M/S Canon India Private Limited v. Commissioner of Customs
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 Cent ral
Excise and Service Tax Appellate Tribunal (‘CESTAT’) dated 19 th
December 2017 (‘impugned order’).
2. Vide the impugned order an exemption of basic customs duty
accorded to the Digital Still Image Video Cameras (‘DSIC’) imported
by the Nikon India Pvt. Ltd, Canon India Pvt. Ltd., Sony India Pvt. Ltd.
and Samsung India Electronics Pvt. Ltd (hereinafter re ferred 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 ref erring to
the events which took place in the case of Nikon.
4. The main issue is whether after clearance of the camer as on
the basis that they were exempted from levy of basic Cus toms duty
under Notification No.15/2012, the proceedings initiated by the Directorate
of Revenue Intelligence for recovery of duty not paid under Se ction
28(4) of the Customs Act, 1962 are valid in law.
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
785
6. The consignment of cameras arrived at Delhi on 15.3.2012.
The importer submitted a Bill of Entry to the Customs A uthorities on
20.3.2012. Along with the Bill of Entry, the importer submitted a covering
letter and literature containing specifications of th e 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.
Recovery of Duties
7. On 19.8.2014, a show cause notice was issued under
Section 28 (4) of the Customs Act, 1962 1 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, the show cause notice was issu ed 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 not ice under
1 Section 28 (4) Where any duty has not been [levied or not paid or has been short-
levied or short-paid] or erroneously refunded, or i nterest 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 emp loyee 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 whic h has not been [so levied or not
paid] or which has been so short-levied or short-pa id 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.
M/S CANON INDIA PRIVATE LIMITED v. COMMISSIONER
OF CUSTOMS [S. A. BOBDE, CJI]
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, Bangalore 2 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 contex t
the expression ‘the agreement’ would refer to that agree ment
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 specify ing
or particularising effect as opposed to the indefin ite or
generalizing force of ‘a’ or ‘an’. It determines what par ticular
thing is meant; that is, what particular thing we are to as sume
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 pe rson or thing.
There is no doubt that, if Parliament intended that any prop er 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 clearance. It must be clarified that the proper officer
2 (1980) 3 SCC 358
3 (2001) 3 SCC 609
787
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 determina tion 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. Su ch 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 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 conf erred 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 p owers in
the same case. Where one officer has exercised his powers of
assessment, the power to order re-assessment must also b e 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.
4 Section 2. Definitions – In this Act, unless the co ntext otherwise requires, -
…
(2) “assessment” means determination of the dutiabi lity of any goods and the
amount of duty, tax, cess or any other sum so payab le, if any, under this Act or under
the Customs Tariff Act, 1975 (51 of 1975) (hereinaf ter 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;
M/S CANON INDIA PRIVATE LIMITED v. COMMISSIONER
OF CUSTOMS [S. A. BOBDE, CJI]
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 det ermine 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 off icer 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 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 Addit ional
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 show n 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 ap pointed 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 ap pointed 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.
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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, P art II,
Section 3, Sub-section (ii)]
Government of India
Ministry of Finance
(Department of Revenue)
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-sec tion
(34) of section 2 of the Customs Act, 1962 (52 of 1962), th e
Central Board of Excise and Customs, hereby assigns the
officers and above the rank of officers mentioned in Colum n
(2) of the Table below, the functions as the proper offi cers in
relation to the various sections of the Customs Act, 1962, gi ven
in the corresponding entry in Column (3) of the said Tabl e: -
M/S CANON INDIA PRIVATE LIMITED v. COMMISSIONER
OF CUSTOMS [S. A. BOBDE, CJI]
19. It appears that a Deputy Commissioner or Assist ant
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 offi cers
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) 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 custom s who
is assigned those functions by the Board or the [Pr incipal
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 Centr al or the
State Government or local authority, it reads as follows:-
“6. Entrustment of functions of Board and customs officer s
on certain other officers – The Central Government may, by
notification in the Official Gazette, entrust either conditi onally
or unconditionally to any officer of the Central or t he State
Government or a local authority any functions of the Boar d
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 Director ate of
Revenue Intelligence which is set up under the Noti fication dated
791
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 Custom s
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 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 imp ort
manifest and the bill of entry were filed before the Additi onal
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 whic h was
duly executed undertaking the obligation of export. The
learned counsel argued that the function of the pre ventive
staff is confined to goods which are not manifested as in
respect of manifested goods, where the bills of entry ar e to be
filed, the entire function of assessment, clearance , etc. is
carried out by the appraising officers functioning un der the
Commissioner of Customs (Imports).
17. Before adverting to the rival submissions, it woul d be
expedient to survey the relevant provisions of the Act. Sectio n
28 of the Act, which is relevant for our purpose, provid es for
issue of notice for payment of duty that has not been paid, or
has been short-levied or erroneously refunded, and provi des
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, t he
proper officer may,-
5(2011) 3 SCC 537
M/S CANON INDIA PRIVATE LIMITED v. COMMISSIONER
OF CUSTOMS [S. A. BOBDE, CJI]
(a) in the case of any import made by any individua l
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 b een
levied or charged or which has been so short-levied or
part paid or to whom the refund has erroneously bee n
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 b een
erroneously refunded by reason of collusion or any wilful
mis-statement or suppression of facts by the importe r or
the exporter or the agent or employee of the importe r or
exporter, the provisions of this sub-section shall have effe ct
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 m ay 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 ‘pro per
officer’.
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
793
who is assigned those functions by the Board or the
Commissioner of Customs;’
It is clear from a mere look at the provision that onl y such
officers of customs who have been assigned specific functio ns
would be ‘proper officers’ in terms of Section 2(34) the Act.
Specific entrustment of function by either the Boar d or the
Commissioner of Customs is therefore, the governing test to
determine whether an ‘officer of customs’ is the ‘p roper
officer’.
20. From a conjoint reading of Sections 2(34) and 28 of the
Act, it is manifest that only such a Customs Officer wh o has
been assigned the specific functions of assessment and re-
assessment of duty in the jurisdictional area where the im port
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 t he Act.
Any other reading of Section 28 would render the provision s
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 pre sent
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.
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 t he duty
was not paid or short paid or erroneously refunded by reason of collusion
or any wilful mis-statement or suppression of facts. It i s, 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 consisti ng of
specifications of the cameras.
M/S CANON INDIA PRIVATE LIMITED v. COMMISSIONER
OF CUSTOMS [S. A. BOBDE, CJI]
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 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 t o 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 ta king 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 f irst
check and had shown the cameras and the cameras were offered on
20.3.2012 along with Bill of Entry and 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 mis-statement 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 bas is 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
795
the same cameras have been considered to be eligible for exe mption
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 ord er
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.
Devika Gujral Appeals allowed.
M/S CANON INDIA PRIVATE LIMITED v. COMMISSIONER
OF CUSTOMS [S. A. BOBDE, CJI]