Madras High Court
Deepak Gopaldas Bajaj vs The Commissioner Of Customs on 8 September, 2021
W.P(MD)Nos.4032 to 4032 of 2018
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 08.09.2021
CORAM:
THE HONOURABLE MR JUSTICE R.SURESH KUMAR
W.P.(MD) Nos.4032 to 4034 of 2018
and W.M.P(MD)Nos.4174, 4175, 4176, 4177 and 4178 of 2018
In W.P(MD)No.4032 of 2018:
Deepak Gopaldas Bajaj .. Petitioner
Vs.
1.The Commissioner of Customs,
Custom House,
Tuticorin – 628 004.
2.The Additional Director General
Directorate of Revenue Intelligence,
No.25, Gopalakrishnalyer Road,
T.Nagar, Chennai – 600 017. ... Respondents
PRAYER: Writ Petition filed under Article 226 of the Constitution of India for
issuance of writ of certiorari and call for the records pertaining to the impugned
order-in-original No.43/2014 dated 28.08.2014 issued by the first respondent
and quash the same.
In W.P(MD)No.4033 of 2018:
M/s.Taher Impex Pvt. Ltd.,
Rep. by its Directorate
Shri Zuzer Rajkotawala .. Petitioner
Vs.
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
1.The Commissioner of Customs,
Custom House,
Tuticorin – 628 004.
2.The Additional Director General
Directorate of Revenue Intelligence,
No.25, Gopalakrishnalyer Road,
T.Nagar, Chennai – 600 017.
3. The Assistant Commissioner of Customs(ARC),
O/o. The Commissioner of Customs,
Custom House, New Harbour Estate,
Tuticorin – 628 004. ... Respondents
PRAYER: Writ Petition filed under Article 226 of the Constitution of India for
issuance of writ of certiorari and call for the records pertaining to the impugned
order-in-original No.43/2014 dated 28.08.2014 issued by the first respondent
and quash the same.
In W.P(MD)No.4034 of 2018:
M/s.Taher Impex Pvt. Ltd.,
Rep. by its Directorate
Shri Zuzer Rajkotawala .. Petitioner
Vs.
1.The Commissioner of Customs,
Custom House,
Tuticorin – 628 004.
2.The Additional Director General
Directorate of Revenue Intelligence,
No.25, Gopalakrishnalyer Road,
T.Nagar, Chennai – 600 017.
3. The Assistant Commissioner of Customs(ARC),
O/o. The Commissioner of Customs,
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
Custom House, New Harbour Estate,
Tuticorin – 628 004. ... Respondents
PRAYER: Writ Petition filed under Article 226 of the Constitution of India for
issuance of writ of certiorari and call for the records pertaining to the impugned
order-in-original No.43/2014 dated 28.08.2014 issued by the first respondent
and quash the same.
In all the 3 Writ Petitions:
For Petitioner : Mr.G.Derrick
For Respondents : Mr.R.Aravindan
COMMON ORDER
Since the issue raised in these Writ Petitions are one and the same, with
the consent of the learned counsel appearing for both sides, these Writ Petitions
are heard together and are being disposed of by this common order.
2. The petitioner in W.P(MD)Nos.4033 and 4034 of 2018 namely Taher
Impex Pvt. Limited, in short we call as 'Taher Impex' imported certain polyester
items and in respect of the same, he used the Duty Free Replenishment
Certificate (hereinafter call it in short as 'DFRC') for paying the import duty.
3.In this context, according to the respondent Customs, the petitioner in
W.P(MD)No.4032 of 2018 i.e Deepak Gopaldas Bajaj acted as broker and both
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
have wrongly used the DFRC at the time of import of different goods as the
original DFRC was given for cotton goods to the original exporter and
therefore, in this regard the respondent Customs issued a Show Cause Notice
on 17.03.2009 under Section 28(1) of the Customs Act, 1962 (In short ''the
Act'').
4. In response to the same, the petitioners had submitted their reply and
after adjudication, a common adjudication order in these cases against the
petitioners were passed by the respondent Customs on 28.08.2014. Challenging
the same and the consequential order of detention notice in one case, these Writ
Petitions were filed for the respective prayers.
5. Though these Writ Petitions were filed in the year 2018, at that time
various grounds were raised on behalf of the petitioners, when these Writ
Petitions are taken up for final hearing, Mr.G.Derrick, learned counsel
appearing for the petitioners, among various grounds, has projected the prime
ground i.e want of jurisdiction.
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
6. The reason being for raising the ground of want of jurisdiction is that,
under Section 28 of the Customs Act, it has been specifically mentioned that
only a proper officer shall initiate proceedings to issue Show Cause Notice and
to complete the proceedings by way of adjudication. The proper officer should
have been nominated or appointed for the specific purpose by the Central
Government. However, the Directorate of Revenue Intelligence Officials are
not the proper officers as they have not been specifically appointed, as such
within the meaning of Section 6 of the Customs Act.
7. In this context, it is the further contention of the learned counsel for
the petitioner that, the issue as to whether the officials of the Directorate of
Revenue Intelligence can be treated as a proper officer for the purpose of
Section 28(1) of the Customs Act to initiate the proceedings and conclude the
same, there has been a direct decision whereby the law has been declared by the
Hon'ble Supreme Court in a recent judgment dated 09.03.2021 made in Canon
India Private Limited Vs. Commissioner of Customs.
8. Heavily relying upon the law declared by the Hon'ble Supreme Court
in Canon India case, the learned counsel for the petitioner would contend that,
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
since the Directorate of Revenue Intelligence officials are not automatically
treated as proper officers within the meaning of Section 28 of the Customs Act,
it was held that, in the said decision, by the Hon'ble Supreme Court, the
proceedings initiated by the Directorate of Revenue Intelligence officials
cannot be construed as valid proceedings initiated by proper officers within the
meaning of Section 28 of the Act, accordingly, the whole proceedings got
vitiated. By virtue of the said law, having been declared by the Hon'ble
Supreme Court in Canon India case, it is the contention of the learned counsel
for the petitioner that, in the present cases also, Show Cause Notice was issued
on 17.03.2009 initiating the proceedings only by the Additional Director
General of Directorate of Revenue Intelligence, Chennai. In view of such
initiation made by the Directorate of Revenue Intelligence officials, whether the
proceedings culminated in the present order dated 28.08.2014, would sustain is
a question, where, two recent judgments were relied on by the learned counsel
appearing for the petitioner, which have been subsequently made by this Court
as well as the Karnata High Court, following the law declared by the Hon'ble
Supreme Court in Canon India case. On 16.03.2021, a learned Judge of this
Court while disposing the writ petitions in W.P(MD)Nos.10186 and 10187 of
2014 in the matter of Quantum Coal Energy (P) Ltd Vs The Commissioner,
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
Office of the Commissioner of Customs, Tuticorin has taken into account the
law declared by the Hon'ble Supreme Court in Canon India case and ultimately
allowed those Writ Petitions.
9. Subsequently in a very recent judgment the similar issue had come up
for consideration before the Karnata High Court, where, the Court by order
dated 14.07.2021 in W.P.No.10773 of 2018(T-CUS) and W.P.No.4628 of 2018
(T-CUS) in Shri Mohan C.Suvarna Vs. The Principal Commissioner of
Customs, Air Commissionerate, Bangalore has extensively discussed the
issue in question, where the applicability of the law declared by the Hon'ble
Supreme Court in Canon India case reported in 2021 SCC online SC 200 has
been considered and the Court ultimately has held that, if the Show Cause
Notice is issued and the proceedings has been initiated under Section 28 of the
Customs Act by the Directorate of Revenue Intelligence officials, since the said
officials cannot be treated as proper officers, the entire proceedings got vitiated.
Accordingly the proceedings in that case was set aside.
10. Relied upon these decisions of this Court as well as the Karnataka
High Court, of course after the law declared by the Hon'ble Supreme Court in
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
Canon India case, the learned counsel for the petitioner would submit that, in
the present case also the very same facts are available, where, admittedly the
Directorate of Revenue Intelligence officials have initiated proceedings under
Section 28 of the Customs Act by issuing the Show Cause Notice referred to
above dated 17.03.2009. Therefore the said Show Cause Notice which is
culminated in the order impugned dated 28.08.2014 cannot stand in the legal
scrutiny in view of the law declared by the Hon'ble Supreme Court in Canon
India case, therefore, the entire proceedings has been vitiated, he contended.
11. Heard the learned Standing Counsel appearing for the respondent
Customs who would submit that, in so far as the law laid down by the Hon'ble
Supreme Court in Canon India case is concerned, the Customs Department filed
a review before the Hon'ble Supreme Court and the same is still pending,
therefore, no conclusive decision can be arrived at on the principles laid down
in the Canon India case as of now. The learned Standing Counsel would also
submit that, in the year 2018, when these Writ Petitions were filed, the law now
declared by the Hon'ble Supreme Court in Canon India case was not available
and therefore, there was prevailing law based on which the proceedings was
initiated and adjudication was completed which ended in order-in-original and
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
the petitioner also had filed theses Writ Petitions on other grounds of course
which are not tenable and therefore, the petitioners cannot turn around to say
that, because of the Canon India case they can take a plea that the proceedings
initiated against the petitioners got vitiated.
12. The learned Standing Counsel for the respondents would further
submit that, in fact the principles laid down by the Supreme Court in Canon
India case was brought to the notice of this court in yet another batch of writ
petitions which were disposed of by a learned Judge on 15.04.2021 in W.P.Nos.
3144 of 2016 etc batch in the case of Sri Sathya Jewellery Vs. the Principal
Commissioner of Customs, Chennai. In the said order, the learned Judge of
this Court having taken note of Canon India case has held that, in that case the
matter has gone to the Hon'ble Supreme Court only after exhausting appeal
remedy available to the petitioner therein and here, since the petitioners
approached this Court straight away by invoking the extraordinary jurisdiction
under Article 226 of the Constitution of India, they can very well approach the
appellate authority.
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
13. Placing heavy reliance on the judgment made by the learned Judge in
Sri Sathya Jewellery case, the learned Standing Counsel would canvass to point
out that, in the present case also these petitioners have challenged the order-in-
original without exhausting the appeal remedy. Hence, they can very well
approach the appellate authority by following the Sathya Jewellery case.
Therefore, no exception can be taken to the said view taken by the learned
Judge as the petitioners are similarly situated hence they can also be relegated
to go before the appellate authorities if they have any presentable grounds
against the order-in-original.
14. Making all these points, the learned Standing counsel for the
respondents would further submit that, in fact in two Civil Miscellaneous
Appeals, a Division Bench of this Court, in a recent judgment, has taken a view
in favour of the Department. However, he fairly added further that, in those
decisions the law declared by the Hon'ble Supreme Court in Canon India case
was not referred and the same has not been taken note.
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
15. I have considered all these rival submissions made by the learned
counsel appearing for both sides and have perused the materials placed before
this Court.
16. Section 28(1) of the Customs Act, after it underwent amendment in
2011, reads thus:
Where any duty has not been levied or not paid or has
been short-levied or short paid or erroneously
refunded, or any interest payable has not been paid,
part-paid or erroneously refunded for any reason other
than the rasons of collusion or any wilful mis-statement
or suppression of facts.
(a)The proper officer shall, within (two years) from the
relevant date, serve notice on the person chargeable
with the duty or interest which has not been so levied
(or paid) 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.
(PROVIDED that before issuing notice, the proper
officer shall hold pre-notice consultation with the
person chargeable with duty or interest in such manner
as may be prescribed.)
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
(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:
(PROVIDED) that the proper officer shall not serve such show
cause notice, where the amount involved is less than rupees one
hundred.
17. The word “The proper officer” has been mentioned in Section 28(1)
(a) of the Act, under which, only the proper officer shall initiate the
proceedings by issuing Show Cause Notice. Here in the case in hand, the
Additional Director General Directorate of Revenue Intelligence, Chennai
admittedly had issued Show Cause Notice dated 17.03.2009 which ultimately
culminated in the order-in-original dated 28.08.2014. Therefore, the fact
remains that, the initiation of the proceedings under Section 28(1) of the Act is
only by the Directorate of Revenue Intelligence official.
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
18. If the Directorate of Revenue Intelligence official initiated
proceedings under Section 28(1) of the Customs Act, whether that would stand
in the legal scrutiny or get vitiated was the prime question posed before the
Hon'ble Supreme Court in Canon India case.
19. While considering the said issue, the Hon'ble Supreme Court has held
as follows:
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:-
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
“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 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. 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.”
1. 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’.
It is obvious that the re-assessment and recovery of
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
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. 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.
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
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
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.
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.
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
20. After having analyzed the fact whether the Directorate of Revenue
Intelligence officials are proper officers under the provisions of the Customs
Act especially in the context of Section 28, the Hon'ble Supreme Court has held
that, the proceedings in the said case initiated by the Additional Director
General Directorate of Revenue Intelligence, by issuing the Show Cause
Notice was invalid and without any authority of law and the same therefore
was liable to be set aside.
21. The subtle difference in this case is only the provision. Here, the
Show Cause Notice was issued under Section 28(1) of the Customs Act and in
that case, since in 2011 Section 28 of the Customs Act underwent amendment
under which Sub-section(4) was inserted by which extended limitation has been
made and therefore in that case, under Sub Section (4) of Section 28 such
notice was issued. However, in the present case in hand, since it was in the year
2009 i.e pre-amendment, notice was issued under Section 28(1) of the Act itself
under the unamended sub section(1) of Section 28. Otherwise, the issue is one
and the same and factually the petitioners' case as well as the Canon India case
are similarly placed.
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
22. However when this decision of Canon India case was brought to the
notice of the learned Judge, who dealt with the batch of cases in Sri Sathya
Jewellery cited supra, the learned Judge in paragraph No.6 of the judgment has
taken the following view:
6.The respective learned Senior Standing Counsels
appearing on behalf of the respondents objected the said
contentions by stating that the respondents have already filed
review petitions in Review Petition (Diary) Nos.9580, 9584,
9587, 9591 of 2021 before the Hon'ble Supreme Court of India
on 07.04.2021. Their contention is that, certain notifications
issued were not brought to the notice of the Hon'ble Supreme
Court of India and further, it is a regular appeal filed after
exhausting the statutory remedies provided under the Act, and the
writ petitioners cannot rely on the said judgment in view of the
fact that the petitioners have not exhausted the statutory appellate
remedy provided under Sections 128 and 129 of the Customs Act.
The case before the Hon'ble Supreme Court of India was decided
in regular appeal, and thus, the appellants had exhausted the
appellate remedy provided under the Act, whereas, the petitioners
in these writ petitions have not exhausted the alternate remedy
and they have filed the writ petitions in order to avoid the Pre-
Deposit as contemplated under the Statute. Therefore, the
petitioners are not entitled for any relief.
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
23. In fact this view expressed by the learned Judge in Sathya Jewellery
case, has been heavily relied upon by the learned Standing Counsel appearing
for the respondent Customs.
24. The learned Judge in the said order has taken the view that, in Canon
India case the petitioner/Appellants after having exhausted the appeal remedy
had gone to the Supreme Court by way of Special Leave Petition. However in
the case in hand before the learned Judge in Sathya Jewellery case, the
petitioners had come to the High Court as against the order-in-original directly,
therefore, the parties could be relegated to approach the appellate authorities.
25. However, the learned counsel for the petitioner in this context has
relied upon a judgment of the Karnataka High Court which is a recent one dated
14.07.2021 in the matter of Sri Mohan C.Suvarna referred to above. In the
said case extensive consideration have been made by the learned Judge of the
Karnataka High Court, where, under the heading ''applicability of judgment in
M/s.Canon India case'' the learned Judge has discussed the following:
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
5) Applicability of judgment in M/s.Canon India Private
Limited: (i) It is to be noticed that the starting point of the
present proceedings relates to the show cause notice dated
07.01.2008 which relates to the period prior to 2011. Certain
amendments were made to the Customs Act, 1962 in 2011.
Under Section 28 of the Customs Act as was applicable during
the relevant period of time, the power is vested in 'the proper
officer' to take action where duty has not been levied or has
been short-levied or erroneously refunded and such proceedings
was to be taken by 'the proper officer.' Subsequent to the
amendment of Section 28, 'the proper officer' still retains
jurisdiction, though there are certain procedural modifications.
(ii) The aspect of who is 'the proper officer' as regards to
Section 28 of the Customs Act prior to the amendment was
considered by the Apex Court in the case of Commissioner of
Customs v. Sayed Ali and Another reported in (2011) 265 ELT .
Subsequent to the judgment of Apex Court in Sayed Ali's case
(supra), certain amendments were effected to the Customs Act,
including the introduction of Section 28(11) inserted by the
Customs (Amendment and Validation Act) 2011 with effect
from 16.09.2011 to the effect that "..... all persons appointed as
officers of Customs under sub-section (1) of Section 4 .....shall
be deemed to have been and always had been the proper
officers for the purposes of this Section." The effect of such
amendments was considered by High Court of Delhi in the case
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
of Mangali Impex Ltd. v. Union of India reported in 2016 (335)
E.L.T. 605 (Del.), which once again reiterated that the
amendment does not in any way alter the position insofar as the
law laid down in Sayed Ali's case (supra). The judgment of the
Delhi High Court, it is stated is pending consideration before
the Apex Court in S.L.P.(C) No.20453/2016, wherein the
judgment in Mangali's case has been stayed, by the Apex Court.
(iii) It ought to be noted that the present judgment of Apex
Court in the case of M/s.Canon India Private Limited (supra)
passed in Civil Appeal No.1827/2018 and connected matters is
a judgment by a Bench consisting of Three Judges and has
referred to the judgment in Sayed Ali's case (supra) in approval.
(iv) The Apex Court in the case of M/s.Canon India Private
Limited (supra) has specifically raised the question at para-9 of
its decision, which reads as follows:-
"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
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
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. v. 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
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.”
The Apex Court while referring to ' the proper officer' found in
Section 28 has specifically recorded a finding that it is only 'the
proper officer', and 'that proper officer' alone can adjudicate the
matter.
Further Apex Court has clarified at para 15 as follows:
"15. ...... 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
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
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)]."
Accordingly, the Apex Court has held that 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 the re-
assessment [which is involved in Section 28(4)].
(v) The Apex Court has also considered the aspect as to whether
the Additional Director General of DRI who has been appointed
as an Officer of Customs has been entrusted with the functions
under Section 28 as 'the proper officer' under the Customs Act.
The Court, after referring to the notification dated 02.05.2012 at
paras-19 and 20 has concluded that the notification issued by
the Central Board of Excise and Customs in exercise of power
under Section 2(34) of the Customs Act would not be sufficient,
as the said Section does not confer any power on the Authority
to entrust any functions of officer, and that Section 2(34) merely
defines who 'the proper officer' is.
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
(vi) The Apex Court has specifically observed that it is only
Section 6 of the Customs Act which provides for entrustment of
functions of Customs Officer on other officers of the Central or
the State Government or local authority. At para-21 of the
decision, it is specifically observed that the Central Government
ought to have passed necessary orders under Section 6, if it was
intended that officers of the Directorate of Revenue Intelligence
were to be entrusted with the functions of Customs Officer.
(vii) The Apex Court has further clarified that the notification
which purports to entrust the functions as 'proper officer' issued
by the Central Board of Excise and Customs in exercise of non-
existing power under Section 2(34) of the Customs Act is
invalid as also having been issued by the Authority which has
no power to do so.
(viii) Finally, the Apex Court after referring to the observations
in the case of Commissioner of Customs v. Sayed Ali and
Another reported in (2011) 3 SCC 537 has concluded at para-24
as follows:-
"24. 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".
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
(ix) In the present case, applying the law laid down in the case
of M/s.Canon India Private Limited (supra) clearly, the
proceedings that have been initiated by issuance of a show
cause notice dated 07.01.2008 by the Additional Director
General, DRI is also liable to be set aside in light of the law laid
down by the Apex Court as referred to above.
23. While judgment of High Court of Madras in the case of
Commissioner of Customs (Air) vs. M/s. Premier Tours &
Travels (Chennai) Pvt. Ltd. and another, in C.M.A. No.
2746/2009 and M.P. No.1/2009 dated 04.02.2021 where
identical contentions were raised and the consideration of such
aspect has been relegated to be decided in the appeal, however
this Court does not find any reason to take the same view, in
light of the clear findings in the case of M/s.Canon India
Private Limited (supra) which does not leave any scope for
further adjudication and the law laid down by the Apex Court
ought to enure to the benefit of the petitioners.
24. It needs to be noted that the High Court of Madras (Madurai
Bench) by order dated 16.03.2021 in the case of Quantum Coal
Energy Pvt. Ltd. vs. The Commissioner of Customs in W.P.
(MD) Nos.10186 & 10187 of 2014 and M.P.(MD) Nos.1 & 1 of
2014 has taken a different stand by setting aside the
proceedings initiated by the Customs Authority where the show
cause notice was issued by the Additional Director General of
DRI while referring to the judgment in the case of M/s.Canon
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
India Private Limited (supra) and this Court finds that, that
would be the only logical conclusion to be arrived at and to take
any other stand would only result in overreaching the decision
of Apex Court, which is plainly impermissible.
25. It is the submission made by learned Additional Solicitor
General that Review Petition has been filed which was the stand
taken by the authorities in their statement of objections filed on
07.04.2021. As the matter was posted on numerous occasions
thereafter, there has been no further development in the review
proceedings and it is submitted that the matter is still pending
consideration. Needless to state that there has to be finality once
the law is laid down by a judgment of the Apex Court and any
further deferment may not be justified. Further, if the Review
Petition is disposed, the legal consequences would enure to the
benefit of the parties involved.
26. Accordingly, the writ petitions are allowed. The Order-in-
original Sl.No.BLR-CUSTM-AIR-003/16-17 dated 27.02.2017
at Annexure-G in both the writ petitions are set aside while
holding specifically that the show cause notice at Annexure-B
dated 07.01.2008 is one that is not issued by 'the proper officer'.
The Authorities are at liberty to take out fresh proceedings as
per law, in light of the discussion as above.
27. The oral request made by learned counsel appearing for
respondent No.2 to keep the order in abeyance is refused, as the
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
Court has passed the order on the basis of the judgment of Apex
Court in the case of M/s.Canon India Private Limited vs.
Commissioner of Customs reported in 2021 SCC Online SC
200, which is the law as on date.
26. In the said decision, all the queries/objections raised by the learned
Standing Counsel appearing for the respondent Customs herein, including that,
as against Canon India judgment, review has been field and by virtue of the
amendment made in Section 28 by inserting Sub Section (11) the Customs
Authorities have every right to issue Show Cause Notice by any official, who
can be treated as a proper officer, have been considered and answered.
27. I am in respectful agreement with the view taken by the learned Judge
of the Karnataka High Court in the said case in Sri Mohan C.Suvarna cited
supra.
28. It is a settled preposition of law that, normally in tax matters, as
against the order-in-original the writ petition would not be entertained unless
the appeal remedy is exhausted and the tax payer/assessee can approach the
High Court only after exhausting the appeal remedy. However, there are
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
exceptions to the general rule, where, under three circumstances writ petitions
are entertained. In the first category, if the principle of natural justice is violated
and in the second category if there is any statutory violation and in third
category if for want of jurisdiction the order passed by the authorities
concerned can be questioned in a writ petition.
29. Here in the case in hand, since the said plea of want of jurisdiction
was not raised as there was no such ground was available at the time of filing
the writ petitions in the year 2018, however during the pendency of the writ
petition law has developed and the Canon India judgment has come in March
2021. After Canon India judgment atleast two decisions from this Court as well
as the Karnataka High Court on the same point had been rendered, where, in the
judgment of the Karnata High Court referred to above, this issue has been
extensively discussed and by applying the ratio of Canon India judgment the
learned Judge allowed the writ petition stating that the proceedings initiated
under Section 28 of the Customs Act by any other officer other than a proper
officer shall be vitiated, therefore, the entire proceedings was interfered with
and set aside.
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
30. Therefore in this context, even though the learned Standing Counsel
appearing for the respondent has raised the vehement contention that the
ground want of jurisdiction now canvassed by the petitioner in view of Canon
India judgment was not available to the petitioner either at the time of issuing
Show Cause Notice or at the time of adjudication or passing order-in-original,
even at the time of filing writ petition in 2018, that contention cannot have a
legal backing as the law declared by the Supreme Court in Canon India case is
only reiterating the law which is already available in statute under Section 28 of
the Customs Act.
31. More over the view expressed by the learned Judge in Sathya
Jewellery case cited supra is concerned, whether it is a direct writ petition
against order-in-original or writ petition or appeal proceedings before this court
after exhausting the appeal remedy, would not make a difference. The want of
jurisdiction ground can very well be taken at any stage either at the first
instance directly before this Court against the order-in-original or at final stage
after exhausting the appeal remedy. Therefore, such distinction which was
trying to be made by the learned Judge in Sri Sathya Jewellery case, in my
considered view, may not be available if we apply the principles laid down by
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
the Supreme Court in Canon India case. In this regard, the view expressed by
the Karnataka High Court in the said case of Shri Mohan C.Suvarna cited supra
can very well be pressed into service in order to meet these circumstances.
32. Therefore, looking from any angle, since admittedly the Show Cause
Notice dated 17.03.2009 was issued by the Additional Director General of
Directorate of Revenue Intelligence, Chennai which culminated in the impuged
order-in-original dated 28.08.2014, the said proceedings would not stand in the
legal scrutiny and therefore, it is liable to be interfered with.
33.In the result, this Court is inclined to order these writ petitions with
the following directions:
The respective impugned orders and the consequential impugned order,
in all these writ petitions are quashed. In view of the same, it is open to the
respondents to act upon in the manner known to law, especially under the
provisions of Customs Act by taking into account the law laid down by the
Hon'ble Supreme Court in Canon India case cited supra.
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
34. In fine, these writ petitions are ordered accordingly. However, there
shall be no order as to costs. Consequently, connected miscellaneous petitions
are closed.
08.09.2021
Index : Yes/ No
Internet: Yes/No
CM
Note: Issue a copy of this order by 29.09.2021.
Note : In view of the present lock down owing to COVID-19
pandemic, a web copy of the order may be utilized for official
purposes, but, ensuring that the copy of the order that is presented
is the correct copy, shall be the responsibility of the
advocate/litigant concerned.
To
1.The Commissioner of Customs,
Custom House,
Tuticorin – 628 004.
2.The Additional Director General
Directorate of Revenue Intelligence,
No.25, Gopalakrishnalyer Road,
T.Nagar, Chennai – 600 017.
3. The Assistant Commissioner of Customs(ARC),
O/o. The Commissioner of Customs,
Custom House, New Harbour Estate,
Tuticorin – 628 004.
https://www.mhc.tn.gov.in/judis/
W.P(MD)Nos.4032 to 4032 of 2018
R.SURESH KUMAR, J.
CM
W.P.(MD) Nos.4032 to 4034 of 2018
and W.M.P(MD)Nos.4174, 4175, 4176,
4177 and 4178 of 2018
08.09.2021
https://www.mhc.tn.gov.in/judis/
