Case Note & Summary
The Supreme Court, in a batch of petitions led by Review Petition No. 400 of 2021, considered the correctness of its earlier judgment in M/s Canon India Private Ltd. v. Commissioner of Customs and the validity of Section 28(11) of the Customs Act, 1962. The background involves a dispute over whether officers of the Directorate of Revenue Intelligence (DRI) are 'proper officers' under Section 2(34) of the Act, empowered to issue show cause notices under Section 28. In Commissioner of Customs v. Sayed Ali (2011), a two-judge bench had held that DRI officers are not proper officers, leading to the issuance of Notification No. 44/2011 and the insertion of Section 28(11) by the Customs (Amendment and Validation) Act, 2011 to validate past actions. The Delhi High Court in Mangali Impex Ltd. v. Union of India (2016) struck down Section 28(11) as unconstitutional, while the Bombay High Court in Sunil Gupta v. Union of India (2014) upheld it. The Supreme Court, in Canon India (2021), had allowed the appeal of the assessee, relying on Sayed Ali and Mangali Impex. The Department sought review, arguing that the judgment suffered from an error apparent on record. The Court framed issues including whether the review was maintainable, whether DRI officers are proper officers, and whether Section 28(11) is valid. After hearing extensive arguments, the Court held that the review petition was maintainable as there was an error apparent on record. It overruled Sayed Ali, holding that DRI officers are proper officers under Section 2(34) as they are assigned functions by the Board. The Court also upheld the constitutional validity of Section 28(11), rejecting the argument that it is overbroad or arbitrary. The amendments by the Finance Act, 2022 were held to be clarificatory. Consequently, the review petition was allowed, the judgment in Canon India was set aside, and the appeals were restored for hearing on merits. The Court also disposed of the connected matters accordingly.
Headnote
A) Customs Law - Proper Officer - Section 2(34) Customs Act, 1962 - DRI officers are proper officers assigned functions of assessment under Section 17 and can issue show cause notices under Section 28 - The Court held that the expression 'proper officer' includes officers of DRI who are assigned functions by the Board, and the earlier decision in Sayed Ali was erroneous (Paras 74-96). B) Constitutional Law - Validity of Section 28(11) - Article 14 - Section 28(11) is constitutionally valid and not overbroad or arbitrary - The provision validates past actions of DRI officers and does not violate Article 14 as it serves a legitimate purpose of regularizing assessments (Paras 114-122). C) Customs Law - Review Jurisdiction - Error Apparent on Record - The judgment in Canon India suffered from an error apparent on record by relying on Sayed Ali which was per incuriam - Review granted to correct the error (Paras 59-73). D) Customs Law - Amendments by Finance Act, 2022 - Section 17 and Section 28 - The amendments are clarificatory and in the nature of surplusage, confirming the existing legal position that DRI officers are proper officers (Paras 138-153).
Issue of Consideration
Whether the judgment in Canon India requires review; whether DRI officers are proper officers under Section 2(34) of the Customs Act, 1962; whether Section 28(11) is constitutionally valid; whether the decision in Sayed Ali and Mangali Impex are correct.
Final Decision
Review Petition No. 400 of 2021 is allowed. The judgment dated 09.03.2021 in Civil Appeal No. 1827 of 2018 is set aside. The civil appeals are restored to their original numbers for hearing on merits. All connected matters are disposed of accordingly.
Law Points
- Proper officer
- Section 2(34)
- Section 17
- Section 28
- Section 28(11)
- Section 4
- Section 6
- Customs Act 1962
- Review jurisdiction
- Error apparent on record
- Constitutional validity
- Article 14
- Finance Act 2022
- Surplusage
