Canon, Reviewed or adjudged?
NOVEMBER 15, 2024
By Sridharan P, Senior Advisor, M2K, Chartered Accountants
THE last word has been said on the vexed question of jurisdiction of DRI officers to issue SCN under Section 28 of the Customs Act, 1962. The Hon'ble SC has allowed the review petition filed by the GOI. [See 2024-TIOL-115-SC-CUS-LB.]
The decision of Hon'ble Supreme Court in the Review Petition in the Canon India matter can be divided into three parts:
a) Addressing the error apparent on record in the Hon'ble Supreme Court decision in the Sayed Ali [2016-TIOL-877-HC-DEL-CUS;] and Canon India Ltd [2021-TIOL-123-SC-CUS-LB,] matters
b) Revenue's Appeal against the Hon'ble Delhi High Court decision in the Mangali Impex matter
c) Constitutional validity of the changes introduced to the Customs Act 1962 through Section 97 of the Finance Act 2022, through which Section 110AA was introduced to the Customs Act 1962.
The focus of this article will be on the first aspect, viz., addressing the error apparent on record in the Hon'ble Supreme Court decision in the Sayed Ali and Canon India Ltd matters, which was also the subject matter of the Review Petition filed by Revenue.
|
Error apparent on the face of record in Canon
|
Error apparent on the face of record in Sayed Ali
|
|
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
|
|
|
14. …….In other words, an officer who did the assessment, could only undertake re-assessment [which is involved in Section 28 (4)].
15. It is obvious that the re-assessment and recovery of duties i.e. contemplated by Section 28(4) is by the same authority and not by any superior authority such as Appellate or Revisional Authority. It is, therefore, clear to us that the Additional Director General of DRI was not “the” proper officer to exercise the power under Section 28(4) and the initiation of the recovery proceedings in the present case is without any jurisdiction and liable to be set aside.
|
14.…….. In our view therefore, 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.
|
It is only to support their conclusion that an officer who did the assessment, could only undertake re-assessment [which is involved in Section 28 (4)], the Hon'ble Supreme Court in the Canon India matter took the Section 6 argument. While the position taken by the Hon'ble Supreme Court on Section 6 could be deemed to be an error apparent on record, it cannot be denied that even without the assistance of the Section 6 argument, the ratio laid down by the Hon'ble Supreme Court could still hold the field.
The Hon'ble Supreme Court in their Review jurisdiction have set this record straight by holding that a DRI officers being officers of Customs do not require a Notification under Section 6 for assigning the functions of a proper officer.
However, to set at nought the ratio laid down by the two Benches of the Hon'ble Supreme Courts, the Hon'ble Supreme Court in their Review jurisdiction appear to have given their own interpretation on the term, 'assessment' under Section 17 and the scope of the Notice under Section 28 as extracted below:.
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.
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.
While arriving at the above interpretation the Hon'ble Supreme Court in the review jurisdiction, has come to the conclusion that post 8.4.2011 there was only self-assessment and the 'proper officer' could only re-assess. This conclusion has been arrived at without noticing the amended definition of the term 'assessment' to include re-assessment. Therefore, the fact remains that even in a self-assessment scenario post 8.4.2011, the proper officer continues to retain the power of assessment under Section 17, through it is termed as re-assessment. The entire conclusion of the Hon'ble Supreme Court in in their Review jurisdiction in setting aside the ratio laid down by two Supreme Court benches, is apparently based on their own interpretation of the term 'assessment' under Section 17 post 8.4.2011.
Further the divorcing of Section 17 and Section 28 to justify their interpretation of the terms "the proper officer" in Section 28 also appears to be an 'error apparent on record', as new Section 28(11) ibid clearly confers the 'power of assessment' under Section 17 to the DRI officers from time immemorial. Therefore Section 17 and 28 are inextricably linked.
It is not apparent as to how these 'interpretations' can be used to negative an earlier Supreme Court decision under the Review Jurisdiction of the Hon'ble Supreme Court, as this aspect is not an error apparent on record, but a difference in the interpretations of the section 17 between different Benches of Supreme Court.
Reading the final decision in the Review Petition, one gets an inescapable feeing that the Review Bench has practically sat in judgment over two co-ordinate Benches of the Hon'ble Supreme Court in a Review Petition.
Final thought: It appears that deciding the question against the Revenue was apparently an 'error apparent on record' and, therefore, the Review was apparently justified!!!.
[The views expressed are strictly personal.]
| (DISCLAIMER : The views expressed are strictly of the author and Taxindiaonline.com doesn't necessarily subscribe to the same. Taxindiaonline.com Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the site) |
