Criminal Appeal No. 211
of 1969 modified to the extent that the sentence of six
months' rigorous imprisonment imposed on Girdharilal
is set aside. The sentence of fine of Rs 2000 shall,
however, stand.”
[Emphasis supplied]

64. In M/s Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi

reported in (1980) 2 SCC 167, the scope of the power of review was

explained by this Court wherein it was held that:

Review Petition No. 400 of 2021 Page 62 of 161

 “8. It is well-settled that a party is not entitled to seek a
review of a judgment delivered by this Court merely for
the purpose of a rehearing and a fresh decision of the
case. The normal principle is that a judgment
pronounced by the Court is final, and departure from
that principle is justified only when circumstances of a
substantial and compelling character make it
necessary to do so: Sajjan Singh v. State of
Rajasthan [AIR 1965 SC 845 : (1965) 1 SCR 933, 948 :
(1965) 1 SCJ 377] . For instance, if the attention of the
Court is not drawn to a material statutory provision
during the original hearing, the Court will review its
judgment: G.L. Gupta v. D.N. Mehta [(1971) 3 SCC
189 : 1971 SCC (Cri) 279 : (1971) 3 SCR 748, 750] .
The Court may also reopen its judgment if a manifest
wrong has been done and it is necessary to pass an
order to do full and effective justice: O.N.
Mohindroo v. Distt. Judge, Delhi [(1971) 3 SCC 5 :
(1971) 2 SCR 11, 27]. ….
[Emphasis supplied]

65. This Court in Yashwant Sinha v. CBI reported in (2020) 2 SCC 338, has

observed that if a relevant law has been ignored while arriving at a decision,

it would make the decision amenable to review. The relevant observations

read as follows:

“78. The view of this Court, in Girdhari Lal

Gupta [Girdhari Lal Gupta v. D.H. Mehta, (1971) 3
SCC 189 : 1971 SCC (Cri) 279 : AIR 1971 SC 2162 :
(1971) 3 SCR 748] as also in Deo Narain Singh [Deo
Narain Singh v. Daddan Singh, 1986 Supp SCC 530] ,
has been noticed to be that if the relevant law is ignored
or an inapplicable law forms the foundation for the
judgment, it would provide a ground for review. If a
court is oblivious to the relevant statutory provisions,
the judgment would, in fact, be per incuriam. No doubt,
the concept of per incuriam is apposite in the context of
its value as the precedent but as between the parties,

Review Petition No. 400 of 2021 Page 63 of 161

 certainly it would be open to urge that a judgment
rendered, in ignorance of the applicable law, must be
reviewed. The judgment, in such a case, becomes open
to review as it would betray a clear error in the
decision.”
[Emphasis supplied]

66. In Sow Chandra Kant and Anr. v. Sheikh Habib reported in (1975) 1 SCC

674, this Court held:

“1. Mr Daphtary, learned counsel for the petitioners,

has argued at length all the points which were urged at
the earlier stage when we refused special leave thus
making out that a review proceeding virtually amounts
to a re-hearing. May be, we were not right is refusing
special leave in the first round; but, once an order has
been passed by this Court, a review thereof must be
subject to the rules of the game and cannot be lightly
entertained. A review of a judgment is a serious step
and reluctant resort to it is proper only where a glaring
omission or patent mistake or like grave error has crept
in earlier by judicial fallibility. A mere repetition,
through different counsel, of old and overruled
arguments, a second trip over ineffectually covered
ground or minor mistakes of inconsequential import are
obviously insufficient. The very strict need for
compliance with these factors is the rationale behind the
insistence of counsel's certificate which should not be a
routine affair or a habitual step. It is neither fairness to
the Court which decided nor awareness of the precious
public time lost what with a huge backlog of dockets
waiting in the queue for disposal, for counsel to issue
easy certificates for entertainment of review and fight
over again the same battle which has been fought and
lost. The Bench and the Bar, we are sure, are jointly
concerned in the conservation of judicial time for
maximum use. We regret to say that this case is typical
of the unfortunate but frequent phenomenon of repeat
performance with the review label as passport. Nothing
which we did not hear then has been heard now, except

Review Petition No. 400 of 2021 Page 64 of 161

 a couple of rulings on points earlier put forward. May
be, as counsel now urges and then pressed, our order
refusing special leave was capable of a different course.
The present stage is not a virgin ground but review of
an earlier order which has the normal feature of
finality.”
[Emphasis supplied]

67. Thus, the decisions referred to above make it abundantly clear that 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 Order XLVII Rule 1 of the Code of Civil Procedure,

1908. In other words, 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.

68. From here onwards, our endeavour is to ascertain whether the relevant

provisions of law including the notifications issued by the Board from time

to time were brought to the notice of the Court while deciding Canon India

(supra).

69. A three-Judge Bench in Canon India (supra) examined whether officers of

the DRI are proper officers for the purpose of issuing recovery notices under

the provisions of Section 28 of the Act, 1962.

70. The Court while deciding the aforesaid question held as under:

Review Petition No. 400 of 2021 Page 65 of 161

 “11. There are only two articles “a (or an)” and “the”.
“A (or an)” is known as the indefinite article because it
does not specifically refer to a particular person or
thing. On the other hand, “the” is called the definite
article because it points out and refers to a particular
person or thing. There is no doubt that, if Parliament
intended that any proper officer could have exercised
power under Section 28(4), it could have used the word
“any”.

12. Parliament has employed the article “the” not

accidently but with the intention to designate the proper
officer who had assessed the goods at the time of
clearance. It must be clarified that the proper officer
need not be the very officer who cleared the goods but
may be his successor in office or any other officer
authorised to exercise the powers within the same office.
In this case, anyone authorised from the Appraisal
Group. Assessment is a term which includes
determination of the dutiability of any goods and the
amount of duty payable with reference to, inter alia,
exemption or concession of customs duty vide Section
2(2)(c) of the Customs Act, 1962 [ “2. Definitions.—In
this Act, unless the context otherwise requires—***(2)
“assessment” means determination of the dutiability of
any goods and the amount of duty, tax, cess or any other
sum so payable, if any, under this Act or under the
Customs Tariff Act, 1975 (51 of 1975) (hereinafter
referred to as the Customs Tariff 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, consequent upon any notification issued
therefor under this Act or under the Customs Tariff Act
or under any other law for the time being in force;”] .

13. The nature of the power to recover the duty, not paid
or short-paid after the goods have been assessed and
cleared for import, is broadly a power to review the
earlier decision of assessment. Such a power is not
inherent in any authority. Indeed, it has been conferred
by Section 28 and other related provisions. The power
has been so conferred specifically on “the proper

Review Petition No. 400 of 2021 Page 66 of 161

 officer” which must necessarily mean the proper officer
who, in the first instance, assessed and cleared the
goods i.e. the Deputy Commissioner Appraisal Group.
Indeed, this must be so because no fiscal statute has
been shown to us where the power to reopen assessment
or recover duties which have escaped assessment has
been conferred on an officer other than the officer of the
rank of the officer who initially took the decision to
assess the goods.

14. Where the statute confers the same power to perform

an act on different officers, as in this case, the two
officers, especially when they belong to different
departments, cannot exercise their powers in the same
case. Where one officer has exercised his powers of
assessment, the power to order reassessment must also
be exercised by the same officer or his successor and not
by another officer of another department though he is
designated to be an officer of the same rank. In our view,
this would result into an anarchical and unruly
operation of a statute which is not contemplated by any
canon of construction of statute.”

71. The aforesaid observations are in line with the decision of this Court in

Sayed Ali (supra). However, it is relevant to note that when Sayed Ali

(supra) was decided, Section 17 read differently and the true purport of

Section 4 of the Act, 1962 was not considered. We shall deal with this aspect

subsequently.

72. The Court further held as under:

“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 Director General can be
considered to be a proper officer only if it is shown that

Review Petition No. 400 of 2021 Page 67 of 161

 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 Director General of the DRI can be
considered to be a Customs officer only if he is shown to
have been appointed as Customs officer under the
Customs Act. 17. Shri Sanjay Jain, Learned Additional
Solicitor General, relied on a Notification No. 17/2002-
Customs (N.T.), dated 7-3-2002 to show all Additional
Directors General of the DRI have been appointed as
Commissioners of Customs. At the relevant time, the
Central Government was the appropriate authority to
issue such a notification. This notification shows that all
Additional Directors General, mentioned in Column (2),
are appointed as Commissioners of Customs.

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 :-

“[To be published in the Gazette of India,

Extraordinary, Part I, Section 3, Sub-section (i)]

Government of India

Ministry of Finance

(Department of Revenue)

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

Review Petition No. 400 of 2021 Page 68 of 161

 New Delhi, dated the 2nd May, 2012

S.O. (E). - In exercise of the powers conferred by

subsection (34) of section 2 of the Customs Act, 1962 (52
of 1962), the Central Board of Excise 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 in the
corresponding entry in Column (3) of the said Table :-

Designation of the Functions under

officers Section of the
Sl. No. Customs Act,
1962
(1) (2) (3)
Commissioner (i) Section 33
of Customs
Additional (i) Sub-section (5)
Commissioner or of section 46; and
Joint (ii) Section 149
Commissioner of
Customs
Deputy (i) ….. (ii) …..
Commissioner or (iii) ….. (iv)…..
Assistant (v) …..
Commissioner of
Customs and (vi) Section
Central Excise 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 functions are assigned to
officers referred to in Column (3) and those officers
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 appears to
be ill-founded. The notification is purported to have
been issued in exercise of powers under sub-section (34)

Review Petition No. 400 of 2021 Page 69 of 161

 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 :-

“2. Definitions. - In this Act, unless the context

otherwise requires, - … 136/163
https://www.mhc.tn.gov.in/judis W.P.Nos.33099 of
2015 & etc., (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 officer on other
officers of the Central or the State Government or local
authority, it reads as follows:-

“6. Entrustment of functions of Board and customs

officers on certain other officers. - The Central
Government may, by notification in the Official
Gazette, entrust either conditionally or
unconditionally to any officer of the Central or the
State Government or a local authority any functions
of the Board or any officer of customs under this
Act.”

21. If it was intended that officers of the Directorate 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 4-12-1957 issued by the Ministry of
Finance and Customs officers who, till 11- 5-2002, were
appointed by the Central Government. The notification

Review Petition No. 400 of 2021 Page 70 of 161

 which purports to entrust functions as proper officer
under the Customs Act has been issued by the Central
Board of Excise and Customs in exercise of non-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 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
= 2011 (265) E.L.T. 17 (S.C.)] wherein the proper
officer in respect of the jurisdictional area was
considered. The consideration made is as 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 duly assessed, and the
benefit of the exemption was extended, subject to
execution of a bond by the importer which was duly
executed undertaking the obligation of export. The
Learned Counsel argued that the function of the
preventive staff is confined to goods which 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
or erroneously refunded, and provides that :

“28. Notice for payment of duties, interest, etc. -

(1) When any duty has not been levied or has been
short-levied or erroneously refunded, or when
any interest payable has not been paid, part paid

Review Petition No. 400 of 2021 Page 71 of 161

 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
short-levied or part paid or to whom the refund
has erroneously been made, requiring him to
show cause 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 or the interest has not
been charged or has been part paid or the duty or
interest has been erroneously refunded by reason
of collusion or any wilful misstatement or
suppression of facts by the importer or the
exporter or the agent or employee of the importer
or exporter, the provisions of this sub-section 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 on an import made by any
individual for 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 on the
person chargeable, 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’.

Review Petition No. 400 of 2021 Page 72 of 161

 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 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 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 assessment 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
28 of the Act. Any 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 aside and the ensuing
demands are also set aside.”

Review Petition No. 400 of 2021 Page 73 of 161

73. It is not in dispute that Canon India (supra) is based on the decision of this

Court in Sayed Ali (supra). We say so because in Canon India (supra), the

petitioner had not questioned the jurisdiction of the officers of DRI either

before the departmental authorities or before the Tribunal. We must,

therefore, first look into the judgment rendered in Sayed Ali (supra).

ii. The decision in Commissioner of Customs v. Sayed Ali

74. In Sayed Ali (supra), a show cause notice dated 28.08.1991 was issued by

the Assistant Collector of Customs (Preventive), Mumbai, alleging a

violation of the provisions of Section 111(d) of the Act, 1962. It culminated

in an order dated 03.02.1993 which was appealed before the Collector of

Customs (Appeals). An order was passed by the Collector of Customs

(Appeals) on 14.12.1993. The Collector of Customs (Appeals) allowed the

appeal by holding that the matter involved demand of duty beyond a period

of six months and therefore the show cause notice could have been issued

only by the Collector and not by the Assistant Collector of Customs

(Preventive). At that point of time, there were circulars of the Board, which

stipulated pecuniary limits for officers to exercise powers under various

provisions of the Act. Thus, the Collector (Appeals) granted liberty to the

department to re-adjudicate the case by issuing a proper show cause notice.

75. The Collector of Customs (Preventive) thus issued a show cause notice dated

16.04.1994, calling upon the importer to show cause as to why the goods

Review Petition No. 400 of 2021 Page 74 of 161

 seized should not be confiscated, why the customs duty amounting to

Rs.5,07,274/- should not be levied in terms of Section 28(1) of the Act, 1962,

by invoking the extended period of limitation, and why the penalties under

Sections 112(a) and (b)(i) and (ii) of the Act, 1962, should not be imposed

on the said importer.

76. The jurisdiction of the Collector of Customs (Preventive) to issue the show

cause notice was questioned in the reply to the show cause notice by

referring to Notification No. 251/83 and Notification No.250/83. The

Collector of Customs (Preventive) rejected the submission on the point of

jurisdiction. The demand was thus affirmed by the Collector of Customs

(Preventive) vide Order dated 19.08.1996. The matter was taken up before

the Tribunal, which held that the Commissioner of Customs (Preventive)

had no jurisdiction to issue the show cause notice and therefore did not have

the jurisdiction to adjudicate the matter when the imports had taken place

within the Bombay Customs House.

77. This Court, after referring to Section 28 of the Act, 1962 as it stood during

the period in dispute, concluded that from a conjoint reading of Section

2(34) and Section 28 of the Act, 1962, it is manifest that only such a customs

officer who has been assigned the specific functions of assessment and re-

assessment of duty in the jurisdictional area where the import concerned has

been effected, either by the Board or the Commissioner of Customs, in terms

Review Petition No. 400 of 2021 Page 75 of 161

 of Section 2(34) of the Act, 1962, was competent to issue notice under

Section 28 of the Act, 1962.

78. This Court further held that “…any other reading of Section 28 would render

the provisions of Section 2(34) of the Act otiose in as much as the test

contemplated under Section 2(34) of the Act of the Act is that of specific

conferment of such functions”. It further held that “Moreover, if the

Revenue's contention that once territorial jurisdiction is conferred, the

Collector of Customs (Preventive) becomes a "proper officer" in terms of

Section 28 of the Act, 1962 is accepted, 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 be "proper officers" ”.

79. This Court concluded that “It is only the officers of customs, who are

assigned the functions of assessment, which of course, would include re-

assessment, working under the jurisdictional Collectorate within whose

jurisdiction the bills of entry or baggage declarations had been filed and the

consignments had been cleared for home consumption, will have the

jurisdiction to issue notice under Section 28 of the Act”. Thus, the

proceedings impugned therein were set aside.

Review Petition No. 400 of 2021 Page 76 of 161

80. Thereafter, a Review Petition was filed by the Department in the aforesaid

case. This Court dismissed the Review Petition on the ground of delay in

filing the review.

81. ⁠The decision in Sayed Ali (supra) proceeds on the assumption that for the

"proper officer" to exercise the functions under Section 28 of the Act, 1962,

such officer must necessarily possess the power of assessment and

reassessment under Section 17. However, a plain reading of Sections 17 and

28 of the Act, 1962 does not bring out any such inter-dependence between

the two provisions. Having looked into the statutory scheme of the Act,

1962, we are of the view that the observations pertaining to the interlinkage

between Sections 17 and 28 respectively of the Act, 1962 made in Sayed Ali

(supra) do not lay down the correct position of law.

82. Even otherwise, the decision in Sayed Ali (supra) could have been arrived

at without deciding on the interdependence of Section 17 and Section 28 of

the Act, 1962 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 Section 28 through

a notification issued by the appropriate authority. As we have observed in

the foregoing parts of this judgment, assignment of functions is a mandatory

requirement for the exercise of jurisdiction by the "proper officer". The

observations made in Sayed Ali (supra) on the connection between Sections

Review Petition No. 400 of 2021 Page 77 of 161

 17 and 28 of the Act, 1962 are obiter dicta at best and do not constitute the

binding ratio decidendi of that judgment.

83. Further, Sayed Ali (supra) could not have been relied upon by this Court in

Canon India (supra) as it could not have been applied for the period

subsequent to 08.04.2011 in view of the fact that Section 17 of the Act, 1962

has undergone a radical change by virtue of the amendments made by the

Finance Act, 2011.

iii. Changes to Section 17 w.e.f. 11.04.2011 – the assessment of bill(s) of

entry and shipping bill(s)

84. Section 17 of the Act, 1962 was amended by Section 38 of the Finance Act,

2011 with effect from 08.04.2011. The amendment altered the method of

assessment of bill(s) of entry and shipping bill(s). This change appears not

to have been brought to the notice of this Court while Canon India (supra)

was heard.

85. We note that with effect from 08.04.2011, the functions of the proper officer

under Section 17 also underwent certain changes. One such change is that

the assessment of bill(s) of entry and shipping bill(s) was no longer the task

of the “proper officer”. With effect from 08.04.2011, Bill(s) of Entry and/or

Shipping Bill(s) are self-assessed. This self-assessment is to be accepted or

rejected by the proper officer subject to verification in certain cases.

Review Petition No. 400 of 2021 Page 78 of 161

86. The “proper officer” appointed for the purpose of Section 17 of the Act,

1962 under a notification issued under Section 2(34) of the Act, 1962 could

only make a re-assessment of the bill(s) of entry and shipping bill(s) in case

they did not agree with the self-assessment of the importer or the exporter

as the case may be.

87. The purport of Section 17 as it stood before 08.04.2011 and after 08.04.2011

was analysed by a learned Single Judge of the Madras High Court in the case

of M/s. N.C. Alexander v. The Commissioner of Customs, Chennai in W.P.

Nos. 33099 of 2015. The relevant paragraphs of the judgment are

reproduced below:

“207. Thus, there was a paradigm shift in the method of

assessment with effect from 08.04.2011. Till 07.4.2011,
the assessment of Bill of Entry(s) or the Shipping Bill(s)
was by a “proper officer” appointed for that purpose
under Section 2(34) of the Custom Act, 1962. The
assessment was left to the Group 'B' Gazetted Officers
and it is only such officers were appointed as “proper
officers” for assessment under Section 17.

208. However, after 08.04.2011, Bill(s) of Entry (in the

case of import) or Shipping Bill(s) (in the case of export)
are to be self assessed by an importer or an exporter
under Sections 46 and 50 of the Customs Act, 1962
respectively. The changes are shown in bold in the
above Table.

209. A “proper officer” has to merely verify the entries

made in the Bill(s) of Entry under Section 46 (in case of
import) or Shipping Bill(s) under Section 50 (in case of
export). The “Proper Officer” may examine or test
imported goods or export goods or such part thereof as

Review Petition No. 400 of 2021 Page 79 of 161

 may be necessary. If required, such an officer can only
re-assess the goods under Section 17 of the Act. Thus,
a “Proper Officer” under Section 17(1) & 17(4) of the
Act is merely required to re-assess the imported goods
or export goods where he differs with the self
assessment of an importer or an exporter. This
important change was not brought to the attention of
the Hon'ble Supreme Court in Canon India Pvt Ltd
Case.

210. As mentioned above, an importer or an exporter is

merely required to make a self-assessment in the Bill(s)
of Entry or Shipping Bill(s) as may be in the case of
import or export respectively and file the same.

211. Officers who are appointed as “Proper Officers”

for the purpose of Section 17 of the Customs Act, 1962
are “Officers of Customs” like any “Officer of
Customs” as per Section 3 and 4 read with notification
issued under these provisions. There is delegation of
functions by the Board and senior officers to different
class of officers by the Board. This is an internal
arrangement with a view for better tax administration.
Thus, officers of Directorate of Revenue Intelligence are
also one among the class “Officers of Customs” like any
Officer of Customs as per Section 3 and 4 read with
notification issued for the said purpose are competent
to issue show cause notice. The “proper officer” at the
Port at the time of clearance of import or export,
merely reassess the self-assessment already made on
the Bill(s) of Entry and/or Shipping Bill(s). They are
normally not assigned with the function to adjudicate
Show Cause Notices and/or Demand Notices under the
various provisions of the Customs Act, 1962.

212. With effect from, 08.04.2011, there was no question

of assessment of Bill(s) of Entry /Shipping Bill(s) by a
“proper officer”. There is only self assessment by an
importer or an exporter. There could be only re-
assessment of Bill of Entry(s) or the Shipping Bill(s) by
the “proper officer” under Section 17 of the Customs
Act,1962.

Review Petition No. 400 of 2021 Page 80 of 161

 213. If the “proper officer” was inclined to disagree
with the self assessment made by an importer or an
exporter as the case may be, the “proper officer” could
make a re-assessment and pass a speaking order under
Section 17(5) of the Customs Act, 1962.

214. If the self assessment is accepted, the “proper

officer” appointed under Section 17 of the Customs Act,
1962 becomes “functus officio” under the scheme of the
Act and the Notification issued for the aforesaid
purpose.

215. Likewise, where there was a re-assessment, again

such an officer becomes “functus officio”, after such an
order of re-assessment and a speaking order under
Section 17(5) of the Customs Act, 1962 is passed.

216. An importer or an exporter aggrieved by such an

order of reassessment and the speaking order is entitled
to file an appeal under Section 128 of the Custom
Act,1962 before the Appellate Commissioner. Only
circumstances, where such an officer who makes an
order of reassessment can re-visit the re-assessment
and/or speaking order is under Section 28 (if
specifically authorized) or under Section 149 or under
Section 154 of the Customs Act, 1962.

217. The power to issue Show Cause Notice whether

under Section 28 or under Chapter XIV of Customs Act,
1962 or under any other provisions and to pass orders
has been by and large exercised by the Superior Officers
from Group 'A' Cadre Officer of the Custom Department
in terms of Notification issued under Section 2(34) of
the Act. The Officers from the Directorate of Revenue
Intelligence (DRI) being “Officers of Custom” have
been recognized as a “Proper Officer” for the aforesaid
purpose.

218. The “proper officer” who is/was involved at the

stage of assessment under Section 17 of the Act upto
08.04.2011 and reassessment after 08.04.2011 have
rarely been involved in collateral adjudication of

Review Petition No. 400 of 2021 Page 81 of 161

 notices issued under Section 28 of the Act. However,
once again at the stage of recovery of duty or penalty
under other provision of the Customs Act, 1962 or
redemption fine under Section 125 of the Customs Act,
1962, they are authorized.

219. Mostly, at the time of clearance of imported goods

or export goods for the purpose of assessment under
Section 17 of the Custom Act,1962, it is the
Superintendent/Appraisers of Customs from Group 'B'
Executive - Gazetted Officers who act as “proper
officers”. They are merely required to verify the entries
made in the Bill(s) of Entry filed under Section 46 of the
Act (in case of import) and or Shipping Bill(s) filed
under Section 50 of the Act (in case of export). As
“proper officers” are required to merely examine or
test any imported or export goods or such parts thereof.
Such Officer of Customs under the Scheme of the Act
and Notification issued thereunder can only re-assess
the self-assessment made by the importer or the
exporter.

220. Earlier, the Officers from the Directorate of

Revenue Intelligence (DRI) were mostly confined with
the task of investigation. Over a period of time, they
were empowered to issue Show Cause Notices and/or
Demand Notices under various provisions of the
Customs Act. Adjudication of the Show Cause
Notices/Demand Notices were however left to the
senior officer of customs from Group 'A' cadre of the
Customs Department. However, they are empowered
to act as “proper officers” not only for issuance of
Show Cause Notice and/or Demand Notices but also
for adjudication of such Show Cause Notices and/or
Demand Notices.”
[Emphasis supplied]

88. In case of re-assessment, such a “proper officer” is bound to pass a

“Speaking Order” to enable the aggrieved party to file an appeal. Section 17

Review Petition No. 400 of 2021 Page 82 of 161

 as it read before 08.04.2011 and after 08.04.2011 is reproduced below to

better appreciate the nuances of the issue:

Section 17: Assessment of Duty

Before 08.04.2011 Between 08.04.2011 and

28.03.2018

(1) After an importer has entered (1) An importer entering any

any imported goods under section imported goods under section 46,
46 or an exporter has entered any or an exporter entering any export
export goods under section 50, the goods under section 50, shall, save
imported goods or the export as otherwise provided in section
goods, as the case may be, or such 85, self-assess the duty, if any,
part thereof as may be necessary leviable on such goods.
may, without undue delay, be
examined and tested by the proper
officer.
(2) After such examination and (2) The proper officer may verify
testing, the duty, if any, leviable on the self-assessment of such goods
such goods shall, save as otherwise and for this purpose, examine or
provided in section 85, be assessed. test any imported goods or export
goods or such part thereof as may
be necessary.
(3) For the purpose of assessing (3) For verification of self-
duty under sub-section (2), the assessment under sub-section (2),
proper officer may require the the proper officer may require the
importer, exporter or any other importer, exporter or any other
person to produce any contract, person to produce any contract,
broker's note, policy of insurance, broker's note, insurance policy,
catalogue or other document catalogue or other document,
whereby the duty leviable on the whereby the duty leviable on the
imported goods or export goods, as imported goods or export goods,
the case may be, can be as the case may be, can be
ascertained, and to furnish any ascertained, and to furnish any
information required for such information required for such
ascertainment which is in his power ascertainment which is in his
to produce or furnish, and power to produce or furnish, and
thereupon the importer, exporter or thereupon, the importer, exporter

Review Petition No. 400 of 2021 Page 83 of 161

 such other person shall produce or such other person shall produce
such document and furnish such such document or furnish such
information. information.
(4) Notwithstanding anything (4) Where it is found on
contained in this section, imported verification, examination or
goods or export goods may, prior to testing of the goods or otherwise
the examination or testing thereof, that the self-assessment is not done
be permitted by the proper officer correctly, the proper officer may,
to be assessed to duty on the basis without prejudice to any other
of the statements made in the entry action which may be taken under
relating thereto and the documents this Act, re-assess the duty leviable
produced and the information on such goods. Amendment of
furnished under sub-section (3); section 18.
but if it is found subsequently on
examination or testing of the goods
or otherwise that any statement in
such entry or document or any
information so furnished is not true
in respect of any matter relevant to
the assessment, the goods may,
without prejudice to any other
action which may be taken under
this Act, be re-assessed to duty.
(5) Where any assessment done (5) Where any re-assessment done
under sub-section (2) is contrary to under sub-section (4) is contrary
the claim of the importer or to the self-assessment done by the
exporter regarding valuation of importer or exporter regarding
goods, classification, exemption or valuation of goods, classification,
concessions of duty availed exemption or concessions of duty
consequent to any notification availed consequent to any
therefor under this Act, and in notification issued therefor under
cases other than those where the this Act and in cases other than
importer or the exporter, as the those where the importer or
case may be, confirms his exporter, as the case may be,
acceptance of the said assessment confirms his acceptance of the said
writing, the proper officer shall re-assessment in writing, the
pass a speaking order within fifteen proper officer shall pass a
days from the date of assessment of speaking order on the re-
the bill of entry or the shipping bill, assessment, within fifteen days
as the case may be. from the date of re-assessment of
the bill of entry or the shipping bill,
as the case may be.

Review Petition No. 400 of 2021 Page 84 of 161

 [(6) Where re-assessment has not
been done or a speaking order has
not been passed on re-assessment,
the proper officer may audit the
assessment of duty of the imported
goods or export goods at his office
or at the premises of the importer
or exporter, as may be expedient,
in such manner as may be
prescribed.] * Explanation.— For
the removal of doubts, it is hereby
declared that in cases where an
importer has entered any imported
goods under section 46 or an
exporter has entered any export
goods under section 50 before the
date on which the Finance Bill,
2011 receives the assent of the
President, such imported goods or
export goods shall continue to be
governed by the provisions of
section 17 as it stood immediately
before the date on which such
assent is received."

89. The examination of Section 17, as amended vide the Finance Act, 2011 vis-

à-vis the provisions of the old Section 17 as it stood prior to 08.04.2011,

highlights the following major changes:

(a) Self-assessment of duty: The concept of self-assessment of duty was

introduced by way of the amendment to Section 17 wherein there is no

role of the proper officer to assess the duty at the first instance. The

onus for providing the duty leviable has been shifted to the assessee

itself.

Review Petition No. 400 of 2021 Page 85 of 161

 (b) Discretion to verify: Sub-section (2) of the new Section 17 states that

“The proper officer may verify the self-assessment of the goods…”. The

use of the word “may” indicates two things:

(i) that the actions to be taken by the proper officer under the old

Section 17 are no longer compulsory. The proper officer may

choose to accept the self-assessment made by the assessee,

thereby becoming functus officio and there is no compulsion on

him or her to examine or test any goods for reaching a first

instance assessment;

(ii) The proper officer is not involved in the assessment of duty under

Section 17 at the first instance except for his or her role in

accepting or not accepting the self-assessed duty. There can be

three situations that may result from such limited role of the

proper officer:

 The proper officer accepts the self-assessed duty without

verification of such duty under sub-section (2) of the new

Section 17,

 The proper officer accepts the self-assessed duty after

verifying the same in accordance with sub-sections (2) and

(3) of the new Section 17,

Review Petition No. 400 of 2021 Page 86 of 161

  The proper officer does not accept the self-assessed duty

after verifying the same in accordance with sub-sections (2)

and (3) of the new Section 17, in which case, the re-

assessment of duty will be undertaken by the proper officer

as per sub-sections (4) and (5) of the new Section 17.

In the first two cases, the scope of the function of the proper officer is

limited. Such proper officer is not entitled to exercise the function of

the assessment of duty, which is a noteworthy deviation from the earlier

procedure.

The proper officer is entitled to exercise his or her functions of re-

assessment of duty only if the verification process shows that the self-

assessment done by the assessee was incorrect.

(c) Condition precedent for re-assessment: It is worthwhile to note that

the old Section 17 allowed for self-assessment of duty, only under sub-

section (4) and that too with the permission of the proper officer.

However, upon a subsequent finding that the statements made by the

assessee were not true, the proper officer was entitled to re-assess the

duty so levied. Therefore, re-assessment was allowed under both the

old and the new Section 17 only after a self-assessment by the assessee.

The only point of difference with respect to re-assessment is that self-

assessment was not a matter of course prior to the amendment and was

Review Petition No. 400 of 2021 Page 87 of 161

 possible only upon the proper officer permitting for the same. After

08.04.2011, self-assessment is ipso jure the procedure and has replaced

the assessment process previously undertaken by the proper officer.

(d) Scheme of Section 17(5): The old Section 17(5) requires the proper

officer to provide a speaking order within 15 days of the date of

assessment of duty if the same is contrary to the claim of the assessee

or is not accepted in writing by the assessee. The new Section 17(5) is

analogous to the old sub-section (5) except that it requires a speaking

order within 15 days from the date of the “re-assessment” of duty. Such

change shows the legislative intent to transfer the process of

“assessment” under the old Section 17 to the stage of “re-assessment”

under the new Section 17 and replace the “assessment” to be done by

the proper officer under the old Section 17 with the process of “self-

assessment”.

90. These changes highlight that the competence of the proper officer to conduct

“assessment” is completely taken away by the legislature vide the

amendment to Section 17. The new Section 17 empowers the proper officer

to perform the functions of verification of self-assessment and subsequent

re-assessment, if found necessary. However, such re-assessment is not a

mandatory function on the same footing as “assessment” under the old

Review Petition No. 400 of 2021 Page 88 of 161

 Section 17. Therefore, in our considered view the scope of the functions of

the proper officer under the new Section 17 is limited.

91. It is evident from the aforesaid that the attention of this Court in Canon

India (supra) was not drawn to the important changes brought to Section 17

of the Act, 1962 vide Section 38 of the Finance Act, 2011 with effect from

08.04.2011.

92. The observation in paragraph 13 in Canon India (supra) that “where one

officer has exercised his powers of assessment, the power to order

reassessment must also be exercised by the same officer or his successor and

not by another officer of another department though he is designated to be

an officer of the same rank” has been made without taking note of the

changes to Section 17 of the Act, 1962 with effect from 08.04.2011.

93. Similarly, the observation in paragraph 14 in Canon India (supra) is

erroneous. The relevant paragraph is reproduced below:

“We find it completely impermissible to allow an officer,

who has not passed the original order of assessment, to
re-open the assessment on the grounds that the duty was
not paid/not levied, by the original officer who had
decided to clear the goods and who was competent and
authorised to make the assessment. The nature of the
power conferred by Section 28(4) to recover duties
which have escaped assessment is in the nature of an
administrative review of an act. The section must
therefore be construed as conferring the power of such
review on the same officer or his successor or any other
officer who has been assigned the function of
assessment.”

Review Petition No. 400 of 2021 Page 89 of 161

 In other words, the conclusion that an officer who did the assessment, could

only undertake reassessment under Section 28(4) was arrived at without

taking note of the abovementioned amendment to Section 17 of the Act,

1962 with effect from 08.04.2011 vide Section 38 of the Finance Act, 2011.

The judgment in Canon India (supra) also recorded an erroneous finding

that the function of re-assessment is with reference to Section 28(4) when in

fact it is an exercise of function under Section 17.

94. Further, in Canon India (supra) the subject show cause notice was dated

19.09.2014 in respect of the Bill of Entry filed on 20.03.2012. This Court

appears to have erroneously applied the provisions of Section 17 of the Act,

1962, as they stood prior to 08.04.2011 as opposed to the amended Section

17 which ought to have been applied.

iv. Scheme of Sections 17 and 28 of the Act, 1962

95. Section 17 read with Sections 46 and 47 of the Act, 1962 deals with the

assessment and re-assessment at the first instance that is, upon entry of the

consignments and clearance of bill(s) of entry. The amendment to Section

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.

96. The proceedings under Section 28 are subsequent to the completion of the

process set out in Section 17 of the Act, 1962. The procedure envisaged

Review Petition No. 400 of 2021 Page 90 of 161

 under Section 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. It is also worth

noting that in the case of DRI, the proceedings under Section 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. Therefore, the nature of review under Section

28 is significantly different from the nature of assessment and re-

assessment under Section 17. The ambit of Section 28 has also been

restricted to the review of assessments and re-assessments done under

Section 17 for ascertaining if there has been a short-levy, non-levy, part-

payment, non-payment or erroneous refund.

97. Keeping this statutory scheme in mind, we are unable to subscribe to the

view taken in both Sayed Ali (supra) and Canon India (supra), namely,

that the vesting of the functions of assessment and re-assessment under

Section 17 is a threshold, mandatory condition for a proper officer to

perform functions under Section 28. This scheme does not flow from the

scheme of the statute and was judicially read in to avoid the possibility of

chaos and confusion due to the potential for multiple proper officers

exercising jurisdiction under Section 28. We find that such apprehensions

of misuse are unfounded considering that no substantial empirical evidence

Review Petition No. 400 of 2021 Page 91 of 161

 has been brought forth by the respondents in this case to support such a

view. Regardless, the the parameters under Section 28 cannot be reduced

to an administrative review of assessment/re-assessment done under

Section 17.

98. We are conscious of the fact that Section 110AA of the Act, 1962, which

has been introduced by the Finance Act, 2022, stipulates that a show cause

notice under Section 28 of the Act, 1962 can only be issued by that "proper

officer" who has been conferred with the jurisdiction, by an assignment of

functions under Section 5 of the Act, 1962, to conduct assessment under

Section 17 of the Act in respect of such duty. However, we are of the view

that the introduction of Section 110AA doesn't alter the statutory scheme

of Sections 17 and 28 of the Act, 1962 as it stood prior to the introduction

of Section 110AA. The legislature in its wisdom may introduce certain new

provisions keeping in mind the exigencies of administration and taking into

account the evolution of law. However, this would not by itself mean that

the procedure which was being followed prior to the introduction of such

changes was incorrect or in contravention of the law. The legality and

correctness of an action has to be adjudged based on the statutory scheme

prevailing at the time when such action took place, and incorrectness or

invalidity cannot be imputed to it on the basis of subsequent changes in

law. Seen thus, the contention of the respondents that Section 110AA of

Review Petition No. 400 of 2021 Page 92 of 161

 the Act, 1962 amounts to an admission by the petitioner on the invalidity

of the legal position existing prior to its introduction, deserves to be

rejected.

99. Therefore, in our considered view, the scheme of Sections 17 and 28 of the

Act, 1962 indicates that there cannot be a mandatory condition linking the

two provisions and the interpretation of this Court in the cases of Sayed Ali

(supra) and Canon India (supra) is patently erroneous.

v. Use of the article ‘the’ in the expression “the proper officer”

100. This Court in Canon India (supra), while laying much emphasis on the use

of the expression “the proper officer” observed that the Parliament had

employed the article “the” instead of “a/an” in Section 28 of the Act, 1962

so as to give effect to its intention of specifying that the proper officer

referred to in Section 28 is the same officer as the one referred to in Section

17. The Court further observed that the use of a definite article instead of an

indefinite article is indicative of the fact that the proper officer referred to in

Section 28 is not “any” proper officer but “the” proper officer assigned with

the function of assessment and reassessment under Section 17.

101. However, there is an error apparent in the aforesaid view. Undoubtedly, a

definite article “the” has been used before “proper officer” with a view to

limit the exercise of powers under Section 28 by a specific proper officer

and not any proper officer. But, in the absence of any statutory linkage

Review Petition No. 400 of 2021 Page 93 of 161

 between Sections 17 and 28 of the Act, 1962 respectively, there was no legal

footing for this Court in Canon India (supra) to hold that “the proper

officer” in Section 28 must necessarily be the same proper officer referred

to under Section 17 of the Act, 1962.

102. As we have discussed in the foregoing parts of this judgment, the statutory

scheme of the Act, 1962 necessitates that a proper officer can only perform

specific functions under the Act if he has been assigned as “the proper

officer” to perform such functions by an appropriate notification issued by

the competent authority. Seen thus, it becomes clear that an officer of

Customs can only perform the functions under Section 28 of the Act, 1962

if such officer has been designated as “the proper officer” for the purposes

of Section 28 by an appropriate notification. The 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 under Section 28 by conferment under Section 5. In other words,

the proper officer is qua the function or power to be discharged or exercised.

103. Thus, the definite article “the” in Section 28 refers to a “proper officer” who

has been conferred with the powers to discharge functions under Section 28

by virtue of a notification issued by the competent authority under Section

5. In other words, the use of article “the” in Section 28 has no apparent

relation with the proper officer referred to under Section 17. The proper

Review Petition No. 400 of 2021 Page 94 of 161

 officer under Section 28 could be said to be determinable only in the sense

that he is a proper officer who has been empowered to perform the functions

under Section 28 by means of a notification issued under Section 5 of the

Act, 1962.

104. In Canon India (supra), this Court held that DRI officers did not have the

power of issuing show cause notices under Section 28 as they did not fall

within the meaning of the expression “the proper officers” used in Section

28 for the reason that they did not possess the power of assessment under

Section 17 of the Act, 1962. However, as we have discussed in the previous

parts of this judgment, contrary to the aforesaid observations of the Court,

DRI officers were notified as “the proper officer” for the purposes of

Sections 17 and 28 of the Act, 1962 respectively vide Notification No.

44/2011–Cus–N.T. dated 06.07.2011 issued by the Central Government.

Hence, those officers of DRI who were designated as “the proper officer”

for the purpose of Section 28 by the aforesaid notification were competent

to issue show cause notices under Section 28.

105. Craies on Statute Law 1 has stated that “the language of statutes is not always

that which a rigid grammarian would use, it must be borne in mind that a

statute consists of two parts, the letter and the sense”. It was observed by

this Court in State of Andhra Pradesh v. Ganesweara Rao, reported in AIR

1
7th Ed., Page 83

Review Petition No. 400 of 2021 Page 95 of 161

 1963 SC 1850 that the aforesaid rule of construction that the provisions of a

statute are to be read together and given effect to and that it is the duty of

the court to construe a statute harmoniously has gained general acceptance.

In Management, S.S.L. Rly. Co. v. S.S.R.W. Union reported in AIR 1969

SC 513, this Court observed that the principle that literal meaning of the

word in a statute is to be preferred is subject to the exception that if such

literal sense would give rise to any anomaly or would result in something

which would defeat the purpose of the Act, a strict grammatical adherence

to the words should be avoided as far as possible. The above principles

would help us to desist from affording undue stress on the definite article

“the” used before the expression “proper officer” in Section 28 of the Act,

1962.

vi. DRI officers as proper officers under section 2(34)

106. In Canon India (supra), this Court erroneously concluded that an officer

from the Directorate of Revenue Intelligence (DRI) was not an officer of

customs and therefore cannot function as a “Proper Officer”. The finding of

the Court 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.

107. By way of Notification No. 40/2012-Customs (N.T.) dated 02.05.2012, the

Board appointed several persons including the Officers of Directorate of

Review Petition No. 400 of 2021 Page 96 of 161

 Revenue Intelligence (DRI) as “Proper Officers” under Section 2(34) of the

Act, 1962.

108. Section 2(34) of the Act, 1962 also stood amended under the Finance Act,

2022. Section 2(34) of the Act, 1962 together with the amendment is

reproduced below:

Section 2(34) of the Customs Act, Section 2(34) of the Customs Act,
1962 till passing of Finance Act, 1962 after amendment vide
2022 Finance Act, 2022
“Proper Officer”, in relation to “Proper Officer”, in relation to
any functions to be performed any functions to be performed
under this Act, means the officer under this Act, means the officer
of customs who is assigned those of customs who is assigned those
functions by the Board or the functions by the Board or the
Principal Commissioner of Principal Commissioner of
Customs or Commissioner of Customs or Commissioner of
Section 2(34) of the Customs Act, Section 2(34) of the Customs Act,
1962 till passing of Finance Act, 1962 after amendment vide
2022 Finance Act, 2022
Customs. Customs under Section 5.

109. The Notification No. 40/2012-Customs (N.T.) dated 02.05.2012, issued

under Section 2(34) of the Act, 1962 cannot be read in isolation. It has to

be read in conjunction with Section 4(1) of the Act, 1962 and the

Notification issued thereunder.

110. The view that the “Proper Officer” for the purpose of Section 28 and other

provisions of the Act, 1962 could only mean the person who cleared the

goods or the officer who succeeds such officer and not any other officer

Review Petition No. 400 of 2021 Page 97 of 161

 from any other department requires reconsideration in view of the changes

to the Act, 1962 vide the Finance Act, 2011 and also in the light of Section

4 and the notification issued thereunder.

111. This Court in paragraphs 11 to 15 of Canon India (supra) proceeded on

the footing that under the provisions of the Act, 1962, the Board has no

power to appoint “Proper Officers”.

112. As per Section 4 of the Act, 1962, the Board constituted under the

provisions of Central Board of Revenue Act, 1963 is vested with the power

to appoint such persons as it thinks fit to be “officers of customs”.

113. Under sub-section (1) to Section 4(1) of the Act, 1962, the Board may

appoint such person as Officers of Customs as it thinks fit. Under Section

4(2) of the Act, 1962 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”. It appears that this aspect was also not brought

to the notice of this Court in Canon India (supra).

vii. Section 4 of the Act, 1962

114. For an easy reference, Section 4 of the Act, 1962 is reproduced below:

“Section 4 : Appointment of “Officers of Customs”:

1) The Board may appoint such persons as it thinks fit

to be Officers of Customs.

Review Petition No. 400 of 2021 Page 98 of 161

 2) Without prejudice to the provisions of subsection (1),
[Board may authorise a Principal Chief Commissioner
of Customs or a Chief Commissioner of Customs
Principal Commissioner of Customs or Commissioner
of Customs) or Joint or Assistant Commissioner of
Customs or Joint or Assistant Commissioner of Customs
or Deputy Commissioner of Customs to appoint officers
of customs below the rank of Assistant Commissioner of
Customs.]”

115. It is relevant to note that it is only an officer of customs, appointed under

Section 4(1) of the Act, 1962 who can be designated as the “proper officer”

as defined in Section 2(34) of the Act, 1962 by a notification. The

notifications issued under Section 2(34) and 4(1) of the Act, 1962 are

nothing but an internal arrangement for the purpose of allocation of work

among the officers of customs.

116. In M/s. N.C. Alexander (supra), the High Court has extensively explained

how officers of the DRI are officers of customs. We quote the relevant

observations:

“236. The officers of the Directorate of Revenue

Intelligence (DRI) have already been appointed as
“Officers of Customs” under Notification issued under
Section 4(1) of the Customs Act, 1962 vide Notification
of the Government of India in the Ministry of Finance
(Department of Revenue) No.186-Cus, dated 4 th
August, 1981. The said Notification was later
superseded by Notification No.19/90- Cus (N.T.), dated
26.04.1990.

Review Petition No. 400 of 2021 Page 99 of 161

 237. By Notification No.19/90- Cus (N.T.), dated
26.04.1990, the officers from the Directorate of Revenue
Intelligence (DRI) were appointed as Collectors and
Assistant Collectors of Customs in the area mentioned
in Column-I of the said notification.

238. Notification No.19/90- Cus (N.T.), dated

26.04.1990 was later superseded by Notification
No.17/2002-Cus. (N.T.) dated 07.03.2002, whereby,
various officers from the Directorate General of
Revenue Intelligence and Directorate of Revenue
Intelligence were appointed as Commissioner of
Customs and as Additional Commissioner and Joint
Commissioner of Customs and Deputy
Commissioner/Assistant Commissioner of Customs.
Thus, they were appointed as Officers of Customs.
Relevant portion Notification No.17/2002-Cus. (N.T.),
dated 07.03.2002 is reproduced below:- Directorate of
Revenue Intelligence (D.R.I.) Officers appointed as
Customs Officers – Notification No.19/90 - Cus. (N.T.)
superseded. In exercise of the powers conferred by sub-
section (1) of Section 4 of the Customs Act, 1962 (52 of
1962) and in supersession of notification of the
Government of India in the Ministry of Finance
(Department of Revenue) No.19/90- Customs (N.T.),
dated the 26th April, 1990, the Central Government
appoints the officers mentioned in Column (2) of the
Table below to the Commissioner of Customs, the
officers mentioned in column (3) thereof to be the
Additional Commissioners or Joint Commissioners of
Customs and Officers mentioned in column(4) thereof to
be the Deputy Commissioners or Assistant
Commissioners of Customs for the areas mentioned in
the corresponding entry in column(1) of the said Table
with effect from the date to be notified by the Central
Government in the Official Gazette:-
Area of Designation of the Officers
Jurisdic
tion
(1) (2) (3) (4)

Review Petition No. 400 of 2021 Page 100 of 161

 Whole of Additional Additional Deputy
Director Directors or Directors,
India Joint or

General, Directors, of Assistant

Directorate Directorate Directors of
General of of Revenue Directorate
Revenue Intelligence of Revenue
Intelligence posted at Intelligence
posted at Headquarters posted at
Headquarters and Headquarters
and Zonal/region and
Zonal/region al units. Zonal/region
al units al units

239. Notification No.17/2002-Cus. (N.T.), dated

07.03.2002 came into force on 25.10.2002 vide
Notification No.63/2002-Cus. (N.T.) dated 03.10.2002.
Notification No.17/2002-Cus. (N.T.), dated 07.03.2002
was further amended by Notification No.82/2014-Cus.
(N.T.), dated 16.09.2014.

240. Thus, the officers from the Directorate of Revenue

Intelligence have been appointed as “Officers of
Customs” under Section 4 of the Customs Act, 1962 and
therefore they are “Proper Officers” for the purpose of
Section 2(34) of the Customs Act, 1962. This aspect was
not brought to the attention of the Hon'ble Supreme
Court in Canon India Private Ltd. case referred to
supra.

241. With a view to streamline the allocation of work

and for the purposes of Section 17 and Section 28 of the
Customs Act, 1962, Notification No. 44/2011-Cus.
(N.T.), dated 06.07.2011 was issued by the Board under
Section 2(34) of the Act.

242. Notification No.44/2011-Cus. (N.T.), dated

06.07.2011 was issued under Section 2(34) of the
Customs Act, 1962 for the purpose of identifying officers
of customs for exercising the power and function under
the Customs Act,1962.

Review Petition No. 400 of 2021 Page 101 of 161

 243. Notification No.44/2011-Cus. (N.T.), dated
06.07.2011 was later amended by Notification
No.53/2012-Cus. (N.T.) dated 21.06.2012 and still later
by Notification No.43/2019-Cus. (N.T.) dated
18.06.2019 and eventually has been
rescinded/superseded by Notification No.25/2022-Cus.
(N.T.) dated 31.03.2022 in tune with the amendment
proposed in the Finance Bill, 2022 and passed by
Finance Act, 2022.

244. Among various officers of the Customs, following

officers were also assigned to act and function as the
“Proper Officer” under Notification No.44/2011 – Cus.
(N.T.) dated 06.07.2011:-
TABLE
Sl.No. Designation of the officers
(1) (2)
1. Additional Director Generals,
Additional Directors or Joint Directors,
Deputy Directors or Assistant Directors
in the Directorate General of Revenue
Intelligence.
2. Commissioners of Customs (Preventive),
Additional Commissioners or Joint
Commissioners of Customs (Preventive),
Deputy Commissioners or Assistant
Commissioners of Customs (Preventive).
3. Additional Director Generals,
Additional Directors or Joint Directors,
Deputy Directors or Assistant Directors
in the Directorate General of Central
Excise Intelligence.
4. Commissioners of Central Excise,
Additional Commissioners or Joint
Commissioners of Central Excise,
Deputy Commissioners or Assistant
Commissioners of Central Excise.

245. Thus, over a period of time, the officers of

Directorate of Revenue Intelligence (DRI) who are
primarily drawn from the Customs Department were

Review Petition No. 400 of 2021 Page 102 of 161

 also given the task of issuing show cause notice and
adjudicating the same in terms of Notifications issued as
“Proper Officer”, as defined in Section 2(34) of the
Customs Act, 1962.

246. Now, under the amended Section 2(34), the word

“under Section 5” has been inserted. Thus, what was
implicit in the Customs Act, 1962 has now been made
explicit in the amendment to the Customs Act, 1962 vide
Finance Act, 2022.

247. As per Section 5(1) of the Act, an “Officer of

Customs” may exercise the powers and discharge the
duties conferred or imposed on him under the Customs
Act, 1962, subject to such conditions and limitations as
the Board may impose.

248. The power to be exercised may be subject to such

conditions and limitations as the Board may impose on
such an “Officer of Customs”. Such officers can also
exercise the powers and discharge the duties conferred
or imposed on any other officers of customs who is
subordinate to such officers. This aspect was also not
brought to the attention of the Hon’ble Supreme Court
in Canon India Private Limited Vs. Commissioner of
Customs case referred to supra.

249. Only exception that has been provided was in Sub-

Section (3) to Section 5 of the Act. As per Sub-Section 3
to Section 5 of the Act, a Commissioner (Appeals)
cannot exercise the power and discharge the duties
conferred or imposed on an “Officer of Customs” other
than those specified in Section 108 of the Act and
Chapter XV deals with the Appeals and Revisions.

250. Section 5 of the Customs Act, 1962 has also been

amended in the Finance Act, 2022. Sub-Section (1A),
(1B) and Sub-Section (4) and (5) to Section 5 of the
Customs Act, 1962 have been now inserted. Section 5 as
it stood prior to amendment and as it stands after
amendment read as under:-

Review Petition No. 400 of 2021 Page 103 of 161

 TABLE
5. Powers of Officers of Customs of the Customs Act,
1962
Before the After the 2022 amendment
amendment Section
(1) Subject to such conditions and limitations as the
Board may impose, an officer of customs may exercise
the powers and discharge the duties conferred or
imposed on him under this Act.
1(A) : Without prejudice to the
provisions contained in
subsection (1), the Board may,
by notification, assign such
functions as it may deem fit, to
an officer of customs, 91 who
shall be the proper officer in
relation to such functions.
(1B) Within their jurisdiction
assigned by the Board, the
Principal Commissioner of
Customs or Commissioner of
Customs, as the case may be,
may, by order, assign such
functions, as he may deem fit,
to an “Officer of Customs”,
who shall be the “Proper
Officer” in relation to such
functions.”
(2) An Officer of Customs may excise the powers and
discharge the duties conferred or imposed under this
Act on any other officer of Customs who is subordinate
to him.
(3) Notwithstanding anything contained in this
Section, a Commissioner (Appeals) shall not exercise
the powers and discharge the duties conferred or
imposed on an officer of customs other than those
specified in Chapter XV and Section 108.
“(4) In specifying the
conditions and limitations
referred to in sub-section (1),
and in assigning functions

Review Petition No. 400 of 2021 Page 104 of 161

 under sub-section (1A), the
Board may consider any one
or more of the following
criteria, including, but not
limited to–– a) territorial
jurisdiction; b) persons or
class of persons; c) goods or
class of goods;

d) cases or class of cases; e)

computer assigned random
assignment; f) any other
criterion as the Board may, by
notification, specify.
(5) The Board may, by
notification, wherever
necessary or appropriate,
require two or more officers of
customs (whether or not of the
same class) to have concurrent
powers and functions to be
performed under this Act.”.

251. During the interregnum in 2012, a more

comprehensive notification was issued vide
Notification No.40/2012-Cus. (N.T.), dated
02.05.2012. This notification fell for consideration in
Canon India Private Limited Vs. Commissioner of
Customs, 2021 (376) E.L.T.3(S.C). However,
No.40/2012-Cus. (N.T.), dated 02.05.2012 cannot be
read in isolation. It had to be read along with
notifications issued under Section 4 of the Customs
Act, 1962.

252. Notification No.40/2012-Cus. (N.T.), dated

02.05.2012 was also amended from time to time and has
now been eventually rescinded/superseded by
Notification No.26/2022-Cus. (N.T.), dated 31- 3-2022
in tune with the amendment proposed in the Finance
Bill, 2022 and passed by Finance Act, 2022.

Review Petition No. 400 of 2021 Page 105 of 161

 253. Both Notification No.44/2011-Cus. (N.T.), dated
06.07.2011 and Notification No. 40/2012-Cus. (N.T.),
dated 02.05.2012 as amended from time to time have
also not been challenged directly by any of the
petitioners.

254. Although, the vires of Notification No.40/2012-

Cus. (N.T.), dated 02.05.2012 was neither challenged
or questioned before the Court in Canon India
Private Limited Vs. Commissioner of Customs, 2021
(376) E.L.T.3(S.C) nor the issue of jurisdiction was
canvassed before the Tribunal, the Hon’ble Supreme
has held that the officers of the Directorate of
Revenue Intelligence were not “Proper Officers” as
they are not Officers of Customs and therefore there
had to be issue of an independent Notification under
Section 6 of the Customs Act, 1962.”
[Emphasis supplied]

viii. Section 6 of the Act, 1962

117. This Court in Canon India (supra) made certain observations on the purport

of Section 6 of the Act, 1962 and held that the Notification No. 40/2012

dated 02.05.2012 which empowered the DRI officers to perform functions

under Section 28 was invalid. The relevant portion of the judgment is

reproduced below:

“21. If it was intended that officers of the Directorate

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

Review Petition No. 400 of 2021 Page 106 of 161

 the authority which appoints both the officers of the
Directorate of Revenue 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 notification which purports to entrust functions as
proper officer under the Customs Act has been issued
by the Central Board of Excise and Customs in
exercise of non-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 not confer any such power.”

[Emphasis supplied]

118. It was held that Section 6 is the only section which provides for the

entrustment of the functions of customs officers to other officers of the

Central or State Government or local authority. As a result of the judgment

in Canon India (supra), the respondents herein vociferously argued that

Section 5 of the Act, 1962 only deals with the powers and duties and not

functions and it is Section 6 which refers to functions. Such argument

proceeded on the erroneous footing that any notification empowering the

DRI should have been issued under Section 6 of the Act, 1962 and not

having been done so, the show cause notice issued by the DRI was without

jurisdiction.

119. Section 6 of the Act, 1962 reads thus:

“6. Entrustment of functions of Board and customs

officers on certain other officers.—The Central
Government may, by notification in the Official Gazette,

Review Petition No. 400 of 2021 Page 107 of 161

 entrust either conditionally or unconditionally to any
officer of the Central or the State Government or a
local authority any functions of the Board or any officer
of customs under this Act.”
[Emphasis supplied]

120. It is evident on a plain reading of Section 6 of the Act, 1962 referred to

above that the same contemplates the entrustment of the functions of the

Board or any officer of customs under the Act, 1962 to any of the officers

of the Central or the State Government or a local authority. Such

entrustment could be either conditional or unconditional. As per Section

6 of the Act, 1962, the Central Government may by notification in the

Official Gazette entrust the functions of the Board or the officers of

Customs to any of the following officers, namely, any officer of:

(i) The Central Government; or

(ii) The State Government; or

(iii) A local authority.

121. Section 6 replaced Section 8 of the erstwhile Sea Customs Act, 1878 under

which the powers of officers of customs, at places where there is no Customs

House, are exercised by the land revenue officers of the district. This is no

longer necessary as the Central Excise officers are available all over the

country. Further the powers of customs officers at times need to be conferred

on other officers, like police officers. Section 6, therefore, makes a general

provision empowering the Central Government to entrust the functions of

Review Petition No. 400 of 2021 Page 108 of 161

 the Board or an officer of customs to any officer of the Central or State

government or a local authority.

122. The object of this Section is to confer powers of search, seizure, arrest and

recording of statements, to the officers working in border states like officers

of police service, Border Security Force, Tehsildar, Indo Tibet Border

Police Force and others. Similarly, officers working in the coast guard or

the navy may also be given such powers as they may be involved in anti-

smuggling operations.

123. The Board has notified entrustment of powers to various officers working

in different departments either under the State services or Central services

from time to time. An illustration of this is M.F.(D.R.) Notification No.

161-Cus. dated the 22.06.1963 which empowered specified officers of DRI

with the power to search premises. It is worth noting that this notification

under Section 6 was issued prior to the notification no. 17/2002 dated

07.03.2002.

124. Notification No. 17/2002 dated 07.03.2002 was issued under Section 4(1)

of the Act appointing DRI officers as officers of customs. The powers of

officers of customs to discharge duties under the Act is derived from

Section 5.

125. A plain reading of Section 6 of the Act, 1962 referred to above, makes it

abundantly clear that it applies only to officers from departments other than

Review Petition No. 400 of 2021 Page 109 of 161

 the officers of the customs under Section 4 of the Act, 1962. The 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. It has been rightly observed by the High

Court of Madras in M/s N.C. Alexander (supra) that post 07.03.2002, a

notification of the Central Government under Section 6 is not required to

recognise the officers from DRI as officers of customs.

126. The observations of the High Court in M/s N.C. Alexander (supra) in the

aforesaid context with which we are in complete agreement are reproduced

hereinbelow:

“269. By such entrustment, these officers of other

Departments do not become Officers of Customs. They
can merely function as such officers. Since
entrustment under Section 6 is on the officers from
other department, the Parliament by design has given
the powers to the Central Government and not to the
Board.

270. As the Officers from the Directorate of Revenue

Intelligence, Ministry of Finance (MOF) are already
“Officers of Customs” before their induction and
deputation to the Board in various Directorates, there is
no impediment on their being appointed as proper
officers for the purpose of Section 2(34) of the Customs
Act, 1962.

271. Merely because the Officers of the Customs and

Central Excise Department are selected and are
deputed in the respective Directorates does not mean
that they cease to be Officers of the respective
Departments as these Directorates are created only to

Review Petition No. 400 of 2021 Page 110 of 161

 assist the Board to implement the object of respective
fiscal enactments. It is an internal arrangement within
the Ministry of Finance, Department of Revenue (DRI).

272. If Section 3 and Section 4 of the Act and the

Notification issued thereunder referred to supra were
perhaps brought to the attention of the Hon’ble Supreme
Court in Canon India Private Limited Vs. Commissioner
of Customs, 2021 (376) E.L.T.3(S.C.), the Hon’ble
Supreme Court would have given a different
interpretation. In any event, these discussion are
academic in the light of the validation in Section 97 of
the Finance Act, 2022.

273. It must also be remembered that the “Officers of

Customs” in Section 3(1)(a) to (h) of the Customs Act,
1962 (as amended under Section 3(1) (a) to (j) after
2022 amendment) are Officers from Group 'A' Cadre of
the Customs Department (IRS) like their counterparts
from the Central Excise Department as Central Tax
Officers under GST.

274. A reading of Section 2(34) with Section 4 of the

Customs Act, 1962 also makes it clear that the
expression “proper officer” means the “Officer of
Customs” who has been assigned those functions
either by the Board or by the Principal Commissioner
of Customs or by Commissioner of Customs in relation
to any function to be performed under the Act.

275. Notifications which have been issued to appoint

these officers from Directorate of Revenue
Intelligence (DRI) to act as “Proper Officers” are
enabling Notification notwithstanding the fact that
they are already “Officers of Customs” under
Notification issued under Section 4(1) of the Customs
Act,1962.

276. Further, the Board can also authorize the Principal

Commissioner of Customs or Chief Commissioner of
Customs or Principal Chief Commissioner or
Commissioner of Customs or Joint or Assistant or

Review Petition No. 400 of 2021 Page 111 of 161

 Deputy Commissioner of Customs, to appoint Officers
of Customs below the rank of Assistant Commissioner of
Customs. Thus, the following Group 'B' Executive -
Gazetted and Non-Gazetted Officers assist in the initial
stage of assessment of goods as:-
Sl. Group ‘B’ Group ‘B’ Executive
No.
Executive Gazetted Non – Gazetted
Officer Officer
1 Superintendent Preventive Officers
of Customs (Customs)
(Preventive)
2 Appraiser of Examiner (Customs)
Customs

277. As mentioned above, assessment is neither by the

Group 'B' Executive – Gazetted Officer nor by Group 'B'
Executive – Non-Gazetted Officer after 08.04.2011.
Only, prior to 08.04.2011, the assessment of goods at
the port was vested with the Group 'B' Executive –
Gazetted Officer. However, after the said date, the
fundamental of assessment has undergone a sea change
and changed permanently as mentioned above.

278. These fundamental changes brought to the manner

of the assessment under the Customs Act, 1962 with
effect from 08.04.2011 appear to have not been brought
to the attention of the Hon'ble Supreme Court and
therefore the assumption in the paragraph Nos.12 to 15
in the case of Canon India Private Limited Vs.
Commissioner of Customs, 2021 (376) E.L.T.3(S.C.)
may require a re-consideration insofar as pending cases
before the Hon'ble Supreme Court and other Courts.”
[Emphasis supplied]

127. Mr. N. Venkataraman, the Ld. ASG is correct in his submission that the

distinction sought to be made between Section 5 and Section 6 of the Act,

Review Petition No. 400 of 2021 Page 112 of 161

 1962 (powers and duties vis-à-vis functions) could be said to be imaginary

and may have very serious legal implications.

128. The assignment of functions of the proper officer for the purposes of any

section under the Act to an officer of customs is expressly mentioned in

Section 2(34). Section 5 empowers the customs officer to discharge the

duties of proper officer so conferred. Even prior to the amendment to

Sections 2(34) and 5, this could be the only understanding with respect to

the question of entrustment of functions of the proper officer to a customs

officer.

129. In our view, the assignment of functions of proper officers as mentioned in

Section 2(34) and entrustment of functions of customs officers as mentioned

in Section 6 operate on different planes. The assignment of functions of the

proper officer is to be done only to officers of customs (whether they be

appointed under Section 4 or entrusted with certain functions under Section

6). There may be some overlap between the assignment of functions of

proper officers under Section 2(34) read with Section 5 and the entrustment

of functions of officers of customs under Section 6 in some instances but

there can be no scenario in which we can hold that the “functions” under

Section 6 and Section 2(34) are congruent.

130. One of the bases for the decision in Canon India (supra) was that no

entrustment of functions under Section 6 was done in favour of the DRI

Review Petition No. 400 of 2021 Page 113 of 161

 officers. This, however, is a glaring misapplication of Section 6 of the Act

and is in ignorance of the applicable law which is in fact Sections 2(34) read

with Section 5 of the Act, 1962. Therefore, in light of the judgment of this

Court in Yashwant Sinha (supra), we find that it is necessary to allow this

review petition to do complete justice.

ix. Observations on the constitutional validity of Section 28 (11) of the Act,

1962

131. The question as to who are the “proper officers” for the purpose of issuance

of show cause notices under Section 28 was raised before the High Court of

Delhi in the case of Mangali Impex (supra). The specific challenge therein

was to the constitutional validity of Section 28(11) of the Act which was

inserted by the Customs (Amendment and Validation) Act, 2011 (the

“Validation Act”) with effect from 16.09.2011.

132. A Division Bench of the High Court held that sub-section (11) of Section 28

could not validate the show cause notices issued by the DRI officers prior to

08.04.2011, i.e., the date when Section 28 was amended.

133. With a view to understanding the true purport of Section 28(11) and the

issues pertaining thereto, it is necessary to first examine the changes to

Section 28 that were introduced prior to the Validation Act. Section 28 as it

stood prior to the Finance Bill 2011 is reproduced below:

“28. Notice for payment of duties, interest, etc. (1)

When any duty has not been levied or has been short-

Review Petition No. 400 of 2021 Page 114 of 161

 levied or erroneously 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 short-levied or part
paid or to whom the refund has erroneously been made,
requiring him to show cause why he should not pay the
amount specified in the notice:

Provided that where any duty has been levied or has

been short-levied or the interest has not been charged
or has been part paid or the duty or interest has been
erroneously refunded by reason of collusion or any
wilful mis-statement or suppression of facts by the
importer or the exporter or the agent or employee of the
importer or exporter, the provisions of this sub-section
shall have effect as if for the words "one year" and "six
months", the words "five years" were substituted.

Provided further that where the amount of duty which

has not been levied or has been short-levied or
erroneously refunded or the interest payable has not
been paid, part paid or erroneously refunded is one
crore rupees or less, a notice under this sub-section
shall be served by the Commissioner of Customs or with
his prior approval by any officer sub-ordinate to him:

Provided also that where the amount of duty has not

been levied or has been short-levied or erroneously
refunded or the interest payable thereon has not been
paid, part paid or erroneously refunded is more than
one crore rupees, no notice under this subsection shall

Review Petition No. 400 of 2021 Page 115 of 161

 be served except with the prior approval of the Chief
Commissioner of Customs.

Explanation : Where the service of the notice is stayed

by an order of a court, the period of such stay shall be
excluded in computing the aforesaid period of one year
or six months or five years, as the case may be.

(2) The proper officer, after considering the

representation, if any, made by the person on whom
notice is served under sub-section (1), shall determine
the amount of duty or interest due from such person (not
being in excess of the amount specified in the notice) and
thereupon such person shall pay the amount so
determined.

(2A) Where any notice has been served on a person

under subsection (1), the proper officer –

(i) in case any duty has not been levied or has been
short-levied, or the interest has not been paid or has
been part paid or the duty or interest has been
erroneously refunded by reason of collusion or any
wilful mis-statement or suppression of facts, where
it is possible to do so, shall determine the amount of
such duty or the interest, within a period of one year:
and
(ii) in any other case, where it is possible to do so, shall
determine the amount of duty which has not been
levied or has been short-levied or erroneously
refunded or the interest payable which has not been
paid, part paid or erroneously refunded, within a
period of six months,

from the date of service of the notice on the person under

subsection (1).

(2B) Where any duty has not been levied, or has been
short-levied or erroneously refunded, or any interest
payable has not been paid, part paid or erroneously
refunded, the person, chargeable with the duty or the
interest, may pay the amount of duty or interest before

Review Petition No. 400 of 2021 Page 116 of 161

 service of notice on him under sub-section (1) in respect
of the duty or the interest, as the case may be, and inform
the proper officer of such payment in writing, who, on
receipt of such information, shall not serve any notice
under sub-section (1) in respect of the duty or the
interest so paid:

Provided that the proper officer may determine the

amount of short-payment of duty or interest, if any,
which in his opinion has not been paid by such person
and, then, the proper officer shall proceed to recover
such amount in the manner specified in this section, and
the period of “one year” or “six months” as the case
may be, referred to in sub-section (1) shall be counted
from the date of receipt of such information of payment.

Explanation 2. For the removal of doubts, it is hereby

declared that the interest under Section 28AB shall be
payable on the amount paid by the person under this
sub-section and also on the amount of short-payment of
duty, if any, as may be determined by the proper officer,
but for this sub-section.

(2C) The provisions of sub-Section (2B) shall not apply

to any case where the duty or the interest had become
payable or ought to have been paid before the date on
which the Finance Bill 2001 receives the assent of the
President.

(3) For the purposes of sub-section (1), the expression

"relevant date" means,-

(a) in a case where duty is not levied, or interest is not

charged, the date on which the proper officer makes
an order for the clearance of the goods;
(b) in a case where duty is provisionally assessed under
section 18, the date of adjustment of duty after the
final assessment thereof;
(c) in a case where duty or interest has been erroneously
refunded, the date of refund;
(d) in any other case, the date of payment of duty or interest.”

Review Petition No. 400 of 2021 Page 117 of 161

134. Thereafter, Section 28 was re-cast and a new scheme of the section was

introduced vide the Finance Act, 2011 promulgated with effect from

08.04.2011. Section 28, as it stands after the amendment, is reproduced

below:

“28. Recovery of duties not levied or short-levied or

erroneously refunded.
(1) Where any duty has not been levied or has been
short-levied or erroneously refunded, or any interest
payable has not been paid, part-paid or erroneously
refunded, for any reason other than the reasons of
collusion or any wilful mis-statement or suppression of
facts,-
(a) the proper officer shall, within one year from the
relevant date, serve notice on the person chargeable
with the duty or interest which has not been so levied or
which has been short-levied or short-paid or to whom
the refund has erroneously been made, requiring him to
show cause why he should not pay the amount specified
in the notice;
(b) the person chargeable with the duty or interest, may
pay before service of notice under clause (a) on the basis
of,-
(i) his own ascertainment of such duty; or
(ii) the duty ascertained by the proper officer, the
amount of duty along with the interest payable thereon
under section 28AA or the amount of interest which has
not been so paid or part-paid.

(2) The person who has paid the duty along with interest
or amount of interest under clause (b) of sub-section (1)
shall inform the proper officer of such payment in
writing, who, on receipt of such information shall not
serve any notice under clause (a) of that sub-section in
respect of the duty or interest so paid or any penalty
leviable under the provisions of this Act or the rules
made thereunder in respect of such duty or interest.

Review Petition No. 400 of 2021 Page 118 of 161

 (3) Where the proper officer is of the opinion that the
amount paid under clause (b) of sub-section (1) falls
short of the amount actually payable, then, he shall
proceed to issue the notice as provided for in clause (a)
of that sub-section in respect of such amount which falls
short of the amount actually payable in the manner
specified under that sub-section and the period of one
year shall be computed from the date of receipt of
information under sub-section (2).

(4) Where any duty has not been levied or has been
short-levied 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 or exporter, the proper officer shall,
within five years from the relevant date, serve notice on
the person chargeable with duty or interest which has
not been so levied or which has been so short-levied or
short-paid or to whom the refund has erroneously been
made, requiring him to show cause why he should not
pay the amount specified in the notice.

(5) Where any duty has not been levied or has been
short-levied or the interest has not been charged or has
been part-paid or the duty or interest has been
erroneously refunded by reason of collusion or any
wilful mis-statement or suppression of facts by the
importer or the exporter or the agent or the employee of
the importer or the exporter, to whom a notice has been
served under sub- section (4) by the proper officer, such
person may pay the duty in full or in part, as may be
accepted by him, and the interest payable thereon under
section 28AA and the penalty equal to twenty five per
cent. of the duty specified in the notice or the duty so
accepted by that person, within thirty days of the receipt
of the notice and inform the proper officer of such
payment in writing.

Review Petition No. 400 of 2021 Page 119 of 161

 (6) Where the importer or the exporter or the agent or
the employee of the importer or the exporter, as the case
may be, has paid duty with interest and penalty under
sub-section (5), the proper officer shall determine the
amount of duty or interest and on determination, if the
proper officer is of the opinion-

(i) that the duty with interest and penalty has been
paid in full, then, the proceedings in respect of
such person or other persons to whom the notice
is served under sub-section (1) or sub- section (4),
shall, without prejudice to the provisions of
sections 135, 135A and 140 be deemed to be
conclusive as to the matters stated therein; or
(ii) (ii) that the duty with interest and penalty that has
been paid falls short of the amount actually
payable, then the proper officer shall proceed to
issue the notice as provided for in clause (a) of
sub-section (1) in respect of such amount which
falls short of the amount actually payable in the
manner specified under that sub-section and the
period of one year shall be computed from the
date of receipt of information under sub-section
(5).

(7) In computing the period of one year referred to in

clause (a) of sub-section (1) or five years referred to in
sub-section (4), the period during which there was any
stay by an order of a court or tribunal in respect of
payment of such duty or interest shall be excluded.

(8) The proper officer shall, after allowing the

concerned person an opportunity of being heard and
after considering the representation, if any, made by
such person, determine the amount of duty or interest
due from such person not being in excess of the amount
specified in the notice.

(9) The proper officer shall determine the amount of

duty or interest under sub-section (8),- (a) within six
months from the date of notice in respect of cases falling

Review Petition No. 400 of 2021 Page 120 of 161

 under clause (a) of sub- section (1); (b) within one year
from the date of notice in respect of cases falling under
sub-section (4).

(10) Where an order determining the duty is passed by

the proper officer under this section, the person liable
to pay the said duty shall pay the amount so determined
along with the interest due on such amount whether or
not the amount of interest is specified separately.

Explanation 1 -- For the purposes of this section,

"relevant date" means,-
(a) in a case where duty is not levied, or interest is not
charged, the date on which the proper officer makes an
order for the clearance of goods;
(b) in a case where duty is provisionally assessed under
section 18, the date of adjustment of duty after the final
assessment thereof;
(c) in a case where duty or interest has been erroneously
refunded, the date of refund;
(d) in any other case, the date of payment of duty or
interest.

Explanation 2. - For the removal of doubts, it is hereby

declared that any non-levy, short-levy or erroneous
refund before the date on which the Finance Bill, 2011
receives the assent of the President, shall continue to be
governed by the provisions of Section 28 as it stood
immediately before the date on which such assent is
received.”

135. Parliament, therefore, made changes to the scheme of Section 28 and added

the Explanation 2 which stated that any non-levy, short-levy or erroneous

refund before the date of presidential assent to the Finance Bill, 2011 shall

be governed by the provisions of Section 28 as it stood prior to the

amendment.

Review Petition No. 400 of 2021 Page 121 of 161

136. On 06.07.2011, Customs Notification No. 44/2011 was issued under Section

2(34), which designated inter alia DRI officers as proper officers for the

purposes of Sections 17 and 28 of the Act, 1962 and empowered such

officers to perform functions under Section 28 including the function of

issuing show cause notices.

137. Subsequently, on 16.09.2011, sub-section (11) of Section 28 came to be

enacted vide the Validation Act. It provided that:

“(11) Notwithstanding anything to the contrary

contained in any judgment, decree or order of any court
of law, tribunal or other authority, all persons
appointed as officers of Customs under sub-
section (1) of section 4 before the 6th day of July, 2011
shall be deemed to have and always had the power of
assessment under section 17 and shall be deemed to
have been and always had been the proper officers for
the purposes of this section.”

138. As stated in the foregoing extract, sub-section (11) was introduced in the

statute to remedy the defects highlighted by this Court in the case of Sayed

Ali (supra) and the same retrospectively empowered all officers of customs

appointed under Section 4(1) before 06.07.2011 to conduct assessments

under Section 17 of the Act and to be proper officers for the purpose of

Section 28.

139. The Statement of Objects and Reasons of the Validation Act explained that

the introduction of Section 28(11) was necessary because the position of law

on the functions of proper officers as interpreted by this Court in Sayed Ali

Review Petition No. 400 of 2021 Page 122 of 161

 (supra) and the consequent invalidation of show cause notices issued by the

Commissionerates of Customs (Preventive), DRI and others, was not the

legislative intent. Parliament clarified that show cause notices issued by

officers of the Commissionerates of Customs (Preventive), DRI, Directorate

General of Central Excise Intelligence (DGCEI) and Central Excise

Commissionerates for demanding customs duty not levied or short levied or

erroneously refunded under Section 28 in respect of goods imported are

valid, irrespective of whether any specific assignment as proper officer was

issued.

140. The Validation Act was first challenged before the High Court of Bombay

in the case of Sunil Gupta (supra) on the grounds that it is violative of

Articles 14, 19 and 21 of the Constitution and that it fails to take note of

Explanation 2 to Section 28. Relying on Sayed Ali (supra), the petitioners

therein challenged the Validation Act on the ground that it is only the

officers of customs who are assigned functions of assessment including the

reassessment and they alone are competent to issue notice under Section 28.

x. Bombay High Court decision in Sunil Gupta (supra)

141. Similar grounds were taken by the petitioners before the High Court of Delhi

in the case of Mangali Impex (supra) wherein it was submitted that there

was an apparent conflict between Explanation 2 and Section 28(11) which

rendered the Validation Act inapplicable to show cause notices issued prior

Review Petition No. 400 of 2021 Page 123 of 161

 to 08.04.2011 i.e., the date on which the new Section 28 came into force. It

was further submitted that Section 28(11), by conferring powers of the

proper officer to multiple sets of customs officers without any territorial or

pecuniary jurisdictional limit, would result in utter chaos and confusion as

envisaged in Sayed Ali (supra) and therefore, does not cure the defects

pointed out therein.

142. The very same argument has been canvassed before us by the respondents

herein. To comprehensively address the submissions made before us, we

find it necessary to address the following three issues:

(i) What is the scope of Explanation 2 to Section 28?

(ii) Whether the field of operation of Section 28(11) and Explanation 2

overlaps? In other words, what is the scope of the non-obstante clause

in sub-section (11)?

(iii) Whether Section 28(11) cures the defect pointed out in Sayed Ali

(supra)?

143. Explanation 2 was introduced as a part of the new Section 28 enacted by the

Finance Act, 2011 with effect from 08.04.2011. Explanation 2 to Section 28

reads as follows:

“Explanation 2. - For the removal of doubts, it is hereby

declared that any non-levy, short-levy or erroneous
refund before the date on which the Finance Bill, 2011
receives the assent of the President, shall continue to be
governed by the provisions of section 28 as it stood

Review Petition No. 400 of 2021 Page 124 of 161

 immediately before the date on which such assent is
received.”

144. It was vehemently argued on behalf of the respondents that reading Section

28(11) with Explanation 2 narrows down the period for the purposes of

retrospective validation of the show cause notices issued and limits the

application of sub-section (11) to the period from 08.04.2011 (enactment of

new Section 28) to 16.09.2011 (enactment of the Validation Act). This

challenge is based on the reasoning that the non-obstante clause contained

in Section 28(11) is limited to “…judgment, decree or order of any court of

law, tribunal or other authority…” and does not oust the application of other

provisions of the Act including Explanation 2. It was argued that the phrase

“…this section…” in sub-section (11) when read harmoniously with

Explanation 2 refers to the new Section 28 only and will not be applicable

to the old provision as it stood prior to 08.04.2011.

145. The determination of the soundness of the aforesaid argument necessitates a

comparison of Section 28, prior to the amendment and subsequent to the

amendment.

Provisions of old Section 28 Corresponding provisions of Comparison and

[running in continuation from new Section 28 Remarks
sub-sections (1) to (3)]

28. Notice for payment of duties, 28. Recovery of duties not levied
interest, etc. or short-levied or erroneously
refunded.

Review Petition No. 400 of 2021 Page 125 of 161

(1) When any duty has not been (1) Where any duty has not been The legislature vide the
levied or has been short-levied or levied or has been short-levied or amendment, has removed
erroneously refunded, or when any erroneously refunded, or any the distinction between
interest payable has not been paid, interest payable has not been paid, the purposes for which the
part paid or erroneously refunded, part-paid or erroneously imports are to be used.
the proper officer may, refunded, for any reason other Sub-section (1)(b) of the
than the reasons of collusion or old Section 28 is
(a) in the case of any import made any wilful mis-statement or analogous to the sub-
by any individual for his personal suppression of facts, section (1)(a) of the new
use or by government or by any Section 28. The only
educational, research or (a) the proper officer shall, within change that has been made
charitable institution or hospital, one year from the relevant date, herein is the period of
within one year; serve notice on the person limitation for service of
chargeable with the duty or show cause notice which
(b) in any other case, within six interest which has not been so has been increased from
months, from the relevant date, levied or which has been short- six months to one year.
serve notice on the person levied or short-paid or to whom
chargeable with the duty or the refund has erroneously been
interest which has not been levied made, requiring him to show
or charged or which has been cause why he should not pay the
short-levied or part paid or to amount specified in the notice;
whom the refund has erroneously
been made, requiring him to show
cause why he should not pay the
amount specified in the notice:

Provided that where any duty has (4) Where any duty has not been In respect of the provision
been levied or has been short- levied or has been short- relating to issuance of
levied or the interest has not been levied or erroneously refunded, or show cause notice for
charged or has been part paid or interest payable has not been paid, non-levy, short-levy, not-
the duty or interest has been part-paid or erroneously paid, part-paid and
erroneously refunded by reason of refunded, by reason of,- erroneous refund of duty
collusion or any wilful mis- (a) collusion; or by reasons of collusion,
statement or suppression of facts (b) any wilful mis-statement; or wilful mis-statement or
by the importer or the exporter or (c) suppression of facts, by the suppression of facts, no
the agent or employee of the importer or the exporter or the change has been made and
importer or exporter, the agent or employee of the importer the time period of five
provisions of this sub-section shall or exporter, the proper officer years for service of notice
have effect as if for the words "one shall, within five years from the has been retained.
year" and "six months", the words relevant date, serve notice on the
"five years" were substituted. person chargeable with duty or The legislature has further
interest which has not been so clarified the procedure
levied or which has been so short- following the service of
levied or short-paid or to whom notice.
the refund has erroneously been
made, requiring him to show Sub-section (5) of the new
cause why he should not pay the Section 28 provides for
amount specified in the notice. the levy of interest on the
amount due and permits
part-payment of the
(5) Where any duty has not been amount mentioned in the
levied or has been short- levied or notice to the extent that
the interest has not been charged the short-fall in duty has

Review Petition No. 400 of 2021 Page 126 of 161

 or has been part- paid or the duty been accepted by the
or interest has been erroneously noticee.
refunded by reason of collusion or
any wilful mis-statement or Sub-section (6) of the new
suppression of facts by the Section 28 lays down the
importer or the exporter or the manner in which the
agent or the employee of the proceedings following the
importer or the exporter, to whom service of the show cause
a notice has been served under notice will be either
sub- section (4) by the proper closed on payment of the
officer, such person may pay the full amount mentioned in
duty in full or in part, as may be the notice or adjudication
accepted by him, and the interest and determination of the
payable thereon under section total amount to be
28AA and the penalty equal to recovered if part-payment
twenty- five per cent of the duty has been made by the
specified in the notice or the duty noticee.
so accepted by that person, within
thirty days of the receipt of the
notice and inform the proper
officer of such payment in writing.

(6) Where the importer or the

exporter or the agent or the
employee of the importer or the
exporter, as the case may be, has
paid duty with interest and penalty
under sub-section (5), the proper
officer shall determine the amount
of duty or interest and on
determination, if the proper officer
is of the opinion-

(i) that the duty with interest and

penalty has been paid in full, then,
the proceedings in respect of such
person or other persons to whom
the notice is served under sub-
section (1) or sub- section (4),
shall, without prejudice to the
provisions of sections 135, 135A
and 140 be deemed to be
conclusive as to the matters stated
therein; or

(ii) that the duty with interest and

penalty that has been paid falls
short of the amount actually
payable, then the proper officer
shall proceed to issue the notice as
provided for in clause (a) of sub-
section (1) in respect of such

Review Petition No. 400 of 2021 Page 127 of 161

 amount which falls short of the
amount actually payable in the
manner specified under that sub-
section and the period of one year
shall be computed from the date of
receipt of information under sub-
section (5).

Provided further that where the The legislature has

amount of duty which has not been removed the pecuniary
levied or has been short-levied or distinction and the
erroneously refunded or the consequent approvals
interest payable has not been paid, from different authorities
part paid or erroneously refunded for issuance of show cause
is one crore rupees or less, a notices.
notice under this sub-section shall
be served by the Commissioner of
Customs or with his prior
approval by any officer sub-
ordinate to him:

Provided also that where the

amount of duty has not been levied
or has been short-levied or
erroneously refunded or the
interest payable thereon has not
been paid, part paid or
erroneously refunded is more than
one crore rupees, no notice under
this sub- section shall be served
except with the prior approval of
the Chief Commissioner of
Customs.

Explanation : Where the service of (7) In computing the period of one This is an analogous
the notice is stayed by an order of year referred to in clause provision.
a court, the period of such stay (a) of sub-section (1) or five years
shall be excluded in computing the referred to in sub-section (4), the
aforesaid period of one year or six period during which there was any
months or five years, as the case stay by an order of a court or
may be. tribunal in respect of payment of
such duty or interest shall be
excluded.

(2) The proper officer, after (8) The proper officer shall, after This is an analogous
considering the representation, if allowing the concerned person an provision and pertains to
any, made by the person on whom opportunity of being heard and the adjudication /
notice is served under sub-section after considering the determination of the
(1), shall determine the amount of representation, if any, made by amount specified in the
duty or interest due from such such person, determine the show-cause notice when
person (not being in excess of the amount of duty or interest due issued under sub-section
amount specified in the notice) and from such person not being in (1) of the new Section 28.

Review Petition No. 400 of 2021 Page 128 of 161

thereupon such person shall pay excess of the amount specified in
the amount so determined. the notice.

(2A) Where any notice has been (9) The proper officer shall This is an analogous
served on a person under sub- determine the amount of duty or provision.
section (1), the proper officer - interest under sub-section (8),-
Sub-section (9)(a) of the
(i) in case any duty has not been (a) within six months from the date new Section 28 is
levied or has been short- of notice in respect of cases falling analogous to sub-section
levied, or the interest has not under clause (a) of sub- section (2A)(ii) of the old
been paid or has been part (1); provision and provides for
paid or the duty or interest a time period of six
has been erroneously (b) within one year from the date months for adjudication of
refunded by reason of of notice in respect of cases falling notices issued under new
collusion or any wilful mis- under sub-section (4). Section 28(1)(a).
statement or suppression of
facts, where it is possible to Sub-section (9)(b) of the
do so, shall determine the new Section 28 is
amount of such duty or the analogous to sub-section
interest, within a period of (2A)(i) of the old
one year: and provision and provides for
(ii) in any other case, where it is a time period of one year
possible to do so, shall for adjudication of notices
determine the amount of duty issued in cases of
which has not been levied or collusion, wilful mis-
has been short-levied or statement and suppression
erroneously refunded or the of facts.
interest payable which has
not been paid, part paid or
erroneously refunded, within
a period of six months, from
the date of service of the
notice on the person under
sub- section (1).

(2B) Where any duty has not been (1) … In both the old and new
levied, or has been short-levied or Section 28, the law has
erroneously refunded, or any (a) … provided an opportunity
interest payable has not been paid, to the person chargeable
part paid or erroneously refunded, (b) the person chargeable with the with duty or interest to
the person, chargeable with the duty or interest, may pay before make payment before the
duty or the interest, may pay the service of notice under clause (a) show cause notice is
amount of duty or interest before on the basis of,- issued to him and inform
service of notice on him under sub- the proper officer of such
section (1) in respect of the duty or (i) his own ascertainment of such payment in writing.
the interest, as the case may be, duty; or
and inform the proper officer of The legislature, in the new
such payment in writing, who, on (ii) the duty ascertained by the Section 28(1)(b) has
receipt of such information, shall proper officer, the amount of duty clarified the basis for
not serve any notice under sub- along with the interest payable ascertainment of amount
section (1) in respect of the duty or thereon under section 28AA or the to be paid prior to issuance
the interest so paid: amount of interest which has not of show cause notice.
been so paid or part-paid.

Review Petition No. 400 of 2021 Page 129 of 161

 (2) The person who has paid the
duty along with interest or amount
of interest under clause (b) of sub-
section (1) shall inform the proper
officer of such payment in writing,
who, on receipt of such
information shall not serve any
notice under clause (a) of that sub-
section in respect of the duty or
interest so paid or any penalty
leviable under the provisions of
this Act or the rules made
thereunder in respect of such duty
or interest.

Provided that the proper officer (3) Where the proper officer is of These provisions are
may determine the amount of the opinion that the amount paid analogous.
short-payment of duty or interest, under clause (b) of sub-section (1)
if any, which in his opinion has not falls short of the amount actually
been paid by such person and, payable, then, he shall proceed to
then, the proper officer shall issue the notice as provided for in
proceed to recover such amount in clause (a) of that sub-section in
the manner specified in this respect of such amount which falls
section, and the period of "one short of the amount actually
year" or "six months" as the case payable in the manner specified
may be, referred to in sub-section under that sub-section and the
(1) shall be counted from the date period of one year shall be
of receipt of such information of computed from the date of receipt
payment. of information under sub-section
(2).

Explanation 2. For the removal of (10) Where an order determining This provision is for the
doubts, it is hereby declared that the duty is passed by the proper recovery of interest.
the interest under Section 28AB officer under this section, the
shall be payable on the amount person liable to pay the said duty
paid by the person under this sub- shall pay the amount so
section and also on the amount of determined along with the interest
short-payment of duty, if any, as due on such amount whether or
may be determined by the proper not the amount of interest is
officer, but for this sub-section. specified separately.

(2C) The provisions of sub-Section

(2B) shall not apply to any case
where the duty or the interest had
become payable or ought to have
been paid before the date on which
the Finance Bill 2001 receives the
assent of the President.

(3) For the purposes of sub-section Explanation 1 - For the purposes This provision is identical
(1), the expression "relevant date" of this section, "relevant date" to the old provision.
means,- means,-

Review Petition No. 400 of 2021 Page 130 of 161

 (a) in a case where duty is not (a) in a case where duty is not
levied, or interest is not charged, levied, or interest is not charged,
the date on which the proper the date on which the proper
officer makes an order for the officer makes an order for the
clearance of the goods; clearance of goods;

(b) in a case where duty is (b) in a case where duty is

provisionally assessed under provisionally assessed under
section 18, the date of adjustment section 18, the date of adjustment
of duty after the final assessment of duty after the final assessment
thereof; thereof;

(c) in a case where duty or interest (c) in a case where duty or interest
has been erroneously refunded, has been erroneously refunded,
the date of refund; the date of refund;

(d) in any other case, the date of (d) in any other case, the date of
payment of duty or interest." payment of duty or interest.

Explanation 2. - For the removal The Explanation 2 was

of doubts, it is hereby declared added to the new Section
that any non-levy, short-levy or 28 to demarcate the date
erroneous refund before the date from which the said
on which the Finance Bill, 2011 section shall become
receives the assent of the applicable and any
President, shall continue to be recoveries of duty prior to
governed by the provisions of such date would be
Section 28 as it stood immediately governed by the old
before the date on which such Section 28.
assent is received."

146. What is discernible from the aforesaid modifications made by the Parliament

is as under:

(a) Distinction in the time-period: In sub-section (1) of new Section 28,

the difference in the purpose of the duty has been removed and for all

cases of short-levy, non-levy, part-payment, non-payment and

erroneous refund except for cases falling under new Section 28(4), the

Review Petition No. 400 of 2021 Page 131 of 161

 period of one year has been provided for the service of the show cause

notice, which under the old provision was six months.

(b) Additional provision in respect of short-levy, non-levy, part-

payment, non-payment and erroneous refund by reasons of

collusion, willful misstatement and suppression of facts: An

additional provision has been inserted by way of Section 28(5)

stipulating that, to the extent the amount mentioned in the show cause

notice has been accepted by the person chargeable with payment of

such duty, the payment of a part of such amount is allowed.

(c) Self-ascertainment of recovery amount before the issuance of a

show cause notice: Parliament introduced the mechanism of self-

ascertainment of the recovery amount by the person chargeable with

the payment of duty and payment of such amounts before the service

of a show cause notice, subject to final adjudication or determination

by the proper officer.

(d) Insertion of Explanation 2: For the removal of doubts regarding the

applicable provision for recoveries of duty arising before and after the

enactment of new Section 28, Parliament added Explanation 2 to clarify

that recoveries arising prior to 08.04.2011 shall be governed by old

Section 28 of the Act.

Review Petition No. 400 of 2021 Page 132 of 161

147. Having analysed the aforesaid modifications made by Parliament to old

Section 28, we can say with certainty that none of the changes made by the

amendments to Section 28 has any impact on the competence of the proper

officer for the purposes of fulfilment of functions under Section 28. In our

considered view, the 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.

148. Therefore, the application of sub-section (11), which pertains only to the

empowerment of proper officers to issue show cause notices under Section

28, cannot be said to be limited only to new Section 28 but also to the

provision as it stood prior to 08.04.2011. The legislative intent is that sub-

section (11) was meant to apply to Section 28 without any restriction as to

time. This is apparent from the Statement of Objects and Reasons of the

Validation Act. Therefore, the contention of the respondent that the phrase

“…this section…” in sub-section (11) means only new Section 28, which

was also accepted by the High Court of Delhi in Mangali Impex (supra), is

erroneous.

149. Since, there is no overlap in the field of operation of Section 28(11) and

Explanation 2, the interpretation of the non-obstante clause in Section

28(11) and the consequent harmonious construction of the two provisions in

Mangali Impex (supra) is otiose.

Review Petition No. 400 of 2021 Page 133 of 161

150. Thus, we are in complete agreement with the view taken by the High Court

of Bombay in the case of Sunil Gupta (supra) with respect to the first two

questions raised by us in this case. The relevant portion of that judgment is

reproduced below:

“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.”
[Emphasis supplied]

151. Further, the finding in Mangali Impex (supra) that Section 28(11) is

overbroad and confers the powers of the proper officer to multiple sets of

Review Petition No. 400 of 2021 Page 134 of 161

 customs officers without any territorial or pecuniary jurisdictional limit

which in turn may lead to “utter chaos and confusion” as highlighted in

Sayed Ali (supra), is misconceived in our view. The apprehension of the

petitioner therein was that plurality of proper officers empowered under

Section 28 would result in more than one show cause notice and a

consequent misuse of the provision, which would be detrimental to the

interests of the persons chargeable with the payment of duty. Although,

Mangali Impex (supra) declared Section 28(11) to be invalid on this ground,

it suggested that the Board should issue instructions in its administrative

capacity that once a show cause notice is issued specifying an adjudicating

authority subject to such an officer being the proper officer for the purposes

of Section 28, then he or she alone should proceed to adjudicate that

particular show cause notice to the exclusion of all other officers who may

have power in relation to that subject matter. We find this to be a reasonable

construal of the import and application of Section 28(11).

152. It is a settled position of law that the possibility of misuse or abuse of a law

which is otherwise valid cannot be a ground for invalidating it. This

principle of law has been expounded by this Court in the case of Shreya

Singhal v. Union of India reported in (2015) 5 SCC 1. The relevant portion

of the judgment is reproduced below:

“In The Collector of Customs, Madras v. Nathella

Sampathu Chetty & Anr., [1962] 3 S.C.R. 786, this

Review Petition No. 400 of 2021 Page 135 of 161

 Court observed: "....This Court has held in numerous
rulings, to which it is unnecessary to refer, that the
possibility of the abuse of the powers under the
provisions contained in any statute is no ground for
declaring the provision to be unreasonable or void.
Commenting on a passage in the judgment of the Court
of Appeal of Northern Ireland which stated:
"If such powers are capable of being exercised
reasonably it is impossible to say that they may not
also be exercised unreasonably" and treating this as
a ground for holding the statute invalid Viscount
Simonds observed in Belfast Corporation v. O.D.
Commission [ 1960 AC 490 at pp. 520-521] : "It
appears to me that the short answer to this
contention (and I hope its shortness will not be
regarded as disrespect) is that the validity of a
measure is not to be determined by its application to
particular cases.... If it is not so exercised (i.e. if the
powers are abused) it is open to challenge and there
is no need for express provision for its challenge in
the statute."
The possibility of abuse of a statute otherwise valid
does not impart to it any element of invalidity. The
converse must also follow that a statute which is
otherwise invalid as being unreasonable cannot be
saved by its being administered in a reasonable
manner. The constitutional validity of the statute
would have to be determined on the basis of its
provisions and on the ambit of its operation as
reasonably construed. If so judged it passes the test
of reasonableness, possibility of the powers
conferred being improperly used is no ground for
pronouncing the law itself invalid and similarly if
the law properly interpreted and tested in the light
of the requirements set out in Part III of the
Constitution does not pass the test it cannot be
pronounced valid merely because it is administered
in a manner which might not conflict with the
constitutional requirements." (at page 825)”
[Emphasis supplied]

Review Petition No. 400 of 2021 Page 136 of 161

153. We were apprised by the learned Additional Solicitor General during the

course of the hearing that the Customs department has been following the

protocol suggested in Mangali Impex (supra) since 1999. Further, no

substantial empirical evidence of the misuse of Section 28(11) which was

enacted over a decade ago, was presented by the parties. Therefore, we are

inclined to accept the policy of the Customs department that once a show

cause notice is issued, the jurisdiction of other empowered proper officers

shall be excluded for such notice. We find that such policy acts as a sufficient

safeguard against the apprehension of chaos or confusion or misuse.

154. Thus, we are of the considered view that the enactment of sub-section (11)

of Section 28 cures the defect pointed out in Sayed Ali (supra) and the

judgment in Mangali Impex (supra) deserves to be set aside.

155. It follows from the above discussion that sub-section (11) of Section 28 is

constitutionally valid, and its application is not limited to the period between

08.04.2011 and 16.09.2011.

156. For the reasons in the foregoing paragraphs, we hold that the Bombay High

Court judgment in Sunil Gupta (supra) lays down the correct position of

law, whereas the Delhi High Court decision in Mangali Impex (supra) is

incorrect and is consequently set aside.

Review Petition No. 400 of 2021 Page 137 of 161

xi. Amendments made by the Finance Act, 2022
157. The third cluster of the present batch of cases relates to the challenge to the

constitutional validity of Sections 86, 87, 88, 94 and 97 of the Finance Act,

2022 respectively. We take this opportunity to consider this issue as the

constitutional validity of the said provisions has been challenged with

specific reference to the findings made in Canon India (supra), which is the

judgment under review herein.

158. The validation amendment vide Section 97 has been challenged before this

Court specifically in WP (C) 526 of 2022 titled Daikin Air Conditioning

India Pvt. Ltd. v. Union of India. The respondent herein has canvassed the

following grounds for declaring the provision unconstitutional on the

touchstone of Article 14 of the Constitution:

(i) The Finance Act, 2022 does not cure the defect pointed out in Canon

India (supra) and no notification or amendment of law deeming DRI

officers to be the proper officers would cure the defect of ouster of

jurisdiction of DRI once the original act of assessment has been

undertaken by a different group of officers. The Finance Act, 2022 is

manifestly arbitrary as no attempt has been made to cure the defect

highlighted in Canon India (supra).

(ii) This Court in Canon India (supra) made a determination of fact that

the DRI officers did not have jurisdiction to perform functions under

Review Petition No. 400 of 2021 Page 138 of 161

 Section 28 of the Act, 1962. Such judicial determination of fact relating

to actual exercise of jurisdiction cannot be retrospectively overruled.

(iii) The legislature has selectively adhered to the legal findings made in

Canon India (supra) only for future actions by enactment of Section

110AA and has proceeded to ignore the findings for past show cause

notices by validating the same vide Section 97 of the Finance Act,

2022. Such a distinction creates two classes of assessees without any

reasonable basis for this differentiation.

(iv) Section 97 of the Finance Act, 2022 fails the test of proportionality as

it is a sweeping validation of all acts under the chapters specified in the

section and does not provide certainty to the assessees as to which

rights have been abrogated.

(v) The writ petitioner in the WP (C) No. 520 of 2022 titled Dish TV India

Ltd. v. Union of India and Ors. has also challenged the application of

Section 97 on the ground that Section 97(iii) of the Finance Act, 2022

gives the amendments made to Sections 2, 3 and 5 retrospective effect

which would make sub-sections (4) and (5) of Section 5 applicable to

the show cause notices issued in the past. It is the case of the writ

petitioner that Customs Notifications Nos. 44/2011 dated 06.07.2011

and 40/2012 dated 02.05.2012 do not in any way satisfy the mandatory

and salutary criteria laid down in Sections 5(4) and 5(5).

Review Petition No. 400 of 2021 Page 139 of 161

159. From the grounds summarized above, we find that the writ petitioners have

challenged the constitutionality of the validation of past actions by Section

97 of the Finance Act, 2022. Therefore, we shall limit our ruling to this

provision alone.

160. It is a settled position of law that the 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.

161. This Court in the case of Empire Industries Ltd. v. Union of India reported

in (1985) 3 SCC 314 observed that:

“51. In the view we have taken of the expression

“manufacture”, the concept of process being embodied
in certain situation in the idea of manufacture, the
impugned legislation is only making “small repairs”
and that is a permissible mode of legislation. In 73rd
vol. of Harvard Law Review p. 692 at p. 795, it has been
stated as follows:
“It is necessary that the Legislature should be able
to cure inadvertent defects in statutes or their
administration by making what has been aptly
called “small repairs”. Moreover, the individual
who claims that a vested right has arisen from the
defect is seeking a windfall since had the
legislature's or administrator's action had the
effect it was intended to and could have had, no
such right would have arisen. Thus, the interest in
the retroactive curing of such a defect in the
administration of government outweighs the

Review Petition No. 400 of 2021 Page 140 of 161

 individual's interest in benefiting from the defect
.... The Court has been extremely reluctant to
override the legislative judgment as to the necessity
for retrospective taxation, not only because of the
paramount governmental interest in obtaining
adequate revenues, but also because taxes are not in
the nature of a penalty or a contractual obligation
but rather a means of apportioning the costs of
government among those who benefit from it…”
[Emphasis supplied]

162. This Court has laid down the tests for determining whether a validating law

is enacted within permissible limits in the case of Indian Aluminium

Company Co. vs. State of Kerala reported in (1996) 7 SCC 637 and the

relevant observations therein are reproduced below:

“56. From a resume of the above decisions the following

salient principles would emerge:
…
(3) In a democracy governed by rule of law, the
Legislature exercises the power under Articles 245 and
246 and other companion Articles read with the entries
in the respective Lists in the Seventh Schedule to make
the law which includes power to amend the law.
(4) The Court, therefore, need to carefully scan the law
to find out: (a) whether the vice pointed out by the
Court and invalidity suffered by previous law is cured
complying with the legal and constitutional
requirements; (b) whether the Legislature has
competence to validate the law; (c) whether such
validation is consistent with the rights guaranteed in
Part III of the Constitution.
(5) The Court does not have the power to validate an
invalid law or to legalise impost of tax illegally made
and collected or to remove the norm of invalidation or
provide a remedy. These are not judicial functions but
the exclusive province of the Legislature. Therefore,
they are not an encroachment on judicial power.

Review Petition No. 400 of 2021 Page 141 of 161

 (6) In exercising legislative power, the Legislature by
mere declaration, without anything more, cannot
directly overrule, revise or override a judicial decision.
It can render judicial decisions ineffective by enacting
valid law on the topic within its legislative field,
fundamentally altering or changing its character
retrospectively. The changed or altered conditions are
such that the previous decision would not have been
rendered by the Court, if those conditions had existed
at the time of declaring the law as including power to
amend the law. It is also empowered to give effect to
retrospective legislation with a deeming date or with
effect from a particular date.”
[Emphasis supplied]

163. We shall now proceed to determine whether the enactment of Section 97 of

the Finance Act, 2022 fulfils the tests laid down by this Court for a validation

Act to be legally sustainable. The first leg of such determination would be

to satisfy ourselves as to whether Section 97 cures the defect pointed out by

this Court in Canon India (supra). In this respect, the following aspects are

relevant:

a) The Coordinate Bench in Canon India (supra) observed that:

“14. It is well known that when a statute directs that the

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

Review Petition No. 400 of 2021 Page 142 of 161

 nature of an administrative review of an act. The section
must therefore be construed as conferring the power of
such review on the same officer or his successor or any
other officer who has been assigned the function of
assessment. In other words, an officer who did the
assessment, could only undertake re-assessment [which
is involved in Section 28 (4)]”
[Emphasis supplied]

b) According to Canon India (supra), only “the proper officer”

empowered to undertake the exercise of assessment or re-assessment

under Section 17 in a jurisdictional area can perform the functions of

“the proper officer” under Section 28 of the Act, 1962 as the exercise

involved in Section 28 is the re-assessment of duty. The defect pointed

out by the Court in Canon India (supra) is that the DRI officers were

not “the proper officers” who undertook the exercise of assessment

under Section 17. Hence, they lacked the jurisdiction to issue show

cause notices under Section 28. The reasoning given by the Court was

that any other reading of the expression “proper officers” would lead

to a multiplicity of proper officers competent to perform functions

under Section 28, which would result in the perpetuation of chaos and

confusion as pointed out in Sayed Ali (supra).

c) However, the apprehension expressed is unfounded in our opinion

especially in context of the Customs department’s policy of exclusion

of jurisdiction of other competent proper officers once a particular

Review Petition No. 400 of 2021 Page 143 of 161

 proper officer empowered to issue a show cause notice under Section

28 has issued it. Such a policy acts as an adequate safeguard in our

view.

d) We find that the ouster of jurisdiction of DRI to issue show cause

notices under Section 28 once an assessment has been done under

Section 17 is not a defect at all in light of Notification No. 44/2011

dated 06.07.2011 and new Section 17 as amended by the Finance Act,

2011. We have already recorded a finding in the foregoing segments

of this judgment that these facts were not considered in Canon India

(supra) and therefore, become the basis of the review petition herein.

e) Notification No. 44/2011 dated 06.07.2011 specifically assigned the

functions of the proper officers under Sections 17 and 28 to DRI

officers. Such assignment of functions of assessment is sufficient for

the DRI officers to fall in the category of “any other officer who has

been assigned the function of assessment” as mentioned in Canon

India (supra).

f) Furthermore, as discussed previously, the functions of assessment and

re-assessment under Section 17 and recovery of duty under Section

28 are distinct. Canon India (supra) held erroneously that Section

28(4) involves the function of re-assessment. The function of

recovery of short-levy, non-levy, part-paid, non-paid and erroneous

Review Petition No. 400 of 2021 Page 144 of 161

 refund under Section 28 is not the same as the assessment or re-

assessment of the bill(s) of entry. It necessarily has to be a process

subsequent to the completion of functions under Section 17. Further,

such function of determining duty to be recovered requires application

of judicial mind and therefore, cannot be an administrative review of

an act. This is especially so after the introduction of self-assessment

in Section 17 vide the Finance Act, 2011.

g) Therefore, the validating provision under Section 97 of the Finance

Act, 2022 is a mere surplusage with respect to validation of the show

cause notices issued by DRI officers under Section 28. It cannot be

challenged on the ground that it does not cure the defect pointed out

in Canon India (supra) when no defect can be made out therein as a

result of this review petition.

164. The contention that Section 97 could not have overruled the finding of fact

relating to the actual exercise of jurisdiction in Canon India (supra) is

untenable for the following reasons:

(a) The argument that once a particular officer has exercised the function

of assessment, it is a jurisdictional fact that has occurred to the

exclusion of all other groups in the Customs Department and therefore,

only that officer or his superiors, who had undertaken assessment under

Review Petition No. 400 of 2021 Page 145 of 161

 Section 17 in the first place, shall have the jurisdiction to issue notices

for recovery of duty under Section 28, does not hold water.

(b) As discussed above, the functions of assessment and re-assessment

under Section 17 and the recovery of duty under Section 28 are distinct.

Therefore, the exercise of functions under Section 17 can only act as a

“jurisdictional fact” for the purpose of excluding the jurisdiction of

other proper officers empowered under that section for the exercise of

the rest of the functions specified therein. Similarly, the exercise of the

function of issuing show cause notices under Section 28 by a particular

proper officer serves as a jurisdictional fact which would exclude the

jurisdiction of other proper officers empowered under Section 28.

(c) Canon India (supra) proceeded on an erroneous assumption that the

jurisdiction of the proper officer under Sections 17 and 28 is linked.

This is due to the erroneous understanding of the provisions of Act,

1962 that functions under Section 28 involve re-assessment.

(d) Therefore, the very basis of the determination of jurisdictional fact for

exercise of functions under Section 28 has been clarified by us. Thus,

we are of the considered view that the challenge to Section 97, on the

ground of inability of a validating Act to overrule a finding of fact, is

unfounded and liable to be dismissed.

Review Petition No. 400 of 2021 Page 146 of 161

165. While challenging the constitutional validity, it was argued that the insertion

of Section 110AA for future actions while validating the past actions (which

in words of the writ petitioners was contrary to the intent of Section 110AA)

does not create a reasonable classification as there is no intelligible

differentia. It was further argued that Section 97 is manifestly arbitrary and

fails the test of proportionality under Article 14. In our view, these

submissions are not tenable in law for the following reasons:

a) It is a settled position of law that matters of economic policy are best

left to the wisdom of the legislature and in policy matters, the accepted

principle is that the courts should not interfere. This principle has been

laid down in the case of Bhavesh D. Parish v. Union and India

reported in (2000) 5 SCC 471, wherein this Court held that:

“26. The services rendered by certain informal sectors

of the India economy could not be belittled. However, in
the path of economic progress, if the informal system
was sought to be replaced by a more organised system,
capable of better regulation and discipline, then this
was an economic philosophy reflected by the legislation
in question. Such a philosophy might have its merits
and demerits. But these were matters of economic
policy. They are best left to the wisdom of the
legislature and in policy matters the accepted principle
is that the courts should not interfere. Moreover in the
context of the changed economic scenario the
expertise of people dealing with the subject should not
be lightly interfered with. The consequences of such
interdiction can have large-scale ramifications and can
put the clock back for a number of years. The process of
rationalisation station of the infirmities in the economy
can be put in serious jeopardy and, therefore, it is

Review Petition No. 400 of 2021 Page 147 of 161

 necessary that while dealing with economic legislations,
this Court, while not jettisoning its jurisdiction to curb
arbitrary action or unconstitutional legislation, should
interfere only in those few cases where the view
reflected in the legislation is not possible to be taken at
all.”
[Emphasis supplied]

b) A Constitution Bench of this Court in the case of Shri Prithvi Cotton

Mills Ltd. and Ors. v. Broach Borough Municipality & Ors., reported

in (1969) 2 SCC 283 set out the modus of validation of tax through

validating statutes and observed as follows:

“4. …
Validation of a tax so declared illegal may be done only
if the grounds of illegality or invalidity are capable of
being removed and are in fact removed and the tax thus
made legal. Sometimes this is done by providing for
jurisdiction where jurisdiction had not been properly
invested before. Sometimes this is done by re-enacting
retrospectively a valid and legal taxing provision and
then by fiction making the tax already collected to
stand under the re-enacted law. Sometimes the
Legislature gives its own meaning and interpretation
of the law under which tax was collected and by
legislative fiat makes the new meaning binding upon
courts. The Legislature may follow any one method or
all of them and while it does so it may neutralise the
effect of the earlier decision of the court which becomes
ineffective after the change of the law. Whichever
method is adopted it must be within the competence of
the legislature and legal and adequate to attain the
object of validation. If the Legislature has the power
over the subject-matter and competence to make a valid
law, it can at any time make such a valid law and make
it retrospectively so as to bind even past transactions.
The validity of a Validating Law, therefore, depends
upon whether the Legislature possesses the competence

Review Petition No. 400 of 2021 Page 148 of 161

 which it claims over the subject-matter and whether in
making the validation it removes the defect which the
courts had found in the existing law and makes adequate
provisions in the Validating Law for a valid imposition
of the tax.”
[Emphasis supplied]

c) We are of the opinion that the introduction of Section 110AA was a

valid exercise of legislative power to amend the provisions of the Act,

1962 and it was done with the objective of following the principle of

comity to give effect to the suggestions of this Court in Sayed Ali

(supra) and Canon India (supra). However, we clarify that a change

in law, which the legislature was competent to enact, having

prospective application cannot be a ground for the writ petitioners to

question the sanctity and wisdom of the legislature in following a

different mechanism to assess/re-assess bills of entry(s) and recover

duty under Sections 17 and 28 respectively.

d) No occasion arises for us to discuss the validity of Section 97 with

respect to the test of reasonable classification as the introduction of

Section 110AA does not create a class of assessees to whom the law

would apply differentially to, at the same point in time. The differential

mechanism for the exercise of functions under Section 28 is not for a

different class of assessees but rather for the show cause notices issued

during different periods of time that is, prior to the Finance Act, 2022

and after its enactment.

Review Petition No. 400 of 2021 Page 149 of 161

 e) On the strength of such reasoning, we are of the view that Section 97

is not manifestly arbitrary and discriminatory and is not disproportional

to the object sought to be achieved by it.

166. It is also the contention of the writ petitioners that Section 97 (iii) gives

retrospective effect to the amendments made in Section 5 thereby making

previous show cause notices subject to the provisions of the newly inserted

provisions, i.e., sub-sections (4) and (5) of Section 5. It is their case that the

previous notifications empowering DRI officers to issue show cause notices

under Section 28 do not fulfil the mandate of Section 5(4) as they cannot be

placed in any of the criteria envisaged therein. We find no merit in the said

contention:

a) Section 5(4) reads as follows:

“(4) In specifying the conditions and limitations

referred to in sub-section (1), and in assigning functions
under sub-section (1A), the Board may consider any one
or more of the following criteria, including, but not
limited to
(a) territorial jurisdiction;
(b) persons or class of persons;
(c) goods or class of goods;
(d) cases or class of cases;
(e) computer assigned random assignment;
(f) any other criterion as the Board may, by
notification, specify.”
[Emphasis supplied]

b) From a plain reading of the above-referred sub-section, we find that the

Board has been entrusted with wide powers in respect of determination

Review Petition No. 400 of 2021 Page 150 of 161

 of criteria and the use of the word “may” is indicative of the Board’s

discretion in this regard. Therefore, the writ petitioners are wrong in

construing the sub-section as a mandatory provision for the purpose of

invalidation of the show cause notices issued.

c) A purposive interpretation of Section 97 indicates that clause (i) therein

is the object of its enactment and clause (iii) is an extension thereof to

further clarify that any deficiencies in law under Sections 2, 3 and 5 of

the Act, 1962 as they stood prior to the Finance Act, 2022 would not

be an obstacle to the validating act under clause (i).

d) Therefore, the retrospective application of Sections 2, 3 and 5 of the

Act, 1962 respectively is not stand-alone but is restricted to

achievement of the ultimate object of validation under clause (i) of

Section 97. Any interpretation of the amended Sections 2, 3 and 5

arising from the retrospective application thereof, which is contrary to

or not in furtherance of the Section 97 (i) would not hold good in law.

e) This Court in the case of Vivek Narayan v. Union of India reported in

(2023) 3 SCC 1 has held that:

“140. The principle of purposive interpretation has also

been expounded through a catena of judgments of this
Court. A Constitution Bench of this Court in M. Pentiah
v. Muddala Veeramallappa [M. Pentiah v. Muddala
Veeramallappa, (1961) 2 SCR 295 : AIR 1961 SC 1107]
was considering a question, as to whether the term
prescribed in Section 34 would apply to a member of a
“deemed” committee under the provisions of the

Review Petition No. 400 of 2021 Page 151 of 161

 Hyderabad District Municipalities Act, 1956. An
argument was put forth that, upon a correct
interpretation of the provisions of Section 16, the same
would be permissible. Rejecting the said argument, K.
Subba Rao, J., observed thus : (AIR pp. 1110-11, para
6)
“6. Before we consider this argument in some detail,
it will be convenient at this stage to notice some of the
well-established rules of construction which would
help us to steer clear of the complications created by
the Act. Maxwell on the Interpretation of Statutes,
10th Edn., says at p. 7 thus:
‘… if the choice is between two interpretations, the
narrower of which would fail to achieve the
manifest purpose of the legislation, we should avoid
a construction which would reduce the legislation to
futility and should rather accept the bolder
construction based on the view that Parliament
would legislate only for the purpose of bringing
about an effective result.’…”
[Emphasis supplied]

f) A seven-Judge Bench of this Court in the case of Abhiram Singh v.

C.D. Commachen (Dead) By Lrs. & Ors., reported in (2017) 2 SCC

629 has held that:

“36. The conflict between giving a literal

interpretation or a purposive interpretation to a
statute or a provision in a statute is perennial. It can
be settled only if the draftsman gives a long-winded
explanation in drafting the law but this would result
in an awkward draft that might well turn out to be
unintelligible. The interpreter has, therefore, to
consider not only the text of the law but the context in
which the law was enacted and the social context in
which the law should be interpreted. This was
articulated rather felicitously by Lord Bingham of
Cornhill in R. (Quintavalle) v. Secy. of State for
Health [R. (Quintavalle) v. Secy. of State for Health,
2003 UKHL 13 : (2003) 2 AC 687 : (2003) 2 WLR

Review Petition No. 400 of 2021 Page 152 of 161

 692 (HL)] when it was said : (AC p. 695 C-H, paras
8-9)
“8. The basic task of the court is to ascertain and
give effect to the true meaning of what Parliament
has said in the enactment to be construed. But
that is not to say that attention should be confined
and a literal interpretation given to the particular
provisions which give rise to difficulty. Such an
approach not only encourages immense prolixity
in drafting, since the draftsman will feel obliged
to provide expressly for every contingency which
may possibly arise. It may also (under the banner
of loyalty to the will of Parliament) lead to the
frustration of that will, because undue
concentration on the minutiae of the enactment
may lead the court to neglect the purpose which
Parliament intended to achieve when it enacted the
statute. Every statute other than a pure
consolidating statute is, after all, enacted to make
some change, or address some problem, or
remove some blemish, or effect some
improvement in the national life. The court's task,
within the permissible bounds of interpretation, is
to give effect to Parliament's purpose. So the
controversial provisions should be read in the
context of the statute as a whole, and the statute
as a whole should be read in the historical context
of the situation which led to its enactment.”
[Emphasis supplied]

g) Thus, we are of the opinion that the retrospective application of Section

5(4) cannot be the basis for the challenge to the validity of Section 97

of the Finance Act, 2022.

167. For the foregoing reasons, we hold that the challenge to the constitutional

validity of the Finance Act, 2022 and more particularly Section 97 thereof,

being unfounded should fail. We say so more particularly in light of the

Review Petition No. 400 of 2021 Page 153 of 161

 judgment in the review of Canon India (supra) and the various judicial

pronouncements of this Court. Therefore, we hold that Section 97 of the

Finance Act, 2022 is constitutionally valid and the challenge to it is rejected

accordingly.

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 (N.T.) dated 26.04.1990 issued by the

Department 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.

(ii) The petition seeking review of the decision in Canon India (supra) is

allowed for the following reasons:

a. Circular No. 4/99-Cus dated 15.02.1999 issued by the Central

Board of Excise & Customs, New Delhi which empowered the

officers of DRI to issue show cause notices under Section 28 of

the Act, 1962 as well as Notification No. 44/2011 dated

06.07.2011 which assigned the functions of the proper officer for

Review Petition No. 400 of 2021 Page 154 of 161

 the purposes of Sections 17 and 28 of the Act, 1962 respectively

to the officers of DRI were not brought to the notice of this Court

during the proceedings in Canon India (supra). In other words,

the judgment in Canon India (supra) was rendered without

looking into the circular and the notification referred to above

thereby seriously affecting the correctness of the 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 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 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,

Review Petition No. 400 of 2021 Page 155 of 161

 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,

we have only considered and reviewed the decision in Canon India

(supra) to the extent that it pertains to the first ground, that is, the

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 (supra) on the aspect of limitation have neither been

considered 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 retrospective

Review Petition No. 400 of 2021 Page 156 of 161

 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 considered 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 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 under Section 28

of the Act, 1962. Further, the High Court could not 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 inherent contradiction can be said to exist between

the two. 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-alia, retrospectively

validated all show cause notices issued under 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)

Review Petition No. 400 of 2021 Page 157 of 161

 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 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 maintainability 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:

a. Where the show cause notices issued under Section 28 of 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

Review Petition No. 400 of 2021 Page 158 of 161

 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 Court, they shall be disposed 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 passed by the adjudicating authority

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 appropriate appeal before the Customs 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

Review Petition No. 400 of 2021 Page 159 of 161

 respective assessee to prefer appropriate appeals before the

CESTAT.

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 judgment and restore such notices to the

CESTAT for hearing the matter on merits.

f. Where appeals against the orders-in-original involving issues

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.

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.

Review Petition No. 400 of 2021 Page 160 of 161

170. We set aside the decision of the High Court of Delhi rendered in the case of

Mangali Impex (supra) and uphold the view taken by the High Court of

Bombay in the case of Sunil Gupta (supra). We also uphold the

constitutional validity of Section 97 of the Finance Act, 2022.

171. The Registry shall take steps to list the connected civil appeals and writ

petitions before the appropriate Bench and they shall be disposed in terms

of the observations made in this judgment.

172. The review petitions are accordingly disposed of.

...................................................... CJI.
(Dr. Dhananjaya Y. Chandrachud)

.......................................................... J.
(J.B. Pardiwala)

.......................................................... J.
(Manoj Misra)

New Delhi;
7th November, 2024

Review Petition No. 400 of 2021 Page 161 of 161