whether after clearance of the cameras on the basis that they were exempted from levy of basic Customs duty under Notification No.15/2012, the proceedings initiated by the Directorate of Revenue Intelligence for recovery of duty not paid under Section 28(4) of the Customs Act, 1962 are valid in law.
In this view of the matter, we consider it unnecessary to answer the issue whether the cameras that were cleared on the basis that they were exempted from customs duty under Exemption Notification No.15/2012 were in fact eligible for the exemption or not. The goods must be taken to have been validly cleared by the Customs officer. We might note that cameras with similar specifications have been treated as exempted under the Explanatory Note to the Combined Nomenclature of the European communities. It is important to add that the same cameras have been considered to be eligible for exemption before 17.03.2012 and after 30.04.2015 under the exemption Notifications issued under the Customs Act read with Chapter 84 & 85 (First Schedule) of Customs Tariff Act, 1975. In the result, these appeals are allowed.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.1827 OF 2018
M/S CANON INDIA PRIVATE LIMITED …. APPELLANT(S)
VERSUS
COMMISSIONER OF CUSTOMS …. RESPONDENT(S)
WITH
CIVIL APPEAL NO. 1875 OF 2018
WITH
CIVIL APPEAL NO.1832 OF 2018
WITH
CIVIL APPEAL NO.3213 OF 2018
J U D G M E N T
S.A. BOBDE, CJI.
1. This batch of statutory appeals (being Civil Appeal
Nos. 1827/2018, 1875/2018, 1832/2018 and 3213/2018)
under Section 130E of the Customs Act, 1962 arises from a
common final order of the Central Excise and Service Tax
Appellate Tribunal (‘CESTAT’) dated 19th December 2017
(‘impugned order’).
2. Vide the impugned order an exemption of basic
customs duty accorded to the Digital Still Image Video
1
Cameras (‘DSIC’) imported by the Nikon India Pvt. Ltd,
Canon India Pvt. Ltd., Sony India Pvt. Ltd. and Samsung
India Electronics Pvt. Ltd (hereinafter referred to as
‘appellants’ or ‘importers’), in terms of exemption
Notification No. 20/2005 dated 01.03.2005 (as amended by
Notification No. 15/2012 dated 17.03.2012) came to be
denied and the consequential confiscation of goods,
demand of interest and imposition of penalty as provided
for under various sections of the Customs Act, 1962, was
upheld by the CESTAT.
3. Since the appeals involve common questions, these
are being decided together and for sake of convenience we
shall be referring to the events which took place in the case
of Nikon.
4. The main issue is whether after clearance of the
cameras on the basis that they were exempted from levy of
basic Customs duty under Notification No.15/2012, the
proceedings initiated by the Directorate of Revenue
Intelligence for recovery of duty not paid under Section
28(4) of the Customs Act, 1962 are valid in law.
2
Exemption Notification
5. Exemption to Digital Still Image Video Cameras was
issued on 1.3.2005 vide Notification No.25/2005 (and
amended vide Notification No.15/2012 on 17.3.2012).
Arrival and decision to clear the goods on payment
of nil duty
6. The consignment of cameras arrived at Delhi on
15.3.2012. The importer submitted a Bill of Entry to the
Customs Authorities on 20.3.2012. Along with the Bill of
Entry, the importer submitted a covering letter and
literature containing specifications of the cameras. After
verification of the Bill of Entry by the Inspector and the
Superintendent, the importer requested the Deputy
Commissioner of Customs for a first check on 21.3.2012.
The Customs Authorities checked the goods on 24.3.2012.
They compared the goods with the description given in the
literature and took a decision to clear the goods on
24.3.2012, as being exempt from duty in terms of the
Notification No.15/2012 which was issued on 17.3.2012.
3
Recovery of Duties
7. On 19.8.2014, a show cause notice was
issued under Section 28 (4) of the Customs Act, 19621
alleging that the Customs Authorities had been induced to
clear the cameras by wilful mis-statement and suppression
of facts about the cameras. In particular; that the cameras
were capable of recording more than a single video
sequence of less than 30 minutes. In other words, after
one sequence of less than 30 minutes was recorded, the
camera had sufficient memory (extendable) to record more
such sequences.
8. It is significant to note that while the decision to clear
the goods for import because they were exempted from
customs duties under Notification No.15/2012, was taken
by Deputy Commissioner, Appraisal Group, Delhi Air Cargo,
1 Section 28 (4) Where any duty has not been [levied or not paid or has been shortlevied or short-paid] or erroneously refunded, or interest payable has not been paid, partpaid 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 not paid] 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.
4
the show cause notice was issued by the Additional Director
General, Directorate of Revenue Intelligence.
9. The question that arises is whether the Directorate of
Revenue Intelligence had authority in law to issue a show
cause notice under Section 28(4) of the Act for recovery of
duties allegedly not levied or paid when the goods have
been cleared for import by a Deputy Commissioner of
Customs who decided that the goods are exempted. It is
necessary that the answer must flow from the power
conferred by the statute i.e. under Section 28(4) of the Act.
This Section empowers the recovery of duty not paid, part
paid or erroneously refunded by reason of collusion or any
wilful mis-statement or suppression of facts and confers the
power of recovery on “the proper officer”. The obvious
intention is to confer the power to recover such duties not
on any proper officer but only on “the proper officer”. This
Court in Consolidated Coffee Ltd. and Another vs.
Coffee Board, Bangalore2
has held:-
“14. ...Secondly, and more importantly, the user
of the definite article ‘the’ before the word
‘agreement’ is, in our view, very significant.
Parliament has not said ‘an agreement’ or ‘any
2 (1980) 3 SCC 358
5
agreement’ for or in relation to such export and
in the context the expression ‘the agreement’
would refer to that agreement which is implicit
in the sale occasioning the export.”
In Shri Ishar Alloy Steels Ltd. vs. Jayaswals
Neco Ltd.3
has held:-
“9. ...’The’ is the word used before nouns,
with a specifying or particularising effect as
opposed to the indefinite or generalizing force of
‘a’ or ‘an’. It determines what particular thing is
meant; that is, what particular thing we are to
assume to be meant. ‘The’ is always mentioned
to denote a particular thing or a person.”
10. 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’.
11. 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
3 (2001) 3 SCC 609
6
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, 19624
.
12. 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 officer” which must
necessarily mean the proper officer who, in the first
4 Section 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;
7
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 re-open 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.
13. 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 re-assessment 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.
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
8
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 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)].
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
9
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.
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 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 (NT) dated
7.3.2002 to show all Additional Directors General of the DRI
have been appointed as Commissioners of Customs. At the
10
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 II, Section 3, Sub-section (ii)]
Government of India
Ministry of Finance
(Department of Revenue)
11
Notification No.40/2012-Customs (N.T.)
New Delhi, dated the 2
nd
May, 2012
S.O. (E). – In exercise of the powers conferred by
sub-section (34) of section 2 of the Customs Act,
1962 (52 of 1962), 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: -
Sl.
No.
Designation of
the officers
Functions
under Section
of the Customs
Act, 1962
(1) (2) (3)
1. Commissioner of
Customs
(i) Section 33
2. Additional
Commissioner or
Joint Commissioner
of Customs
(i) Sub-section (5)
of section 46;
and
(ii) Section 149
3. Deputy
Commissioner or
Assistant
Commissioner of
Customs and
Central Excise
(i) …..
(ii) …..
(iii) …..
(iv) …..
(v) …..
(vi) Section 28;
………
19. It appears that a Deputy Commissioner or Assistant
Commissioner of Customs has been entrusted with the
functions under Section 28, vide Sl. No.3 above. By reason
of the fact that the 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
12
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) 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, -
…
(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
13
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
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.
14
22. In the above context, it would be useful to refer to
the decision of this Court in the case of Commissioner of
Customs vs. Sayed Ali and Another5
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 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
5 (2011) 3 SCC 537
15
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 shortlevied 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 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.”
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’.
19. Section 2(34) of the Act defines a ‘proper
officer’, thus:
16
‘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 undersection 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 setaside.
17
Limitation
24. It is strictly not necessary to decide the question on
limitation but we intend to do so since parties have
elaborately relied on disclosures made before the Customs
officer on that issue. The show cause notice was issued on
19.8.2014. Under Section 28(4), such a show cause notice
must be issued within five years from the relevant date
which means the date on which the goods were assessed
and cleared, in case the duty was not paid or short paid or
erroneously refunded by reason of collusion or any wilful
mis-statement or suppression of facts. It is, therefore,
necessary for us to examine whether there is suppression
of facts.
25. The case was presented for scrutiny of the Customs
officers on 20.3.2012 along with the Bill of Entry and
literature consisting of specifications of the cameras.
26. The Bill of Entry made a statement that these are
Digital Still Image Video Camera packed for retail sale
(COOLPIX S4300, S2600 etc.). This was supported by
literature which clearly stated that “… the single maximum
18
recording time for a single movie is 29 minutes, even when
there is sufficient free space on the memory card for longer
recording”. This meant that even if the camera could
record more than 29 minutes when it had sufficient free
space (which depends on the capacity of the card providing
extended memory) the maximum time for which it could
record a single sequence was 29 minutes.
27. In other words, the camera could record more than
one single sequence but not 30 minutes and more in a
single sequence. It is obvious that the Deputy
Commissioner took the view that the camera complied with
the requirement of exemption i.e. it could only record up to
less than 30 minutes in a single sequence. At this juncture,
it is not relevant to see whether the Deputy Commissioner
was right or not in taking this decision to clear the goods as
exempted goods. What is important is to see whether the
importers made any wilful mis-statement or suppression of
facts and induced the delivery of goods.
28. It is pertinent to note that the importer had asked for
a first check and had shown the cameras and the cameras
were offered on 20.3.2012 along with Bill of Entry and
19
literature detailing specifications of models. The camera
could have been operated to see the length of time of the
single sequence and whether recording of the single
sequence exhausts the total memory of the camera
(including extended memory) and whether the cameras
were eligible for exemption. It is difficult in such
circumstances to infer that there was any wilful misstatement of facts. In these circumstances, it must,
therefore, follow that the extended period of limitation of
five years was not available to any authority to re-open
under Section 28(4).
29. In this view of the matter, we consider it unnecessary
to answer the issue whether the cameras that were cleared
on the basis that they were exempted from customs duty
under Exemption Notification No.15/2012 were in fact
eligible for the exemption or not. The goods must be taken
to have been validly cleared by the Customs officer.
30. We might note that cameras with similar
specifications have been treated as exempted under the
Explanatory Note to the Combined Nomenclature of the
European communities. It is important to add that the
20
same cameras have been considered to be eligible for
exemption before 17.03.2012 and after 30.04.2015 under
the exemption Notifications issued under the Customs Act
read with Chapter 84 & 85 (First Schedule) of Customs Tariff
Act, 1975.
31. In the result, these appeals are allowed. The
common order dated 19.12.2017 passed by the CESTAT,
New Delhi in Customs Appeal Nos. 50098, 50099, 50100
and 50280/2017 is set aside. Consequently, the impugned
demand notices issued against all the three appellants
herein are also set aside.
32. Parties to bear their own costs.
..…………....................CJI.
[S. A. BOBDE]
…..…………....................J.
[A. S. BOPANNA]
..…..………......................J.
[V. RAMASUBRAMANIAN]
MARCH 9, 2021
NEW DELHI
21
