Holding

DRI officers are proper officers for purposes of section 28 of the Customs Act, 1962, and the validation provisions of section 28(11) and section 97 of the Finance Act, 2022 are constitutionally valid.

Summary

The Customs Department filed a review petition challenging the Supreme Court's earlier decision in Canon India Ltd. v. Commissioner of Customs, which held that Directorate of Revenue Intelligence (DRI) officers were not "proper officers" under section 28 of the Customs Act, 1962. The Court examined whether there was an error apparent on the face of the record, whether DRI officers qualify as proper officers under sections 2(34) and 5, and the constitutional validity of the validation provision s.28(11) and the Finance Act, 2022 s.97. It held that DRI officers are indeed officers of customs appointed under the relevant notifications and therefore proper officers capable of issuing show‑cause notices under s.28. The Court also affirmed the constitutionality of s.28(11) and s.97, set aside the Delhi High Court’s decision in Mangali Impex, and upheld the Bombay High Court’s view in Sunil Gupta. Consequently, the review petition was allowed, restoring the jurisdiction of DRI officers to issue show‑cause notices.

Issues considered

Whether there is an error apparent on the face of the record warranting a review of the Canon India judgment.
Whether officers of the Directorate of Revenue Intelligence (DRI) are proper officers for the purposes of section 28 of the Customs Act, 1962, including the scope of section 6 and the need for entrustment.
Whether the power under section 28 can be exercised only by officers empowered under section 17, and the meaning of the definite article "the" in "the proper officer".
Whether the introduction of section 28(11) by the Customs (Amendment and Validation) Act, 2011 is discriminatory or violative of Article 14.
Whether the Delhi High Court’s interpretation of section 28(11) in Mangali Impex is correct.
Whether section 97 of the Finance Act, 2022, which retrospectively validates actions under the Customs Act, is manifestly arbitrary and unconstitutional.

Legislation cited

Central Board of Revenue Act, 1963
Customs Act, 1962s. 110AA, s. 17, s. 2(34), s. 28, s. 28(11), s. 3, s. 4, s. 5, s. 6
Customs (Amendment and Validation) Act, 2011s. 28(11)
Finance Act, 2011s. 38 (amendment to section 17)
Finance Act, 2022s. 86, s. 87, s. 88, s. 94, s. 97

Subjects

Error apparent on face of recordReview petitionCanon India’s casePower of DRI to issue show cause noticeOfficers of Directorate of Revenue Intelligence-DRI, if proper officers for s.28 of Customs Act, 1962Retrospectively validating show cause noticesSayed Ali’s caseMangali Impex’s cases.97 of the Finance Act, 2022Proper officerReview of judgement in Canon India’s caseNotification No. 19/90-Cus (N.T.) dated 26.04.1990Notification No. 17/2002 dated 07.03.2002Administrative changesCircular No. 4/99-Cus dated 15.02.1999Proper officer to issue show cause notice in terms of s.28Commissioner of Customs (Preventive) not “proper officer”Reconsideration of Sayed Ali’s caseInter-dependence between two provisionsAssessment of dutyMethod of assessment of bills of entry and shipping billsSelf-assessmentRe-assessmentNotice for payment of duties, interestQuasi-judicial proceedingCircular No. 44/2011-Customs dated 23.11.2011Short-levy, non-levy, part payment, non-payment or erroneous refundUse of article ‘the’ in the expression “the proper officer”DRI officers as proper officers u/s 2(34)Notification No. 40/2012-Customs (N.T.) dated 02.05.2012Finance Act, 2011Appointment of “Officers of Customs”Entrustment of functions of Board and customs officers on certain other officersRecovery of duties not levied or short-levied or erroneously refundedConstitutional validity of s.28(11)Review of judgments or orders by the Supreme CourtGrounds of reviewValidation of legislation to validate earlier acts declared illegal

Judgment

[2024] 12 S.C.R. 202 : 2024 INSC 854

Commissioner of Customs
v.
M/s Canon India Pvt. Ltd.
(Review Petition No. 400 of 2021)
In
(Civil Appeal No. 1827 of 2018)
07 November 2024
[Dr Dhananjaya Y Chandrachud, CJI, J.B. Pardiwala*
and Manoj Misra, JJ.]

Issue for Consideration
Issue arose whether there was an “error apparent on the face
of the record” for the purpose of entertaining the review petition;
whether law laid down in Canon India’s case as regards the power
of the DRI to issue show cause notices could be said to be the
correct statement of law; whether officers of DRI are the proper
officers for the purposes of s.28 of the Customs Act, 1962; whether
the introduction of s.28(11) vide the Validation Act of 2011 which
retrospectively validates the show cause notices issued u/s.28
with effect from 06.07.2011, is discriminatory and arbitrary for
not curing the defect highlighted in Sayed Ali’s case and, thus,
is violative of Art.14 of the Constitution; whether the judgment
delivered by the High Court in the case of Mangali Impex’s case
expounds the correct interpretation of s.28(11) and whether s.97
of the Finance Act, 2022, which retrospectively validates the show
cause notices with effect from 01.04.2023, is manifestly arbitrary
and thus, violative of Art.14 of the Constitution of India.

Headnotes†
Customs Act, 1962 – ss.2(34), 28, 17 – Proper officer –
Directorate of Revenue Intelligence – DRI officers, if proper
officers u/s.28 – Review of judgement in Canon India’s case
which held DRI officers were not proper officers u/s.28 and
thus lacked the jurisdiction to issue show cause notice in terms
of s.28, since only officers directly involved in assessment
u/s.17 could initiate show cause notice proceedings u/s.28 –
Maintainability:

*Author
[2024] 12 S.C.R. 203

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

Held: DRI officers are ‘proper officers’ to issue show cause
notice u/s.28 – Review petition seeking review of the decision in
Canon India’s case allowed – DRI officers came to be appointed
as the officers of customs vide Notification No. 19/90-Cus (N.T.)
dated 26.04.1990 – This notification later came to be superseded
by Notification No. 17/2002 dated 07.03.2002, to account for
administrative changes – Circular No. 4/99-Cus dated 15.02.1999
which empowered the officers of DRI to issue show cause notices
u/s.28 as well as Notification No. 44/2011 dated 06.07.2011 which
assigned the functions of the proper officer for the purposes of ss.17
and 28 respectively to the officers of DRI were not brought to the
notice of this Court during the proceedings in Canon India’s case,
thus the judgment was rendered without looking into the circular
and the notification thereby seriously affecting the correctness of
the same – Decision in Canon India’s case failed to consider the
statutory scheme of ss.2(34) and 5 respectively, thus the decision
erroneously recorded the finding that since DRI officers were not
entrusted with the functions of a proper officer for the purposes of
s.28 in accordance with s.6, they did not possess the jurisdiction to
issue show cause notices for the recovery of duty u/s.28 – Reliance
placed in Canon India’s on the decision in Sayed Ali’s case is
misplaced – Decision in Canon India’s case is reviewed only to the
extent that the jurisdiction of the DRI officers to issue show cause
notices u/s.28 – Officers of Directorate of Revenue Intelligence,
Commissionerates of Customs (Preventive), Directorate General
of Central Excise Intelligence and Commissionerates of Central
Excise and other similarly situated officers are proper officers for
the purposes of s.28 and are competent to issue show cause
notice thereunder – Any challenge made to the maintainability of
the show cause notices issued by this particular class of officers,
on the ground of want of jurisdiction for not being the proper
officer, which remain pending before various forums, to be dealt
with in the manner stipulated. [Para 168]

Customs Act, 1962 – ss.17 and 28 – Issue as regards the proper
officer to issue show cause notice in terms of s.28 – Sayed
Ali’s case held that the Commissioner of Customs (Preventive)
is not a “proper officer” as defined in s.2(34) and thus, did not
have the jurisdiction to issue a show cause notice in terms
of s.28; and that only such officers who are vested with the
power of assessment u/s.17 can be empowered to issue show
204 [2024] 12 S.C.R.

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cause notices u/s.28 or else this would result in a state of
chaos and confusion – Reconsideration of Sayed Ali’s case:
Held: Decision in Sayed Ali proceeds on the assumption that
for the “proper officer” to exercise the functions u/s.28, such
officer must necessarily possess the power of assessment
and reassessment u/s.17 – However, a plain reading of ss.17
and 28 does not bring out any such inter-dependence between
the two provisions – Observations pertaining to interlinkage
between ss.17 and 28 respectively made in Sayed Ali’s case
do not lay down the correct position of law – Even otherwise,
decision in Sayed Ali’s case could have been arrived at without
deciding on the interdependence of ss.17 and 28 as the Customs
(Preventive) officers, whose jurisdiction to issue show cause
notices was under challenge in that case, were not assigned
the functions of the “proper officer” for the purposes of s.28
through a notification issued by the appropriate authority –
Assignment of functions is a mandatory requirement for the
exercise of jurisdiction by the “proper officer” – Observations made
in Sayed Ali’s case on the connection between ss.17 and 28 are
obiter dicta and do not constitute the binding ratio decidendi of
that judgment – Sayed Ali’s case could not have been relied upon
in Canon India’s case as it could not have been applied for the
period subsequent to 08.04.2011 since s.17 has undergone a
radical change by virtue of the amendments made by the Finance
Act, 2011. [Paras 81-83]

Customs Act, 1962 – s.17 – Assessment of duty – Changes
to s.17 w.e.f. 11.04.2011 – Amendment altered the method of
assessment of bills of entry and shipping bills – Functions
of the proper officer u/s.17 also underwent changes, the
assessment of bill of entry and shipping bill no longer the
task of the “proper officer”, they were to be self-assessed,
which is to be accepted or rejected by the proper officer
subject to verification in certain cases – Said changes not
brought to the notice of this Court while Canon India’s case
was heard – Effect:
Held: On basis of the amendment to s.17, the competence of the
proper officer to conduct “assessment” was completely taken away
by the legislature – New s.17 empowers the proper officer to perform
the functions of verification of self-assessment and subsequent re-
assessment, if found necessary – However, such re-assessment
[2024] 12 S.C.R. 205

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

is not a mandatory function on the same footing as “assessment”
under the old s.17 – Thus, the scope of the functions of the proper
officer under the new s.17 is limited – However, the attention of this
Court in Canon India’s case not drawn to the important changes
brought to s.17 vide s.38 of the Finance Act, 2011 with effect from
08.04.2011 – Conclusion that an officer who did the assessment,
could only undertake reassessment u/s.28(4) was arrived at without
taking note of the amendment to s.17 – Judgment in Canon
India’s case also recorded an erroneous finding that the function
of re-assessment is with reference to s.28(4) when in fact it is an
exercise of function u/s.17 – In Canon India’s case the show cause
notice was dated 19.09.2014 in respect of the Bill of Entry filed
on 20.03.2012 – This Court erroneously applied the provisions of
s.17, as they stood prior to 08.04.2011 as opposed to the amended
s.17 which ought to have been applied. [Paras 90-94]

Customs Act, 1962 – ss.17 and 28 – Assessment of duty –
Notice for payment of duties, interest – Scheme of ss.17
and 28:
Held: s.17 read with ss.46 and 47 deals with the assessment
and re-assessment at the first instance that is, upon entry of the
consignments and clearance of bills of entry – Amendment to
s.17 introduces the process of self-assessment and subsequent
re-assessment upon verification by the proper officer, if so required,
for undertaking a check at the first instance – Proceedings
u/s.28 are subsequent to the completion of the process set
out in s.17 – Procedure envisaged u/s.28 is in the nature of a
quasi-judicial proceeding with the issuance of the show cause notice
by the proper officer followed by adjudication of such notices by
the field customs officers – In the case of DRI, the proceedings
u/s.28 start only after an investigation has been undertaken by
DRI – This is reaffirmed by Circular No. 4/99-Cus dated 15.02.1999
and Circular No. 44/2011-Customs dated 23.11.2011 – Thus, the
nature of review u/s.28 significantly different from the nature of
assessment and reassessment u/s.17 – Ambit of s.28 has also been
restricted to the review of assessments and re-assessments done
u/s.17 for ascertaining if there has been a short-levy, non-levy, part
payment, non-payment or erroneous refund – Scheme of ss.17
and 28 indicates that there cannot be a mandatory condition linking
the two provisions and the interpretation of this Court in the Sayed
Ali’s case and Canon India’s case that vesting of the functions of
assessment and re-assessment u/s.17 is a threshold, mandatory
206 [2024] 12 S.C.R.

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condition for proper officer to perform functions u/s.28, patently
erroneous. [Paras 95-99]

Customs Act, 1962 – s.28 – Notice for payment of duties,
interest – Use of article ‘the’ in the expression “the proper
officer” – Interpretation:
Held: In Canon India’s case it was held that the Parliament had
employed the article “the” instead of “a/an” in s.28 so as to give
effect to its intention of specifying that the proper officer referred
to in s.28 is the same officer as the one referred to in s.17 and the
use of a definite article instead of an indefinite article is indicative
of the fact that the proper officer referred to in s.28 is not “any”
proper officer but “the” proper officer assigned with the function
of assessment and reassessment u/s.17 – There was an error
apparent in the said view – Definite article “the” has been used
before “proper officer” with a view to limit the exercise of powers
u/s.28 by a specific proper officer and not any proper officer –
However, in the absence of any statutory linkage between ss.17
and 28 respectively, there was no legal footing for this Court in
Canon India’s case to hold that “the proper officer” in s.28 must
necessarily be the same proper officer referred to u/s.17 – Statutory
scheme of the 1962 Act necessitates that an officer of Customs
can only perform the functions u/s.28 if such officer has been
designated as “the proper officer” for the purposes of s.28 by an
appropriate notification – Use of the article “the” in the expression
“the proper officer” should be read in the context of that proper
officer who has been conferred with the powers of discharging the
functions u/s.28 by conferment u/s.5 – Proper officer is qua the
function or power to be discharged or exercised – Use of article
“the” in s.28 has no apparent relation with the proper officer referred
to u/s.17. [Paras 100-103]

Customs Act, 1962 – s.2(34) – Proper officer – DRI officers as
proper officers u/s 2(34):
Held: In Canon India’s case, this Court erroneously concluded that
officer from the Directorate of Revenue Intelligence (DRI) was not an
officer of customs and thus, cannot function as a “Proper Officer” –
Finding that the power conferred by the Board under Notification
No. 40/2012-Customs (N.T.) dated 02.05.2012 was ill-founded is
an error apparent – By way of Notification No. 40/2012-Customs
[2024] 12 S.C.R. 207

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

(N.T.), the Board appointed several persons including the Officers
of Directorate of Revenue Intelligence (DRI) as “Proper Officers”
u/s.2(34) – Notification No. 40/2012-Customs (N.T.) issued u/s.2(34)
cannot be read in isolation – It has to be read in conjunction with
s.4(1) and the Notification issued thereunder – View that the
“Proper Officer” for the purpose of s.28 and other provisions of
the 1962 Act could only mean the person who cleared the goods
or the officer who succeeds such officer and not any other officer
from any other department requires reconsideration in view of the
changes to the 1962 Act vide the Finance Act, 2011 and s.4 and
the notification issued thereunder – Court in Canon India’s case
proceeded on the footing that under the provisions of the Act, 1962,
the Board has no power to appoint “Proper Officers” – As per
s.4(1), the Board is vested with the power to appoint such persons
as it thinks fit to be “officers of customs”, u/s.4(2) the Board can
even authorize a Chief Commissioner of Customs or a Joint or
Assistant or Deputy Commissioner of Customs to appoint any
officers below the rank of Assistant Commissioner of Customs as
an “officer of customs” – This aspect was not brought to the notice
in Canon India’s case. [Paras 106-113]

Customs Act, 1962 – s.4 – Appointment of “Officers of
Customs:
Held: It is only an officer of customs, appointed u/s.4(1) who can
be designated as the “proper officer” as defined in s.2(34) by a
notification – Notifications issued u/ss.2(34) and 4(1) are nothing
but an internal arrangement for the purpose of allocation of work
among the officers of customs. [Para 115]

Customs Act, 1962 – s.6 – Entrustment of functions of Board
and customs officers on certain other officers – Application
of s.6:
Held: s.6 contemplates the entrustment of the functions of the
Board or any officer of customs under the Act to any of the officers
of the Central or the State Government or a local authority – Such
entrustment could be either conditional or unconditional – Object
of this Section is to confer powers of search, seizure, arrest and
recording of statements, to the officers working in border states
as also officers working in the coast guard or the navy as they
may be involved in anti smuggling operations – Plain reading of
208 [2024] 12 S.C.R.

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s.6 makes it abundantly clear that it applies only to officers from
departments other than the officers of the customs u/s.4 – Officers
of DRI are not any other officers of the Central Government or the
State Government or the local authority to be entrusted with the
functions of the Board and the Customs Officers – Post 07.03.2002,
a notification of the Central Government u/s.6 is not required to
recognise the officers from DRI as officers of customs – Assignment
of functions of proper officers as mentioned in s.2(34) and
entrustment of functions of customs officers as mentioned in s.6
operate on different planes – Assignment of functions of proper
officer is to be done only to officers of customs (whether appointed
u/s.4 or entrusted with certain functions u/s.6) – There may be
some overlap between assignment of functions of proper officers
u/s.2(34) rw s.5 and entrustment of functions of officers of customs
u/s.6 in some instances but there can be no scenario where it can
be held that “functions” u/s.6 and s.2(34) are congruent – One
of the basis for the decision in Canon India’s case was that no
entrustment of functions u/s.6 was done in favour of DRI officers,
which is a misapplication of s.6 and is in ignorance of the applicable
law, ss.2(34) rw s.5 of the Act. [Paras 120-122, 125, 129, 130]

Customs Act, 1962 – s.28 (11) – Recovery of duties not levied or
short-levied or erroneously refunded – Constitutional validity
of s.28(11) – Introduction of s.28(11) vide the Validation Act of
2011 which retrospectively validates the show cause notices
issued u/s.28 with effect from 06.07.2011, if discriminatory and
arbitrary for not curing the defect highlighted in Sayed Ali’s
case and, thus, violative of Art.14 of the Constitution of India:
Held: s.28(11) is constitutionally valid and its application is not
limited to the period between 08.04.2011 and 16.09.2011 – None
of the changes made by the amendments to s.28 has any impact
on the competence of the proper officer for the purposes of
fulfilment of functions u/s.28 – Only major change that warrants
the clarification provided under Explanation 2 is the distinction with
respect to the limitation period for the issuance of show cause
notices – Thus, the application of sub-section (11), which pertains
only to the empowerment of proper officers to issue show cause
notices u/s.28, cannot be said to be limited only to new s.28 but
also to the provision as it stood prior to 08.04.2011 – Legislative
intent is that sub-section (11) was meant to apply to s.28 without
[2024] 12 S.C.R. 209

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

any restriction as to time – Enactment of sub-section (11) of s.28
cures the defect pointed out in Sayed Ali’s case. [Paras 147, 148,
151, 154, 155]

Customs Act, 1962 – ss.17 and 28 – Proper officer to issue
show cause notice in terms of s.28 – Judgment by the High
Court in the case of Mangali Impex’, if expounds the correct
interpretation of s.28(11):
Held: High Court in Mangali Impex’s case observed that
s.28(11) could not be said to have cured the defect pointed out
in Sayed Ali’s case as the possibility of chaos and confusion
would continue to subsist despite the introduction of the said
section with retrospective effect – High Court declined to give
retrospective operation to s.28(11) for the period prior to 08.04.2011
by harmoniously construing it with Explanation 2 to s.28 of the
1962 Act – Decision in Mangali Impex’s case failed to take into
account the policy being followed by the Customs department
since 1999 which provides for the exclusion of jurisdiction of all
other proper officers once a show cause notice by a particular
proper officer is issued – It could be said that this policy provides
a sufficient safeguard against the apprehension of the issuance
of multiple show cause notices to the same assessee u/s.28 –
Further, the High Court could not have applied the doctrine of
harmonious construction to harmonise s.28(11) with Explanation 2
because s.28(11) and Explanation 2 operate in two distinct fields
and no inherent contradiction can be said to exist between the two –
Thus, the decision in Mangali Impex’s case set aside. [Para 168]

Finance Act, 2022 – s.97, Amendments made by Finance Act –
Constitutional validity of ss.86, 87, 88, 94 and 97 – s.97 which
retrospectively validates the show cause notices with effect
from 01.04.2023, if manifestly arbitrary and thus, violative of
Art.14 of the Constitution of India:
Held: s.97 which, inter-alia, retrospectively validated all show
cause notices issued u/s.28 of the Act, 1962 cannot be said to be
unconstitutional – It cannot be said that s.97 fails to cure the defect
pointed out in Canon India’s case nor is it manifestly arbitrary and
discriminatory and is not disproportional to the object sought to be
achieved by it. [Para 168]
210 [2024] 12 S.C.R.

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Constitution of India – Art.137 – Review of judgments or orders
by the Supreme Court – Grounds of review as stipulated by
the statute:
Held: Grounds of review are discovery of new and important matter
or evidence which, after the exercise of due diligence, was not
within the knowledge of the petitioner or could not be produced
by him at the time when the decree was passed or order made;
mistake or error apparent on the face of the record; or any other
sufficient reason – Thus, when a court disposes of a case without
due regard to a provision of law or when its attention was not
invited to a provision of law, it may amount to an error analogous
to one apparent on the face of record sufficient to bring the case
within the purview of Ord. XLVII r.1 CPC – If a court is oblivious
to the relevant statutory provisions, the judgment would in fact
be per incuriam – In such circumstances, a judgment rendered in
ignorance of the applicable law must be reviewed – Code of Civil
Procedure, 1908 – Ord. XLVII r.1 – Supreme Court Rules, 2013 –
Ord. XLVII Part IV. [Paras 60, 67]

Legislation – Validation of legislation to validate earlier acts
declared illegal – Power of:
Held: Legislature is empowered to enact validating legislations to
validate earlier acts declared illegal and unconstitutional by courts
by removing the defect or lacuna which led to the invalidation of
the law – With the removal of the defect or lacuna resulting in the
validation of any act held invalid by a competent court, the act may
become valid, if the validating law is lawfully enacted – Possibility
of misuse or abuse of a law which is otherwise valid cannot be a
ground for invalidating it. [Paras 152, 160]

Case Law Cited
Sunil Gupta v. Union of India and Others (2014) SCC Online
Bom 1742 – approved.
Mangali Impex Ltd. v. Union of India (2016) SCC Online Del
2597 – disapproved.
Commissioner of Customs v. Sayed Ali and Another [2011] 2
SCR 1045 : (2011) SCC 537; Union of India and Another v.
[2024] 12 S.C.R. 211

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

Godrej and Boyce Manufacturing, SLP (C) No. 1513/2022; Daikin
Air Conditioning India Pvt. Ltd v. Union of India, W.P. (C) 526
of 2022; S.K. Srivastava v. Union of India, 1971 SCC OnLine
Del 134; Consolidated Coffee Ltd. and Anr. v. Coffee Board,
Bangalore [1980] 3 SCR 625 : 1980 AIR 1468; Collector of
Customs v. Nathella Sampathu Chetty [1962] 3 SCR 786 : 1962
SCC OnLine SC 30; Shreya Singhal v. Union of India [2015] 5
SCR 963 : (2015) 5 SCC 1; Commissioner of Customs v. Dilip
Kumar & Co. [2018] 7 SCR 1191 : (2018) 9 SCC 1; Goodyear
India Ltd. v. State of Haryana [1989] Supp. 1 SCR 510 : (1990)
2 SCC 71; Col. Avtar Singh Sekhon v. Union of India [1981]
1 SCR 168 : (1980) Supp SCC 562; Lily Thomas v. Union of
India [2000] 3 SCR 1081 : (2000) 6 SCC 224; Champsey Bhara
& Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd. (1923)
SCC OnLine PC 10; State of Telangana v. Mohd. Abdul Qasim
[2024] 5 SCR 81 : (2024) 6 SCC 461; Chhajju Ram v. Neki,
1922 SCC OnLine PC 11; Moran Mar Basselios Catholicos v.
Mar Poulose Athanasius [1955] 1 SCR 520 : 1954 SCC OnLine
SC 49; Tinkari Sen v. Dulal Chandra Das, 1966 SCC OnLine
Cal 103; Girdhari Lal Gupta v. D. H. Mehta [1971] 3 SCR 748 :
(1971) 3 SCC 189; M/s Northern India Caterers (India) Ltd. v.
LT. Governor of Delhi [1979] 1 SCR 557 : (1980) 2 SCC 167;
Yashwant Sinha v. CBI [2019] 5 SCR 638 : (2020) 2 SCC 338;
Sow Chandra Kant and Anr. v. Sheikh Habib [1975] 3 SCR 933 :
(1975) 1 SCC 674; M/s. N.C. Alexander v. The Commissioner of
Customs, Chennai, W.P. Nos. 33099 of 2015; State of Andhra
Pradesh v. Ganesweara Rao [1964] 3 SCR 297 : AIR 1963 SC
1850; Management, S.S.L. Rly. Co. v. S.S.R.W. Union [1969]
2 SCR 131 : AIR 1969 SC 513; Dish TV India Ltd. v. Union
of India and Ors., WP (C) No. 520 of 2022; Empire Industries
Ltd. v. Union of India [1985] Supp. 1 SCR 292 : (1985) 3 SCC
314; Indian Aluminium Company Co. v. State of Kerala [1996]
2 SCR 23 : (1996) 7 SCC 637; Bhavesh D. Parish v. Union and
India [2000] Supp. 1 SCR 291 : (2000) 5 SCC 471; Shri Prithvi
Cotton Mills Ltd. and Ors. v. Broach Borough Municipality & Ors.
[1970] 1 SCR 388 : (1969) 2 SCC 283; Vivek Narayan v. Union
of India [2023] 1 SCR 1 : (2023) 3 SCC 1; Abhiram Singh v.
C.D. Commachen (Dead) By Lrs. & Ors. [2017] 1 SCR 158 :
(2017) 2 SCC 629 – referred to.
212 [2024] 12 S.C.R.

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Books and Periodicals Cited
Craies on Statute Law 17th Ed., Page 83 – referred to.

List of Acts

Customs Act, 1962; Finance Act, 2022; Customs (Amendment
and Validation) Act, 2011; Finance Act, 1995; Central Sales Tax
Act, 1956; Finance Act, 2011; Finance Act, 2022; Central Board
of Revenue Act, 1963; Customs Act, 1878; Supreme Court Rules,
2013; Code of Civil Procedure, 1908.

List of Keywords

Error apparent on face of record; Review petition; Canon India’s
case; Power of DRI to issue show cause notice; Officers of
Directorate of Revenue Intelligence-DRI, if proper officers for
s.28 of Customs Act, 1962; Retrospectively validating show
cause notices; Sayed Ali’s case; Mangali Impex’s case; s.97
of the Finance Act, 2022; Proper officer; Review of judgement
in Canon India’s case; Notification No. 19/90-Cus (N.T.)
dated 26.04.1990; Notification No. 17/2002 dated 07.03.2002;
Administrative changes; Circular No. 4/99- Cus dated 15.02.1999;
Proper officer to issue show cause notice in terms of s.28;
Commissioner of Customs (Preventive) not “proper officer”;
Reconsideration of Sayed Ali’s case; Inter-dependence between
two provisions; Assessment of duty; Method of assessment
of bills of entry and shipping bills; Assessment; Verification of
self-assessment; Re-assessment; Notice for payment of duties,
interest; Entry of consignments and clearance of bills of entry;
Quasi-judicial proceeding; Circular No. 44/2011-Customs dated
23.11.2011; Short-levy, non-levy, part payment, non-payment or
erroneous refund; Notice for payment of duties, interest; Use of
article ‘the’ in the expression “the proper officer”; DRI officers as
proper officers u/s 2(34); Notification No. 40/2012-Customs (N.T.)
dated 02.05.2012; Finance Act, 2011; Appointment of “Officers of
Customs; Entrustment of functions of Board and customs officers
on certain other officers; Recovery of duties not levied or short-
levied or erroneously refunded; Constitutional validity of s.28(11);
Review of judgments or orders by the Supreme Court; Grounds
[2024] 12 S.C.R. 213

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

of review; Validation of legislation to validate earlier acts declared
illegal; Possibility of misuse or abuse of law.

Case Arising From

INHERENT JURISDICTION: Review Petition (Civil) No. 400 of 2021

In

Civil Appeal No. 1827 of 2018

From The Judgment And Order Dated 09.03.2021 of The Supreme
Court of India In C.A. No. 1827 of 2018

With

C.A. Nos. 6142, 6161,6160 and 6159 of 2019, C.A. No. 8828 of
2016, C.A. Nos. 6157 and 6158 of 2019, C.A. No. 9313 and 9406
of 2016, C.A. No. 6153 of 2019, C.A. Nos. 9315, 10140, 9436,
9317, 10012, 10739, 10422, 10421, 10991, 10952 and 12345 of
2016, C.A. No. 6149-6152 of 2019, C.A. No. 430 of 2017, C.A. No.
8749 of 2016, C.A. No. 6127 of 2019, C.A. No. 8752 of 2017, C.A.
Nos. 6139-6140, 6143, 6148, 6248, 6156 and 7292 of 2019, C.A.
No. 2666-2695 of 2020, C.A. No. 1738 of 2021, R.P.(C) No. 402
of 2021 In C.A. No. 1875 of 2018, R.P.(C) No. 403 of 2021 In C.A.
No. 1832 of 2018, R.P.(C) No. 401 of 2021 In C.A. No. 3213 of
2018, SLP(C) No. 2504 of 2022, C.A. No. 2367-2368 of 2022, C.A.
No. 10788 of 2024, C.A. No. 3253 of 2017, C.A. Nos. 10873 and
10819 of 2024, C.A. No. 4559 of 2022, SLP(C) No. 12970 of 2022,
W.P.(C) Nos. 501, 499, 502, 504, 522, 507, 526, 534, 537, 548,
575, 566 and 568 of 2022, C.A. Nos. 10698, 10693, 10752, 10697,
10753, 10754, 10755, 10712, 10756, 10757, 10710 – 10711, 10758,
10759, 10760, 10709, 10761, 10762, 10763, 10764, 10765, 10766,
10767, 10768, 10769, 10770, 10771, 10772 and 10774 of 2024,
C.A. No. 4566 of 2022, Diary No. 33597 of 2022, C.A. Nos.10707 -
10708, 10781, 10854 and 10694-10695 of 2024, R.P.(C) No. 155
of 2022 In C.A. No. 3411 of 2020, R.P.(C) No. 1289 of 2021 In
C.A. No. 5053 of 2021, C.A. Nos. 10782, 10784, 10785, 10706
and 10705 of 2024, Diary No. 30895 of 2022, C.A. Nos. 10699 -
10704, 10786, 10787 of 2024, Diary. No. 38691 of 2022, C.A.
Nos. 10845 and 10809 of 2024, T.P.(C) No. 1576-1597/2023 and
WP (C) D. No. 37678 and 37700 of 2024
214 [2024] 12 S.C.R.

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Appearances for Parties
N. Venkataraman, A.S.G., A. K. Panda, S. Nandakumar,
Arshad Hidayatullah, Rupesh Kumar, Dr. Purvish Malkan, R.K.
Sanghi, Sr. Advs., Gurmeet Singh Makker, Kartikeya Asthana,
Ms. Nisha Bagchi, Merusagar Samantaray, Shovan Mishra,
Ms. Charanya Lakshmikumaran, Mukesh Kumar Maroria, Ms.
Sharmila Upadhyay, Sarvjit Pratap Singh, Pawan R Upadhyay,
Ms. Shobha Ramamoorthy, Shilp Vinod, Gokulakrisnan, Ms.
Deepika Nandakumar, Naresh Kumar, Raja S, Aakash Elango, Ms.
Rohini Musa, B. Krishna Prasad, Brajesh Kumar, Deepak Agrawal,
Shivam Singh, Shubham Janghu, Gopal Singh, S. Hariharan, Ms.
Jaikriti S. Jadeja, Shivang Goel, K M Kalidharun, Ishaan Aggarwal,
A.R. Madhav Rao, Mukunda Rao Angara, Krishna Rao, Tushar
Joshi, Siddhant Buxy, Ms. Pankhuri Shrivastava, Ms. Neelam
Sharma, Makarand Joshi, Alekshendra Sharma, Shariq Ahmed,
Tariq Ahmed, Vinay Vats, Sunil Kumar Verma, Shekhar Vyas,
Ms. Mrinal Kanwar, Ms. Neha Warrier, Vaibhav, Pulkit Srivastava,
Ms. Khushboo Aakash Sheth, Ms. Dharita Malkan, Alok Kumar,
Kush Goel, Suraj Pandey, Ms. Qurratulain, Ms. Aakriti Mathur,
Ms. Shagun Mishra, V Lakshmikumaran, Ms. Apeksha Mehta,
Ms. Umang Motiyani, Ms. Neha Choudhary, Ms. Falguni Gupta,
S Vasudevan, Ayush Agarwal, Rachit Jain, Dhruv Matta, Nikhil Jain,
Ram Krishna, Rahul Yadav, Dinesh Bahadur Singh, Nitish Messy,
Ms. Rashi Bansal, Ravi Bharuka, Prateek Gattani, Rohit Agarwal,
Mrs. Vanita Bhargava, Ajay Bhargava, Ms. Nandita Chauhan, Ms.
Tijil Thakur, M/s. Khaitan & Co., Ms. Shilpa Singh, Jitendra Singh,
Saurabh Suman Sinha, Chitray Parande, M/s. Ap & J Chambers,
Somanadri Goud Katam, Ashok K. Mahajan, Rameshwar Prasad
Goyal, Satyendra Kumar, Ambuj Ojha, Rajeev Singh, Manoj
Chauhan, Vikramaditya Singh, Ujjawal Parmar, Ms. Neha Raj
Singh, Sajal Singhai, Hardeep, Yashika Gupta, Ms. Poornima Ojha,
K. Paari Vendhan, Pawanshree Agrawal, Kumar Visalaksh, Rahul
Khurana, Udit Jain, Arihant Tater, Ms. Akanksha Dikshit, Abhishek
Vikas, M. P. Devanath, T. L. Garg, Rajat Bose, Ankit Sachdeva,
Ms. Shohini Bhattacharya, Neeladri Chakrabarty, S. S. Shroff,
Raj Bahadur Yadav, Ms. Manju Jetley, Prasannan Namboodiri,
Ms. Prathiibha Namboodiri, Deepak Goel, Ms. Alka Goyal, Aditya
Goel, Mrs. Anjali Jha Manish, Rajat Mittal, Suprateek Neogi, Vivek
Singh, Ritik Dwivedi, Rajesh Kumar Chaurasia, Sahil Tagotra,
Prabhakar Mishra, Sujay Jain, Advs. for the appearing parties.
[2024] 12 S.C.R. 215

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

Judgment / Order of the Supreme Court
Judgment

J.B. Pardiwala, J.
For the convenience of exposition, this judgment is divided into the
following parts: -
INDEX*
A. FACTUAL BACKGROUND OF THE REVIEW PETITION........... 10
B. SUBMISSIONS ON BEHALF OF THE DEPARTMENT................ 18
i. Error apparent in the judgment under review......................... 18
ii. Why the decision in Sayed Ali (supra) requires
reconsideration................................................................. 30
iii. The decision in Mangali Impex (supra) is liable to be set
aside and the decision in Sunil Gupta (supra) ought to be
affirmed............................................................................. 36
iv. Changes introduced by the Finance Act, 2022 are in the
nature of surplusage........................................................... 42
C. SUBMISSIONS ON BEHALF OF THE RESPONDENTS............. 48
D. ISSUES FOR CONSIDERATION............................................... 57
E. ANALYSIS................................................................................ 59
i. Review jurisdiction............................................................. 59
ii. The decision in Commissioner of Customs v. Sayed Ali..... 74
iii. Changes to Section 17 w.e.f. 11.04.2011 – the assessment
of bill(s) of entry and shipping bill(s)...................................... 78
iv. Scheme of Sections 17 and 28 of the Act, 1962...................... 90
v. Use of the article ‘the’ in the expression “the proper
officer” .............................................................................. 93
vi. DRI officers as proper officers under section 2(34)............... 96
vii. Section 4 of the Act, 1962.................................................. 98
viii. Section 6 of the Act, 1962.................................................. 106
ix. Observations on the constitutional validity of Section
28(11) of the Act, 1962....................................................... 114
x. Bombay High Court decision in Sunil Gupta (supra)............. 123
xi. Amendments made by the Finance Act, 2022....................... 138
F. CONCLUSION.......................................................................... 154

* Ed. Note: Pagination as per the original Judgment.
216 [2024] 12 S.C.R.

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1. Since the pivotal question of law involved in all the captioned petitions
is the same, they were taken up for hearing analogously and are
being disposed of by this common judgment and order.
2. For the sake of convenience, the Review Petition No. 400 of 2021
filed by the Customs Department is treated as the lead matter.
3. This Review Petition has been filed by the Customs Department
through the Commissioner of Customs, New Delhi (the “Department”)
under Order XLVII of the Supreme Court Rules, 2013 seeking review
of the judgment and order dated 09.03.2021 passed by this Court in
Civil Appeal No. 1827 of 2018 titled M/s Canon India Private Ltd.
v. Commissioner of Customs.

A. FACTUAL BACKGROUND OF THE REVIEW PETITION
4. A two-Judge Bench of this Court in the case of Commissioner of
Customs v. Sayed Ali and Another reported in (2011) SCC 537,
had held that the Commissioner of Customs (Preventive) is not a
“proper officer” as defined in Section 2(34) of the Customs Act, 1962
(“the Act, 1962”) and therefore did not have the jurisdiction to issue
a show cause notice in terms of Section 28 of the Act, 1962. The
Court observed that while all proper officers must be “officers of
customs”, all “officers of customs” are not proper officers. It also held
that only those officers of customs who were assigned the functions
of assessment, which would include re-assessment, working under
the jurisdictional collectorate within whose jurisdiction the bills of
entry or baggage declarations had been filed and consignments had
been cleared for home consumption, would have the jurisdiction to
issue show cause notice under Section 28 or else it would lead to a
situation of utter chaos and confusion, in as much as all officers of
customs in a particular area, be it under the Collectorate of Customs
(Imports) or the Preventive Collectorate, would fall under the definition
of “proper officers”. Section 2(34) is extracted below:
“(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”
5. As a result of the decision in Sayed Ali (supra), the Central
Board of Excise and Customs (the “Board”) issued Notification
No. 44/2011-Cus-NT dated 06.07.2011 under Section 2(34) of the
[2024] 12 S.C.R. 217

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

Act, 1962, assigning the functions of the “proper officers” to the
Commissioners of Customs (Preventive), Directorate of Revenue
Intelligence (“DRI”), Directorate General of Anti Evasion (“DGAE”)
and Officers of Central Excise. The notification specified that it would
operate prospectively. With a view to account for the past periods,
Section 28(11) was introduced vide the Customs (Amendment
and Validation) Act, 2011 (Act No.14 of 2011) dated 16.09.2011 by
virtue of which all persons appointed as Officers of Customs under
sub-section (1) of Section 4 before the 06.07.2011 were deemed to
have and always had the power of assessment under Section 17
and were deemed to be and always have been “proper officers” for
the purpose of the said section.
6. The constitutional validity of Section 28(11) of the Act, 1962, came to
be challenged before the High Court of Delhi in the case of Mangali
Impex Ltd. v. Union of India reported in (2016) SCC Online Del
2597 and a batch of matters were disposed of by the High Court
vide a common judgment on 03.05.2016.
7. The High Court held that although Section 28(11) of the Act, 1962
begins with a non-obstante clause, it neither explicitly nor implicitly
seeks to overcome the legal position brought about by Explanation
2 which states that the cases of non-levy, short-levy or erroneous
refund prior to 08.04.2011 would continue to be governed by the
unamended Section 28 of the Act, 1962 as it stood prior to said
date. On this basis, it held that the newly enacted Section 28(11)
would not empower officers of DRI or DGAE to either to adjudicate
the show-cause notices already issued by them for the period prior
to 08.04.2011 or to issue fresh show-cause notices for said period.
8. The High Court also held that Section 28(11) of the Act, 1962 is
overbroad in as much as it confers jurisdiction on a plurality of
officers on the same subject matter which may result in utter chaos,
unnecessary harassment and conflicting decisions. It held that such
untrammelled power would be arbitrary and violative of Article 14 of
the Constitution. The issue as to the constitutional validity and effect
of Section 28(11) of the Act, 1962 was answered accordingly. The
Department preferred an appeal against the decision in Mangali
Impex (supra) in Civil Appeal No. 6142 of 2019 before this Court
and vide order dated 01.08.2016, a two-Judge Bench of this Court
stayed the operation of that decision.
218 [2024] 12 S.C.R.

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9. The constitutional validity of Section 28(11) of the Act, 1962 was
also challenged before the High Court of Bombay in the case of
Sunil Gupta v. Union of India and Others reported in (2014) SCC
Online Bom 1742. The two-Judge Bench vide its Judgement dated
03.11.2014 held thus:
“25. As a result of the above discussion and finding
that Explanation 2 has not been dealing with the case,
which was specifically dealt with by sub- section (11) of
section 28 of the Act, that we are of the opinion that the
challenge in the writ petition is without any merit. The
Explanation removes the doubts and states that even
those cases which are governed by section 28 and
whether initiated prior to the Finance Bill 2011 receiving
the assent of the President shall continue to be governed
by section 28, as it stood immediately before the date
on which such assent is received. The reference to
the Finance Bill therein denotes the Bill by the section
itself was substituted by Act 8 of 2011 with effect from
April 8, 2011. Prior to this Bill by which the section was
substituted receiving the assent of the President of
India, some cases were initiated and section 28 was
resorted to by the authorities. Explanation 2 clarifies that
they will proceed in terms of the unamended provision.
The position dealt with by insertion of section 28(11) is
distinct and that is about competence of the officer. The
officers namely those from the Directorate of Revenue
Intelligence having been entrusted and assigned the
functions as noted above, they are deemed to have been
possessing the authority, whether in terms of section 28
unamended or amended and substituted as above. In
these circumstances, for these additional reasons as
well, the challenge to this sub-section must fail.”
10. Since the decision in Sunil Gupta (supra) was anterior in time, the
same was relied upon by the Department before the High Court of
Delhi during the hearing in Mangali Impex (supra). However, the
High Court of Delhi did not agree with the view taken therein.
11. A batch of four statutory appeals came to be decided by this Court
on 09.03.2021 in Canon India (supra) wherein this Court decided
[2024] 12 S.C.R. 219

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

the following two issues – first, whether the officers of DRI would be
“proper officers” under Section 2(34) for the purposes of Sections 17
and 28 of the Act, 1962 respectively; and second, whether such
officers are empowered to issue show cause notices demanding
customs duty under section 28 of the Act, 1962. To elaborate:
(a) Whether the Directorate of Revenue Intelligence (DRI) had the
legal authority to issue a show cause notice under Section 28(4)
of the Act, 1962, when the goods were cleared for import by a
Deputy Commissioner of Customs (who had decided that the
goods are exempted from being taxed on import)?
(b) Whether an Additional Director General of DRI, who has been
appointed as an “officer of Customs” under the Notification
dated 07.03.2002, has been entrusted with the functions of “the
proper officer” for the purpose of Section 28 of the Act, 1962?
12. This Court while disposing of the aforesaid batch of matters
proceeded to reiterate the principles laid down in Sayed Ali (supra)
that only such officers who are vested with the power of assessment
under Section 17 can be empowered to issue show cause notices
under Section 28 or else this would result in a state of chaos and
confusion. It also held that unless it is shown that the officers of
DRI are at the first instance, customs officers under the Act, 1962
and are entrusted with the functions of a proper officer under
Section 6 of the Act, 1962, they would not be competent to issue
show-cause notices. It was held that, since no entrustment was
made under Section 6 of the Act, 1962, the officers of DRI who were
not otherwise officers of customs, could not have been assigned
as the “proper officers”.
13. It also observed that from a conjoint reading of Section 2(34) and
Section 28 respectively of the Act, 1962, it is manifest that only
such a custom officer who has been assigned the specific functions
of assessment and reassessment in the jurisdictional area where
the import concerned has been affected, either by the Board or
the Commissioner of Customs, in terms of Section 2(34) of the
Act, 1962, was competent to issue notice under Section 28 of the
Act, 1962.
14. It appears from the decision in Canon India (supra) that the Notification
No. 44/2011-Cus-NT dated 06.07.2011 designating officers of DRI
220 [2024] 12 S.C.R.

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as “proper officers” for the purposes of both Sections 17 and 28 of
the Act, 1962 respectively; the introduction of Section 28(11) vide
the Validation Act, 2011 introducing Section 28(11) empowering
such officers for the period prior to 06.07.2011; the statutory scheme
as envisaged under Sections 3, 4, 5 and 2(34) of the Act, 1962
respectively; and the pendency of the appeal against the decision
in Mangali Impex (supra) and the stay of the operation of the said
decision by this Court was either not noticed or not brought to the
notice of the Court.
15. The Department preferred the present Review Petition against the
judgement delivered in Canon India (supra) on 09.03.2021. This
judgement was followed in other cases adjudicated by this Court
and the High Courts, resulting in various other Review Petitions,
Special Leave Petitions and Civil Appeals. This Court vide order
dated 15.02.2022 in the present Review Petition allowed an
open court hearing to be conducted and after hearing the parties,
issued notice on the Review Petition vide order dated 19.05.2022.
A co-ordinate Bench of this Court later in Union of India and Another
v. Godrej and Boyce Manufacturing (SLP (C) No. 1513/2022)
through order dated 11.02.2022 also issued notice.
16. The aforesaid developments led to a hiatus. As a result, the appeals
pending before the Tribunals and other authorities could not be
decided. This necessitated the introduction of the following provisions
by Parliament: Sections 86, 87 and 88 in the Finance Act, 2022
(Act No. 6 of 2022) to amend Sections 2(34), 3 and 5 of the Act,
1962 respectively. Further, Sections 94 and 97 of the Finance Act,
2022 introduced a new Section 110AA and a validation enactment
respectively. These amendments came to be challenged before this
Court in W.P. (C) 526 of 2022 titled Daikin Air Conditioning India
Pvt. Ltd v. Union of India.
17. The present batch comprises of three clusters of matters:
(i) The Review Petitions in the Canon India (supra) batch;
(ii) The Mangali Impex (supra) appeal and other appeals pending
before this Court on the issue of whether the officers of DRI
would be proper officers in light of Section 28(11); and
(iii) The petitions challenging the constitutional validity of Section 97
of the Finance Act, 2022.
[2024] 12 S.C.R. 221

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

B. SUBMISSIONS ON BEHALF OF THE DEPARTMENT
18. Mr. N. Venkataraman, the learned Additional Solicitor General of
India, made extensive submissions on the following broad issues –
(i) The Review Petitions filed in the case of Canon India (supra)
are maintainable as there is an error apparent on the face of
the record.
(ii) The decision rendered by this Court in Sayed Ali (supra)
requires reconsideration.
(iii) The decision rendered by the Delhi High Court in Mangali Impex
(supra) should be overruled and the view expressed by the
Bombay High Court in Sunil Gupta (supra) should be upheld.
(iv) The changes introduced by the Finance Act, 2022 are merely
clarificatory in nature and the crux of the issue before the Court
can be answered without reference to and reliance upon the
changes introduced by the said Act.

i. Error apparent in the judgment under review
19. It was submitted that the judgement rendered by this Court in Canon
India (supra) requires review as there are errors apparent on the face
of the record. The Ld. ASG submitted that it is equally important that
the legality and validity of the decision rendered by the High Court
of Delhi in Mangali Impex (supra) which is a part of the present
batch of pending appeals be considered since the issues in both
Canon India (supra) and Mangali Impex (supra) are one and the
same. He submitted that the fact that an appeal against Mangali
Impex (supra) was pending before this Court and that the operation
of the said judgement was stayed went unnoticed in Canon India
(supra). He submitted that this would have a direct bearing both in
the review and in the batch of appeals before this Court.
20. He submitted that Canon India (supra) proceeded on the assumption
that DRI officers are not officers of Customs and therefore need to
be entrusted with such powers under Section 6 of the Act, 1962 and
only upon such entrustment, the functions of a proper officer can be
assigned to them. This, he submitted, is in the teeth of the provisions
of the Act, 1962 more particularly Sections 3, 4, and 5 thereof. He
further submitted that there is no discussion worth the name on
222 [2024] 12 S.C.R.

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these provisions as regards its applicability to the DRI officers who
are none other than a class of officers of customs under Section 3
appointed pursuant to Section 4 and consequently, no entrustment is
required under Section 6. He submitted that Section 6 would come
into play for such of those officers of the Central or State Government
or Local Authority, who are not a class of officers of customs under
Section 3 appointed in accordance with Section 4 of the Act, 1962.
He explained this clear distinction between the two provisions by
relying on the notifications issued under Section 4 of the Act, 1962
proclaiming DRI officers to be a class of officers of Customs under
Section 3 of the Act.
21. He submitted that this Court erred in not taking into consideration
Sections 3, 4 and 5 of the Act, 1962 respectively and its interplay, if
any, with Section 6, as duly indicated by the notifications issued from
time to time. More particularly, the Court did not take into account
the origin and history of the DRI and how it was always a part of
the Ministry of Finance since its inception except for a brief period
between 1970 and 1977.
22. He adverted to Sections 3, 4, 5 and 6 of the Act, 1962 respectively
along with the relevant notifications issued under the respective
provisions. The provisions and relevant notifications are reproduced
hereinbelow:
Section 3 as introduced in 1962:
“3. There shall be the following classes of officers of
custom namely: —
(a) Collectors of Customs;
(b) Appellate Collectors of Customs;
(c) Deputy Collectors of Customs;
(d) Assistant Collectors of Customs; and
(e) such other class of officers of customs as may be
appointed for the purposes of this Act.”
The provision was amended by the Finance Act, 1995 and underwent
only one change wherein the expression ‘collector’ was replaced
by the expression ‘commissioner’. The amended provision reads
as under:
[2024] 12 S.C.R. 223

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

“3. Classes of officers of customs.-
There shall be the following classes of officers of customs,
namely.-
(a) Chief Commissioners of Customs;
(b) Commissioners of Customs;
(c) Commissioners of Customs (Appeals);
(d) Deputy Commissioners of Customs;”
23. He submitted that Section 3 refers to the class of officers of customs.
All officers of the same rank irrespective of the functions and roles
they play would fall under Section 3 as class of officers of customs.
Class in this sense would refer to the same rank.
24. Sections 4 and 5 of the Act, 1962 are extracted below:
Section 4:
"(1) The Board may appoint such persons as it thinks fit
to be officers of customs.
(2) Without prejudice to the provisions of sub-section
(7), the Board may authorise a Commissioner of
Customs or a Deputy or Assistant Commissioner of
Customs to appoint officers of customs below the
rank of Assistant Commissioner of Customs.”
Section 5:
"(1) Subject to such conditions and limitations as the Board
may impose, an officer of customs may exercise the
powers and discharge custom the duties conferred
or imposed on him under this Act.
(2) An officer of customs may exercise the powers and
discharge the duties conferred or imposed under this
Act on any other officer of customs who is subordinate
to him.
(3) Notwithstanding anything contained in this section,
an Appellate Collector of Customs shall not exercise
the powers and discharge the duties conferred or
imposed on an officer of customs other than those
specified in Chapter XV and section 108.”
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25. Section 4 relates to appointment of officers of customs and Section 5
deals with the powers and duties of officers of customs. There is only
one significant change carried out in Section 4 on 11.05.2002. Prior
to that date, the appointing Authority was the Central Government
and post 11.05.2002, the Board became the appointing Authority.
26. Some of the relevant notifications issued under Sections 4 and 5 of
the Act, 1962 respectively are reproduced below:
“G.S.R. 214 ̶In exercise of the powers conferred by
sub-section (1) of Section 4 of the Customs Act, 1962
(52 of 1962), the Central Government hereby appoints—
(a) the officers specified below to be Collectors of Customs
within their respective jurisdictions, namely:—
1. Director, Directorate of Revenue Intelligence.
2. Collector of Customs and Central Excise, Cochin.
3. Collectors of Land Customs and Central Excise,
Delhi, Calcutta and Shillong.
4. Collectors of Central Excise, Baroda, Bombay,
Poona, Bangalore, Madras, Hyderabad, Calcutta,
Nagpur, Patna, Allahabad and Kanpur.
(b) the Deputy Collectors posted under the Collectors
specified in clause (a) to be Deputy Collectors of
Customs within their respective jurisdictions;
(b) the Assistant Collectors posted under the Collectors
specified in clause (a) to be Assistant Collectors of
Customs within their respective jurisdictions.
[No. 37/F. No. 4/1/63-CAR]
G.S.R. 215-In exercise of the powers conferred by
sub-section (1) of section 4 of the Customs Act, 1962
(52 of 1962), the Central Government hereby appoints
the following persons to be officers of Customs,
namely:-
1. Principal Appraisers, Appraisers, Examiners,
Chief Inspectors, Additional Chief Inspectors,
Inspectors, Preventive Officers, Women
[2024] 12 S.C.R. 225

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

searches, Mnisterial officers and Class IV
officer in the Customs Department at Bombay,
Calcutta, Madras, Cochin, Visakhapatnum and
Kandla.
2. Reverificadors, Verficiadores, Appraisers,
Preventive Inspectors, Preventive Officers,
Officials Probationary Officials, Fiscal Guards,
Cabos, Sub-Chefes, and Auxiliaries of the
Technical Cadre, borne on the establishment
of Customs and Central Excise Administration,
Goa.
3. Superintendents, Deputy Superintendent,
Inspectors, Sub-Inspectors, women searchers,
Ministerial staff and Class IV staff of Central
Excise Department, who are for the time being
posted to a Customs-port, Customs-airport,
land-customs station, coastal port, Customs
Preventive post, Customs Intelligence post or
a Customs warehouse.
4. Superintendents, Duty Superintendents and
Inspectors of Central Excise Department in any
place in India.
5. All officers of the Directorate of Revenue
Intelligence.
[No. 38/F. No. 4/1/63-CAR.]”
27. Our attention was specifically drawn to S. No. 1 of GSR 214 as
extracted above wherein the Central Government appointed the
Director, Directorate of Revenue Intelligence as an officer of customs
and also to S. No. 5 of GSR 215 by which the Central Government
appointed all the officers of DRI as officers of customs.
28. He also placed before us the origin and history of the DRI as a part of
the Ministry of Finance. From 04.12.1957 till 24.06.1970, DRI was with
the Ministry of Finance. From 25.06.1970 to 28.07.1970, it was with
the Ministry of Home Affairs. Between 29.07.1970 and 06.04.1977,
it was with the Cabinet Secretariat and from 07.04.1977 onwards,
DRI has remained with the Ministry of Finance.
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29. Placing reliance on the decision of the Delhi High Court in the case
of S.K. Srivastava v. Union of India reported in 1971 SCC OnLine
Del 134, he submitted that DRI was always a part of the Customs
Department, working under a common Board and the Ministry of
Finance. The relevant paragraphs from this decision are extracted
below:
“(2) Therefore, on 3-12-1970 the order dated 27-7-1970
was cancelled.
(3) On 16-12-1970 the President was pleased to order that
the petitioner “be posted as Collector of Central Excise,
Hyderabad”.
The petitioner however refused to join his posting
at Hyderabad and has filed the present writ petition
challenging his transfer from the post of Director of Revenue
Intelligence to the post of Collector of Customs as being
illegal and unconstitutional.
Let us first consider the legality of the transfer. Under
Article 310 of the Constitution, the petitioner held office
during the pleasure of the President. The conditions of
service of the petitioner could be regulated by Parliament
by legislation under Article 309 of the Constitution. In the
absence of such legislation the President could also frame
rules to do so under the proviso to Article 309. But neither
any such legislation nor any such rules exist. The formation
of the Indian Customs and Central Excise Service Class I
was itself brought about by purely executive action. It
is well-established that the administration of service by
the Government of India can be carried on by executive
instructions and executive action even though no statute
or statutory rules may have been made.
The distinction between the personnel forming a
Service and the posts which may be manned by the
members of such a Service has to be noted at the
outset in this case. The petitioner along with others
belong to the Indian Customs and Central Excise
Service Class I. The members of this Service stood in
relation to each other in a particular order of seniority.
[2024] 12 S.C.R. 227

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

There was no statute or rules, however, restricting the
appointments of the members of the Service to any
particular post. Initially the officers of the Collectorate
of Customs and Excise working under the Ministry
of Finance, Department of Revenue, used to do all
the work relating to customs and excise. In 1939, the
work of inspection in the Departments of Customs
and Central Excise which was till then performed by
the departments themselves as carved out and given
to a separate Directorate of Inspection (Customs and
Central Excise) as a part of the office of the Central
Board of Revenue which was formed by an Act of
1924 and which was split later by an Act of 1963 into
two Boards, namely:—
(a) Board of Direct Taxes under which functions the
Department of Income-tax;
(b) The Central Board of Excise and Customs under
which functioned the Collectorates of Customs
and Central Excise, Directorate of Inspection and
Directorate of Revenue Intelligence.
It was in 1957 that the intelligence work till then
performed by the Central Revenue Intelligence Bureau
functioning as a unit in the Directorate of Inspection,
was constituted as a third unit in the Department of
Revenue, Ministry of Finance styled as Directorate of
Revenue, Intelligence. All this and more information is
contained in the Government publication Organisation
Set-up and Functions of the Ministries/Departments
of the Government of India “, 4th Edition, 1968, pages
68-70 (Annexure R XIII).
As the work of Directorates of Inspection and Revenue
Intelligence has been carved out from the work
originally performed by the Collectorates of Customs
and Central Excise and as no separate personnel was
recruited to man the posts in these two Directorates,
the members of the Indian Customs and Central
Excise Service Class I have been manning those
posts. There have been therefore numerous transfers
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of officers of the Indian Customs and Central Excise
Service Class I from their posts in the Collectorates
to the subsequently created posts in the Directorates.
Equally frequently these officers have been transferred
back to the posts in the Collectorates. The important
fact to be noted is that only one set of personnel
originally recruited for the Customs and Central Excise
Collectorates has been used to fill the posts not only
in the Collectorates but also in the Directorates. The
reason is obvious. The Central Board of Excise and
Customs in 1963 and prior to that the Central Board
of Revenue functioning as a part of the Department
of Revenue, Ministry of Finance of the Government
of India administered and controlled the work of the
Collectorates of Customs and Central Excise as well
as of the Directorates of Inspection and Revenue
Intelligence. These three units form one whole working
under the Board and the Ministry. This position is
reflected in the following documents:—
(1) The Central Civil Services [Revised Pay Rules, 1960
(Annexure R xiv)] have a Schedule in which the
various posts which could be manned by the Central
Civil Services are shown with the emoluments
attached to those posts. In this Schedule section 10
forms the Ministry of Finance (Department of
Revenue).…”
[emphasis supplied]
30. Having adverted to Sections 3, 4 and 5 of the Act, 1962, he submitted
that the officers of DRI would fall under Section 3 as “class of officers”
and under Section 4 as “officers of customs” and that the Board is
empowered to assign and fix powers and assign duties to such DRI
officers similar to other classes of officers and officers of customs.
31. In the aforesaid context, he submitted that having failed to advert to
these three sections and the various notifications referred to above,
this Court erred in placing sole reliance on Section 6 of the Act, 1962
to conclude that DRI officers are not officers of customs as they
belong to a different department and require specific entrustment
under Section 6 of the Act, 1962 by the Central Government before
[2024] 12 S.C.R. 229

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the powers of a proper officer under Section 2(34) of the Act, 1962
can be assigned to them. Section 6 is reproduced below:
“(6) 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 functions of the Board
or any officer of customs under this Act.”
32. He submitted that the question of entrustment would arise only
in relation to an officer of Central or State Government or Local
Authority who does not fall within the class of officers of customs
under Section 3 appointed under Section 4 of the Act, 1962. Some
instances of the Central Government entrusting such functions
of customs officers under Section 6 are M.F. (D.R.) Notification
No. 161-Cus dated 22.06.1963 and M.F.(D.R.&I.) Notification
No. 33-Cus., dated 27.04.1974 which entrusted functions of customs
officer to police officers in a particular jurisdiction and officers of
the Border Security Force respectively. However, in the case of
DRI officers, they would clearly fall under Sections 3, 4 and 5 of
the Act, 1962 and the notifications conferring powers and duties
are already on record.
33. Our attention was also drawn to Notification 161-Cus dated
22.06.1963 issued under Section 6 entrusting powers of search to
DRI officers. As per Notifications GSR 214 and GSR 215 issued in the
same year under Section 4 of the Act, 1962, all officers of DRI were
appointed as officers of customs. Therefore, an inadvertent reference
to Section 6 under Notification No. 161 dated 22.06.1963 should not
lead to the drawing of any adverse inferences as at the highest, it may
only be a case of misquoting of a Section. Secondly, till 11.05.2002,
it was the Central Government which was the appointing authority
under Section 4 for officers of customs as well as for entrustment
under Section 6. It is only from 11.05.2002 that the powers under
Section 4 were delegated to the Board since Notification No. 161
dated 22.06.1963 was issued prior to 11.05.2002 and the authority
being the Central Government under both Sections, any incorrect
reference to a provision would be totally inconsequential.
34. He submitted that by virtue of the aforesaid and also without reference
to the Notification No. 44/2011 – Cus (N.T.) dated 06.07.2011,
erroneous conclusions came to be rendered in paragraphs 17 to 23
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of the decision under review. The findings in Canon India (supra)
in paragraphs 13 and 14 respectively that DRI officers belong to a
different department and therefore cannot become proper officers
under Section 28, and if done so, would result in anarchical and
unruly operation of the statute, too, is erroneous in light of the
aforesaid submissions.
35. He further submitted that despite being a conceded position that
issuance of a show cause notice under Section 28 is a quasi-judicial
exercise of power, this Court fell in error in holding the same to be
an administrative review in paragraph 15. The Court also erred in
concluding that the expression “the proper officer” can only signify
an officer empowered to undertake assessment and re-assessment
under Section 17, by placing unfounded reliance on the decision in
Consolidated Coffee Ltd. and Anr. v. Coffee Board, Bangalore
reported in 1980 AIR 1468 as it relates to a totally different scenario
envisaged under Article 286 read with Section 5 of the Central Sales
Tax Act, 1956.
36. After pointing out the aforesaid aspects as errors apparent on the face
of the record, he prayed that the present review petition be allowed.
ii. Why the decision in Sayed Ali (supra) requires
reconsideration
37. He submitted that there are two fundamental errors in the dictum
laid in Sayed Ali (supra) –
(i) Firstly, it casts an obligation that an officer of customs who is
empowered to undertake assessment or reassessment under
Section 17 alone is qualified to become a proper officer under
Section 28 for the purpose of raising demand of short levy,
non-levy or erroneous refund. No other officer can be assigned
the functions of the proper officer under Section 28.
(ii) Secondly, the judgment was rendered in connection with
officers of the Customs (Preventive), who were not assigned
the powers and duties of a proper officer, and no notifications
to this effect were produced or brought to the notice of this
Court.
38. It was pointed out by him that Sayed Ali (supra) did not deal with
DRI officers who were indeed vested with the powers of proper
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officers vide the Circular No. 437/9/98-Cus.IV dated 15.02.1999
issued by the Board in terms of Section 2(34). Under Section
2(34), the power of assigning functions of a proper officer to an
officer of customs vests with the Board or the Commissioner of
Customs. Since the Board issued this assignment, the DRI officers
became proper officers with effect from 15.02.1999. As a result, the
decision rendered in Sayed Ali (supra) which was with reference
to only Customs (Preventive) would have no application to the DRI
and DGAE officers. The circular dated 15.02.1999 is reproduced
hereinbelow:
“F. No. 437/9/98-Cus.IV
Circular No. 4/99-Cus
Dated 15/2/1999
Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Excise & Customs, New Delhi
Subject: Issuance of Show Cause Notice by the Officers
of directorate of Revenue Intelligence -regarding-
A doubt has been recently raised as to whether the Officers
of Directorate of Revenue Intelligence could issue show
cause notices in cases investigated by them – a practice
started last year apparently in tune with the practice of
the Directorate General of Anti Evasion. The matter has
been examined in the Board.
2. It has been observed that in terms of Customs Notification
No. 19/90-Cus (NT.), dated 26.4.90, as amended from time
to time, the Officers of Directorate of Revenue Intelligence
of different categories have been notified and appointed
as Commissioners of Customs, Deputy Commissioners
of Customs or Assistant Commissioners of Customs for
the are specified. These officers, therefore, can legally
be entrust with discharge of functions normally performed
by Commissioners, Deputy Commissioners or Assistant
Commissioners of Customs in their jurisdiction, as the case
may be. Board can no doubt subject these powers/functions
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to certain restrictions/limitations as may be imposed, as
provided under section 5(1) of the Customs Act.
3. Directorate of Revenue Intelligence Officer are, therefore,
to undertake investigations of cases detected by them,
and to issue the Show Cause Notices on completion of
investigations. In line with the instructions issued (vide
F.No. 208/23/97-CX-8, dated 20.1.98) in respect of Officers
of Directorate General Anti Evasion, Board has decided
that in impact of cases investigated by the Directorate
General of Revenue intelligence, the officers of said
Directorate will be competent to and may issue show
cause notices in cases investigated by them – though
these will continue to be adjudicated by the concerned
jurisdictional Commissioners, Additional Commissioners,
Deputy Commissioners or Assistant Commissioners of
Customs, as the case may be.
4. The Board has also decided that these instructions may
kindly be brought to the notice of all departmental officers
by issuing suitable standing orders.
Sd/-
(Rajendra Singh)
Under Secretary to the Government of India”
39. As regards the observations in Sayed Ali (supra) on the inter se
link between Sections 17 and 28 of the Act, 1962 respectively, he
submitted that no such mandate flows from either of the two sections
and reading any such linkage into the scheme of the Act, 1962 would
directly undermine the powers of search, seizure and investigation
of the DRI officers under the Act, 1962 along with the assignment
of functions as proper officers to issue show cause notices post
such search and investigation. Although no disability is to be found
in any provisions of the Act, 1962, yet Sayed Ali (supra) creates
such an embargo and also proceeds to hold that empowering such
officers to issue show cause notices would result in multiple persons
dealing with the same issue leading to utter chaos and confusion. He
submitted that the Board has been issuing circulars and notifications
from time to time with a view to ensure that no such overlap occurs.
He also argued that the respondents have not adduced any evidence
[2024] 12 S.C.R. 233

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or empirical statistics to even remotely indicate that an importer has
been visited with either multiple show cause notices or adjudication
orders on the same subject.
40. He further submitted that the Board had vested DRI with the power
to issue only show cause notices and the adjudication orders in
furtherance of the show cause notices were to be passed by the
respective port officers. In cases involving multiple ports, common
adjudicators were assigned powers by the Board and later also by
the DRI and these adjudicators never involved themselves either
in the investigation of the case or in the issuance of show cause
notices. In such circumstances, he submitted that both the findings
in Sayed Ali (supra) require reconsideration.
41. He further drew our attention to Circular No. 18/2015 – Customs
dated 09.06.2015 issued by the Board pertaining to the appointment
of common adjudicating authority and the mode and manner of
assignment of functions for adjudication with a view to avoid multiplicity
or plurality. The same is extracted below:
“Circular No. 18/2015- Customs
F.No. 450/145/2014- Cus IV
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
To
All Chief Commissioner of Customs / Customs (Preventive)
All Chief Commissioners of Customs and Central Excise
All Commissioners of Customs
All Commissioners of Customs and Central Excise
Sir / Madam,
Subject: Appointment of common adjudicating
authority -regarding
Reference is invited to Notification No 60/2015-Customs
(N.T.), dated 04.06.2015 whereby the power to appoint
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common adjudicating authority in cases investigated by
DRI upto the level of Commissioner of Customs has been
delegated to Principal Director General of Directorate of
Revenue Intelligence in terms of section 152 of the Customs
Act, 1962. This notification was issued in the interest
of expediting decision making with resultant benefits to
both trade and revenue in terms of faster settlement of
outstanding disputes. These appointments were done
hitherto by the Central Board of Excise and Customs under
sections 4 and 5 of the Customs Act 1962.
2. In the light of the aforementioned notification, all cases
of appointment of common adjudicating authority in respect
of cases investigated by DRI will be handled by Principal
DG, DRI. In this regard, the Board has prescribed the
following guidelines for Principal DG, DRI:
(a) The following cases initiated by DRI shall be assigned
to Additional Director General (Adjudication), DRI:
(i) Cases involving duty of Rs.5 crores and above;
(ii) Group of cases on identical issues involving
aggregate duty of Rs.5 crores or more;
(iii) Cases involving seizure value of Rs.5 crores
or more;
(iv) Cases of over-valuation irrespective of value
involved; and
(v) Existing DRI cases with erstwhile Commissioner
(Adjudication).
(b) Cases other than at (a) above involving more than
one Customs Commissionerate would be assigned
to the jurisdictional Commissioner of Customs on the
basis of the maximum duty evaded;
(c) Cases other than at (a) above involving a single
Customs Commissionerate would be assigned to the
jurisdictional Commissioner of Customs;
(d) Non-DRI cases pending with erstwhile Commissioner
(Adjudication) would be assigned to Additional
Director General (Adjudication), DRI;
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Commissioner of Customs v. M/s Canon India Pvt. Ltd.

(e) Past DRI cases pending for adjudication with
jurisdictional Commissioners of Customs would
continue with these officers;
(f) Remand cases would be decided by the original
adjudicating authority.
3. All other cases of appointment of common adjudicator
i.e. other than the cases mentioned in paragraph 2 above
would continue to be dealt by the Board. This would include
cases made by Commissionerates or cases made by DRI
wherein the adjudicating officer is an officer below the
level of Additional Director General (Adjudication), DRI.
4. Board has also decided that all the pending cases
where common adjudicating authorities have not been
appointed so far or where the common adjudicating
authorities have been appointed but adjudications have not
been done should be disposed of expeditiously in terms
of aforementioned guidelines. However, while doing so in
regard to the latter category of cases, Principal DG, DRI
will take into consideration the fact whether or not personal
hearings have taken place and the stage of passing the
adjudication order. This is to ensure that cases about to
be finalized are not reallocated to another adjudicating
authority thereby defeating the objective of expediting the
finalization of disputes.
5. Difficulty faced, if any, may be brought to the notice of
the Board at an early date.
Yours faithfully
(Pawan Khetan)
OSD (Customs IV)”
42. He also brought to our notice similar notifications and circulars issued
subsequently to plead that all steps have been taken with a view
to ensure that there is no overlap of jurisdiction. In the absence of
any evidence or proof adduced by the importer, the dictum as laid
in Sayed Ali (supra) declaring that this would result in utter chaos
and confusion and only such officers vested with the power of
assessment and re-assessment can issue notices under Section 28,
requires reconsideration.
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iii. The decision in Mangali Impex (supra) is liable to be set
aside and the decision in Sunil Gupta (supra) ought to be
affirmed
43. He submitted that the decision in Mangali Impex (supra) too observed
that the assignment of powers to DRI officers for issuing show cause
notices under Section 28 of the Act, 1962 would create a situation
of utter confusion and chaos and declared Section 28(11) of the
Act, 1962 to be unconstitutional for being violative of Article 14 owing
to its inherent arbitrariness. The decision also directed the Department
to issue suitable instructions and ensure avoidance of multiplicity or
plurality of proceedings. He submitted that the instructions have been
scrupulously followed and complied with since 1999 through various
notifications and Board circulars, thereby avoiding any overlap. He
submitted that it was because of this reason that the importers were
not able to produce any material to support such adverse inferences.
Thus, he submitted that the decision in Mangali Impex (supra) also
deserved to be set aside.
44. On the correctness of the decision in Mangali Impex (supra), he
further submitted that the reasoning in the decision i.e., the Validation
Act, 2011 does not extend its non-obstante clause to anything
contained elsewhere in the same statute or in any other law for the
time being in force, is incorrect and not legally unsustainable. On
the finding of the High Court that since Explanation 2 remains on
the statute even after the insertion of Section 28(11), it places an
embargo for the period prior to 08.04.2011, for the application of
Section 28(11). The Ld. ASG submitted that Explanation 2, in no way,
had interfered or can interfere with the validating power introduced
vide Section 28(11). He delineated the sequence of events leading
to the insertion of Section 28(11) in the Act, 1962 to make good his
submission.
(i) This Court delivered the judgment in Sayed Ali (supra)
on 18.02.2011.
(ii) Parliament vide the Finance Act, 2011 introduced certain
amendments to Section 28 on 08.04.2011.
(iii) On 06.07.2011, the Central Government issued Notification
44/2011 assigning the functions of proper officers to officers of
Customs (Preventive), DRI, DGAE and officers of Commissioner
of Central Excise. The same is extracted below:
[2024] 12 S.C.R. 237

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

“Proper officers for Customs Sections 17 and 28
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 functions of the proper officer to the
following officers mentioned in column (2) of the Table
below, for the purposes of section 17, section 28,
section 28AAA and second proviso to Section 124
of the said Act, namely:-
TABLE

Sl.No. Designation of the officers
(1) (2)
1. Additional Director Generals, Additional
Directors or Joint Directors, Deputy Directors
or Assistant Directors in the Directorate
General of Revenue Intelligence.
2. Commissioners of Customs (Preventive),
Additional Commissioners or Joint
Commissioners of Customs (Preventive),
Deputy Commissioners or Assistant
Commissioners of Customs (Preventive).
3. Additional Director Generals, Additional
Directors or Joint Directors, Deputy Directors
or Assistant Directors in the Directorate
General of Central Excise Intelligence.
4. Commissioners of Central Excise, Additional
Commissioners or Joint Commissioners of
Central Excise, Deputy Commissioners or
Assistant Commissioners of Central Excise.”
[Notification No. 44/2011-Cus. (N.T.), dated 6-7-2011]

(iv) The Validation Bill, 2011, introducing Section 28(11) along with
the Statement of Reasons came to be issued on 02.08.2011
and the same is extracted below:
“Introduction of Sub-section 11 in Section 28 as
per the Customs (Amendment And Validation)
Bill, 2011
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“(11) Notwithstanding anything to the contrary
contained in any judgment, decree or order of
any court of law, tribunal or other authority, all
persons appointed as officers of Customs under
sub-section (1) of section 4 before the 6th day of
July, 2011 shall be deemed to have and always had
the power of assessment under section 17 and shall
be deemed to have been and always had been the
proper officers for the purposes of this section.”
STATEMENT OF OBJECTS AND REASONS
The Customs Act, 1962 consolidates and amends the
law relating to customs. Clause (34) of section 2 of
the said Act defines the expression “proper officer” in
relation to the functions under the said Act to mean
the officer of customs who is assigned those functions
by the Central Board of Excise and Customs or the
Commissioner of Customs. Recently, a question has
arisen as to whether the Commissioner of Customs
(Preventive) is competent to exercise and discharge
the powers of a proper officer for issue of a notice for
the demand of duty. The Hon’ble Supreme Court of
India in Commissioner of Customs versus Sayed Ali
and Anr. (Civil Appeal Nos. 4294-4295 of 2002) held
that only a customs officer who has been specifically
assigned the duties of assessment and re-assessment
in the jurisdiction area is competent to issue a notice
for the demand of duty as a proper officer. As such
the Commissioner of Customs (Preventive) who has
not been assigned the function of a “proper officer” for
the purposes of assessment or re-assessment of duty
and issue of show cause Notice to demand Customs
duty under Section 17 read with Section 28 of the Act
in respect of goods entered for home consumption is
not competent to function as a proper officer which
has not been the legislative intent.
2. In view of the above the Show Cause Notices issued
over the time by the Customs officers such as those
of the Commissionerates of Customs (Preventive),
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Commissioner of Customs v. M/s Canon India Pvt. Ltd.

Directorate General of Revenue Intelligence and
others, who were not specifically assigned the
functions of assessment and re-assessment of
customs duty may be construed as invalid. The result
would be huge loss of revenue to the exchequer
and disruption in the revenue already mobilized in
cases already adjudicated. However, having regard
to the urgency of the matter, the Government issued
notification on 6th July, 2011 specifically declaring
certain officers as proper officers for the aforesaid
purposes.
3. In the circumstances, it has become necessary
to clarify the true legislative intent that Show Cause
Notices issued by Customs officers, i.e., officers
of the Commissionerates of Customs (Preventive),
Directorate General of Revenue Intelligence (DRI),
Directorate General of Central Excise Intelligence
(DGCEI) and Central Excise Commissionerates for
demanding customs duty not levied or short levied
or erroneously refunded in respect of goods imported
are valid, irrespective of the fact that any specific
assignment as proper officer was issued or not. It
is, therefore, purposed to amend the Customs Act,
1962 retrospectively and to validate anything done
or any action taken under the said Act in pursuance
of the provisions of the said Act at all material times
irrespective of issuance of any specific assignment
on 6th July, 2011.
4. The Bill seeks to achieve the above objects.”
(v) Finally, the Validation Act came to be passed on 16.09.2011
and Sub-Section (11) became part of Section 28.
45. He contended that Explanation 2 and the introduction of Section 28(11)
are for distinct purposes and are not connected to each other in
any way. Prior to 08.04.2011, the period of limitation available
under the statute for demanding short levy, non-levy or erroneous
refund was six months. Whereas after 08.04.2011, it was enhanced
to one year. As the amendment substituted the then-existing
Section 28, it provided a saving provision to protect the notices issued
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prior to 08.04.2011 from the extension of limitation period from 6
months to one year. He submitted that the purport of Explanation 2
was only to ensure that those rights envisaged under old Section 28
stand preserved. Explanation 2 did not deal with the jurisdictional
exercise of the power of DRI officers in issuing show cause notices
under Section 28, whereas, the Validation Act, 2011, introducing
Section 28(11) addressed precisely only that issue.
46. He submitted that the conclusion drawn in Mangali Impex (supra)
was legally incorrect for holding that Section 28(11) is overbroad in
assuming every officer of customs to be deemed as proper officers
both for Sections 17 and 28. The Validation Act, 2011, was enacted
to regularize only past actions and not future actions, which are
governed by Notification No. 44/2011 dated 06.07.2011 which even
according to the High Court is valid and proper. Consequently, the
validation has a very limited role to play as it travels back only to
empower such of those officers of customs who had issued show
cause notices in the past and vesting them also with the power
under Section 17.
47. He submitted that the decision in Sunil Gupta (supra) clarifies the
correct legal position and should be held to be so by this Court.
iv. Changes introduced by the Finance Act, 2022 are in the
nature of surplusage
48. Lastly, he referred to the amendments brought about by the Finance
Act, 2022, vide Sections 86, 87, 88, 94 and 97. The same are
extracted below:
Section 86 - Amendment of section 2 of the Act, 1962
“86. In the Customs Act, 1962 (52 of 1962), (hereinafter
referred to as the Customs Act), in section 2, in clause
(34), after the words “Principal Commissioner of Customs
or Commissioner of Customs”, the words and figure “under
section 5” shall be inserted.”
Section 87 - Substitution of new section for section
3 of the Act, 1962
“87. For section 3 of the Customs Act, the following section
shall be substituted, namely:
3. Classes of officers of customs.-
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“There shall be the following classes of officers of customs,
namely:--
(a) Principal Chief Commissioner of Customs or Principal
Chief Commissioner of Customs (Preventive) or
Principal Director General of Revenue Intelligence;
(b) Chief Commissioner of Customs or Chief Commissioner
of Customs (Preventive) or Director General of
Revenue Intelligence;
(c) Principal Commissioner of Customs or Principal
Commissioner of Customs (Preventive) or Principal
Additional Director General of Revenue Intelligence
or Principal Commissioner of Customs (Audit);
(d) Commissioner of Customs or Commissioner of
Customs (Preventive) or Additional Director General
of Revenue Intelligence or Commissioner of Customs
(Audit);
(e) Principal Commissioner of Customs (Appeals);
(f) Commissioner of Customs (Appeals);
(g) Additional Commissioner of Customs or Additional
Commissioner of Customs (Preventive) or Additional
Director of Revenue Intelligence or Additional
Commissioner of Customs (Audit);
(h) Joint Commissioner of Customs or Joint Commissioner
of Customs (Preventive) or Joint Director of Revenue
Intelligence or Joint Commissioner of Customs
(Audit);
(i) Deputy Commissioner of Customs or Deputy
Commissioner of Customs (Preventive) or Deputy
Director of Revenue Intelligence or Deputy
Commissioner of Customs (Audit);
(j) Assistant Commissioner of Customs or Assistant
Commissioner of Customs (Preventive) or Assistant
Director of Revenue Intelligence or Assistant
Commissioner of Customs (Audit);
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(k) such other class of officers of customs as may be
appointed for the purposes of this Act.”
Section 88 - Amendment of section 5 of the Act, 1962
“88. In section 5 of the Customs Act,--
(a) after sub-section (1), the following sub-sections shall
be inserted, namely:--
“(1A) Without prejudice to the provisions contained in sub-
section (1), the Board may, by notification, assign such
functions as it may deem fit, to an officer of customs, who
shall be the proper officer in relation to such functions.
(1B) Within their jurisdiction assigned by the Board, the
Principal Commissioner of Customs or Commissioner
of Customs, as the case may be, may, by order, assign
such functions, as he may deem fit, to an officer of
customs, who shall be the proper officer in relation to
such functions.”;
(b) after sub-section (3), the following sub-sections shall
be inserted, namely:-
“(4) In specifying the conditions and limitations referred
to in sub-section (1), and in assigning functions under
sub-section (1A), the Board may consider any one or
more of the following criteria, including, but not limited to--
(a) territorial jurisdiction;
(b) persons or class of persons;
(c) goods or class of goods;
(d) cases or class of cases;
(e) computer assigned random assignment;
(f) any other criterion as the Board may, by notification,
specify.
(5) The Board may, by notification, wherever necessary
or appropriate, require two or more officers of customs
(whether or not of the same class) to have concurrent
powers and functions to be performed under this Act.”
[2024] 12 S.C.R. 243

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

Section 94 - Insertion of new section 110AA to the
Act, 1962
“94. After section 110A of the Customs Act, the following
section shall be inserted, namely:--
110AA. Action subsequent to inquiry, investigation or audit
or any other specified purpose.-
“Where in pursuance of any proceeding, in accordance
with Chapter XIIA or this Chapter, if an officer of customs
has reasons to believe that--
(a) any duty has been short-levied, not levied, short-paid
or not paid in a case where assessment has already
been made;
(b) any duty has been erroneously refunded;
(c) any drawback has been erroneously allowed; or
(d) any interest has been short-levied, not levied, short-
paid or not paid, or erroneously refunded, then
such officer of customs shall, after causing inquiry,
investigation, or as the case may be, audit, transfer
the relevant documents, along with a report in writing.
(i) to the proper officer having jurisdiction, as assigned
under section 5 in respect of assessment of such
duty, or to the officer who allowed such refund or
drawback; or
(ii) in case of multiple jurisdictions, to an officer of
customs to whom such matter is assigned by the
Board, in exercise of the powers conferred under
section 5, and thereupon, power exercisable under
sections 28, 28AAA or Chapter X, shall be exercised
by such proper officer or by an officer to whom the
proper officer is subordinate in accordance with sub-
section (2) of section 5.”
Section 97 - Validation of certain actions taken under
the Act, 1962
“97. Notwithstanding anything contained in any judgment,
decree or order of any court, tribunal, or other authority, or
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in the provisions of the Customs Act, 1962 (52 of 1962),
(hereinafter referred to as the Customs Act):-
(i) anything done or any duty performed or any action
taken or purported to have been taken or done under
Chapters V, VAA, VI, IX, X, XI, XII, XIIA, XIII, XIV,
XVI and XVII of the Customs Act, as it stood prior to
its amendment by this Act, shall be deemed to have
been validly done or performed or taken;
(ii) any notification issued under the Customs Act for
appointing or assigning functions to any officer
shall be deemed to have been validly issued for all
purposes, including for the purposes of section 6;
(iii) for the purposes of this section, sections 2, 3 and 5
of the Customs Act, as amended by this Act, shall
have and shall always be deemed to have effect
for all purposes as if the provisions of the Customs
Act, as amended by this Act, had been in force at
all material times.
Explanation. -- For the purposes of this section, it is
hereby clarified that any proceeding arising out of any
action taken under this section and pending on the date
of commencement of this Act shall be disposed of in
accordance with the provisions of the Customs Act, as
amended by this Act.”
49. He submitted that the amendments carried out in the Act, 1962
vide Sections 87 and 88 of the Finance Act, 2022 respectively are
a mere surplusage done ex abundanti cautela and are clarificatory
in nature. He further submitted that Section 3 deals with classes of
officers and officers of the same rank will constitute the same class.
The amended Section 5 only expands the very same class with
designation and functions and nothing more.
50. He submitted that Section 94 of the Finance Act, 2022 introducing
Section 110AA to the Act, 1962 is only a way forward for the future
wherein post search and investigation by the DRI, certain category
of cases have now been directed to be handed over to the port
authorities for issuing necessary show cause notices and this, in
no way, can vitiate notices issued by DRI earlier especially in the
absence of a constitutional or statutory embargo.
[2024] 12 S.C.R. 245

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

51. Finally, he submitted that a provision of law should appear arbitrary
or abusive to be declared illegal or unconstitutional or invalid. A
possible misuse of the provision by the authorities or a perceived
misuse or mere presumptions and conjectures of a possible misuse
cannot constitute basis to hold that a provision is arbitrary and
violative of Article 14. He relied on the following decisions to fortify
his submission:
a. Collector of Customs v. Nathella Sampathu Chetty, 1962
SCC OnLine SC 30
b. Shreya Singhal v. Union of India (2015) 5 SCC 1
c. Commissioner of Customs v. Dilip Kumar & Co. (2018) 9
SCC 1
d. Goodyear India Ltd. v. State of Haryana (1990) 2 SCC 71

C. SUBMISSIONS ON BEHALF OF THE RESPONDENTS
52. Mr. Mukul Rohatgi, Mr. Arvind Datar and Mr. V. Lakshmikumaran,
learned Senior Counsel appeared on behalf of the various importers
and vehemently objected to the review of Canon India (supra) and also
contended that both Sayed Ali (supra) and Mangali Impex (supra)
are correct in their conclusions and need no interference.
53. Mr. Mukul Rohatgi contended that the power of review is extremely
circumscribed and limited. It is not a means to provide a second
innings to anyone. The Department in the guise of a review is
seeking to re-argue the whole matter. Even if a different view is
possible, the same cannot give rise to a review. He relied on the
following decisions:
(i) Col. Avtar Singh Sekhon v. Union of India (1980) Supp
SCC 562
(ii) Lily Thomas Vs Union of India (2000) 6 SCC 224
(iii) Champsey Bhara & Co. v. Jivraj Balloo Spinning and
Weaving Co. Ltd. (1923) SCC OnLine PC 10
(iv) State of Telangana v. Mohd. Abdul Qasim (2024) 6 SCC 461.
54. Mr. Arvind Datar too submitted that the scope of review is extremely
limited and further contended that Section 97 of the Finance Act, 2022
is a clear overreach and needs to be considered separately.
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55. Mr. V. Lakshmikumaran made the following submissions:
(i) The scheme of the Act, 1962 clearly indicates that Sections 17,
46, 47 and 28 of the Act, 1962 respectively are interlinked to
and inter-dependent on each other. These provisions involve
a sequential flow of events to be processed by a single officer,
and therefore, empowering DRI officers who are not connected
to this scheme, is illegal.
(ii) Section 17 deals with assessment and reassessment.
Section 46 obligates filing of bills of entries. Section 47 allows
clearance of goods for home consumption post the assessment
under Section 17 and Section 28 pertains to demand of duty in
the nature of short levy, short paid and erroneously refunded.
Since all these statutory action points are interrelated, it is the
same proper officer who should be empowered to perform all
of these four functions and the same cannot be assigned to
different sets of officers.
(iii) The amendment to Section 17 in 2011 allowing self-assessment
is inconsequential since the power to assess and reassess and
allow clearances is still with the officer of customs.
(iv) On the issue of whether there are any statutory limitations
to the assignment of powers under Section 28 only to
those officers who do assessment or re-assessment under
Section 17, he submitted that the scheme of the Act, 1962 as
explained in Sayed Ali (supra) and Mangali Impex (supra),
clearly indicates that Sections 17 and 28 of the Act, 1962
respectively are interconnected and interdependent.
(v) Canon India (supra) is correct in holding that DRI officers
should be entrusted with the functions under Section 6 of the
Act, 1962. Since the Central Government has not done so, they
cannot be assigned the functions of proper officer.
(vi) Section 5 of the Act, 1962 deals only with powers and duties
but not the functions, whereas, Section 6 deals with functions
and thus, a notification under Section 6 is necessary. He
emphasised on the different consequences arising from the
use of the words “powers” and “duties” in Section 5 and use
of the word “functions” in Section 6.
[2024] 12 S.C.R. 247

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

(vii) It was contended that Section 28 deals with short levy,
non-levy and erroneous refund. Levy means determination of
duty through a process of assessment/reassessment. Section 28
therefore involves rendering a finding that the earlier assessment
was not correct. Section 28 is intended to revise or upset the
original assessment done under Section 17 and once an order
gets passed under Section 28, the original assessment would
not survive and therefore, the same officer can issue the show
cause notice.
(viii) The Board’s Circular dated 15.02.1999 cannot come to the
rescue of the Department because there was no assignment
of function of assessment/reassessment as required by Sayed
Ali (supra). According to the learned counsel, both Notification
No. 44/2011 dated 06.07.2011 and Section 28(11) were brought
to the notice of this Court in Canon India (supra).
(ix) Having accepted the principles laid down in Sayed Ali (supra)
on the interlinkage between Sections 17 and 28 of the Act, 1962
respectively, both vide Section 28(11) and Notification No.
44/2011 dated 06.07.2011, it is not open to the Department to
now contend the contrary as reaffirmed in Canon India (supra).
(x) All proper officers are officers of customs, but all officers of
customs are not proper officers. Mere conferment of power or
assignment of functions of assessment/reassessment under
Sections 17 and 28 of the Act, 1962 respectively is not enough.
Out of the various proper officers who have been empowered
under Sections 17 and 28, only that proper officer who had
actually carried out the assessment will be the proper officer.
There can be concurrent conferment of power but there cannot
be concurrent exercise of powers as the same may result in
chaos and utter confusion.
(xi) The decision rendered by the High Court in Mangali Impex
(supra) is correct and need not be disturbed for the following
reasons:
a. Section 28(11) does not validate the show cause notices
issued by various officers. It merely deems all officers who
were appointed as officers of customs under Section 4(1) to
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have always had the powers under Sections 17 and 28 the
Act, 1962 respectively. This would not automatically revive
the show cause notices issued by such officers of customs.
b. In order to hold that Section 28(11) validates past actions,
this Court will have to insert words in the statute, that too
in a taxing statute which imposes liabilities on assesses,
that too retrospectively.
c. Several unintended consequences may arise if it is held
that show cause notices issued by other officers of customs
will be revived. There are instances wherein many show
cause notices have been issued after the Sayed Ali (supra)
judgment by the jurisdictional commissionerate wherever
the limitation period permitted for demands to be made.
In those cases, assessees will be faced with two show
cause notices. He laid emphasis on the need to take an
undertaking from the Department to avoid such a situation
if it were to arise.
d. The High Court has correctly held that Section 28(11)
perpetrates the very chaos that the judgment in Sayed
Ali (supra) sought to prevent.
e. Explanation 2 to Section 28 should be given a plain
meaning. It was in the statute before Section 28(11) was
introduced, hence the framers of the statute were well
aware of the implications of the Explanation 2.
f. On 08.4.2011, Section 28 of the Act, 1962 underwent a
drastic change and not just a mere change in terms of
time period being changed from six months to one year.
The mode & manner of issuing the show cause notice,
the manner of adjudication and payment of duty, etc. have
been amended making it more beneficial to the assessee.
That is the reason why the old notices were to be dealt
with under the old Section.
g. It is impossible to read Section 28(11) and Explanation 2
together as validating any action prior to 08.04.2011. Such
is the plain meaning and only such an interpretation is
warranted in the present case.
[2024] 12 S.C.R. 249

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

(xii) Section 97 of the Finance Act, 2022 is liable to be struck down
as manifestly arbitrary and thus violative of Article 14. According
to him, the Finance Act, 2022 does not cure the defects pointed
out by this Court in its decision rendered in Canon India (supra)
for the following reasons:
a. The amendments introduced vide the Finance Act, 2022
continue to violate the principles laid down in the judgment
of this Court in Sayed Ali (supra) wherein it was held that
granting jurisdiction to multiple officers will create utter
chaos and confusion. He highlighted that the review filed
against the decision in Sayed Ali (supra) has already
been dismissed.
b. The validation of past actions by way of Section 97(i) of
the Finance Act, 2022 violates the principles enshrined in
the judgment of Canon India (supra) since it will lead to
a very anarchical and unruly operation of a statute which
was sought to be avoided in Canon India (supra).
c. A Validation Act can only validate the law but cannot
validate a fact. Once a particular officer has exercised
the function of assessment, it is a jurisdictional fact that
has occurred to the exclusion of all other groups in the
Customs Department. Thereafter, only that officer or
his superiors (known as the Customs group) who had
undertaken assessment under Section 17 in the first place
shall have the jurisdiction to issue notices for recovery of
duty under Section 28.
d. This Court in its judgment in Canon India (supra) found
that factually the assessments were initially not undertaken
by officers of DRI and such a defect cannot be cured
retrospectively by a validating law. Therefore, the present
amendments seek to validate and effectively change a
judicially determined fact, which cannot be done by a
legislation.
(xiii) The Finance Act, 2022 also introduced a provision, i.e.
Section 110AA, providing a mechanism for actions to be taken
subsequent to inquiry, investigation or audit by any officer of
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customs. Section 110AA operates only prospectively. This
provision is Parliament’s recognition of the importance of
maintaining the jurisdiction for issuing show cause notices
within the assessing group.
(xiv) Further, by retrospectively modifying the scheme of appointment
and assignment of functions to officers of customs, a larger
lacuna has been created as there exist no valid notifications for
assignment of functions of a ‘proper officer’ under Section 5 for
the period prior to 01.04.2022. Thus, all actions performed by
any officer of Customs prior to 01.04.2022 have in fact been
performed without jurisdiction. In such circumstances referred
to above, it was prayed that there being no merit in the Review
Petition filed by the Department, the same may be dismissed.

D. ISSUES FOR CONSIDERATION
56. Having heard the learned counsel appearing for the parties and
having gone through the materials on record, the following questions
fall for our consideration:
(i) Whether there is an “error apparent on the face of the record”
for the purpose of entertaining the review petition?
(ii) If the answer to the aforesaid question is in the affirmative, then
whether the exposition of law propounded by this Court in Canon
India (supra) as regards the power of the DRI to issue show
cause notices could be said to be the correct statement of law?
This would entail addressal of the following questions:
a. Whether officers of DRI are the proper officers for the
purposes of Section 28 of the Act, 1962?
b. What would be the extent, scope and domain of
Section 6 of the Act, 1962 vis-à-vis Section 2(34), Section 3,
Section 4 and Section 5 of the Act, 1962 and whether an
entrustment by the Central Government under Section 6
of the Act, 1962 is mandatory to empower the Officers of
the DRI for the purpose of issuing show cause notices?
c. Whether the power under Section 28 can be exercised
only by someone who is empowered to exercise the power
[2024] 12 S.C.R. 251

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under Section 17 of the Act, 1962 for the goods in question?
In other words, how best the meaning of the expression
“proper officer” should be construed for the purposes of
exercise of functions under Section 28?
d. Whether “the proper officer” in Section 28 must necessarily
be the same proper officer referred to under Section 17 of
the Act, 1962? If no, whether the use of the definite article
“the” in the expression “the proper officer” in Section 28
is in the context of that proper officer who has been
assigned the powers of discharging the functions under
Section 28 by virtue of powers conferred under Section 5
of the Act, 1962?
e. Whether issuance of show cause notices followed by
adjudication under Section 28 of the Act, 1962 is an
administrative review as held in Canon India (supra) or a
quasi-judicial exercise of power under administrative law?
(iii) Whether the introduction of Section 28(11) vide the Validation
Act of 2011 which retrospectively validates the show cause
notices issued under Section 28 with effect from 06.07.2011, is
discriminatory and arbitrary for not curing the defect highlighted
in Sayed Ali (supra) and, therefore, is violative of Article 14 of
the Constitution of India?
(iv) Whether the judgment delivered by the High Court of Delhi
in the case of Mangali Impex (supra) expounds the correct
interpretation of Section 28(11)?
(v) Whether Section 97 of the Finance Act, 2022, which
retrospectively validates the show cause notices with effect
from 01.04.2023, is manifestly arbitrary and therefore, violative
of Article 14 of the Constitution of India?

E. ANALYSIS

i. Review jurisdiction
57. Article 137 of the Constitution of India provides for review of judgments
or orders by the Supreme Court. It reads as under:
“137. Review of judgments or orders by the Supreme
Court. — Subject to the provisions of any law made
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by Parliament or any rules made under Article 145, the
Supreme Court shall have power to review any judgment
pronounced or order made by it.”
58. Further, Part IV Order XLVII of the Supreme Court Rules, 2013 deals
with the review and consists of five rules. Rule 1 is relevant for our
purposes. It reads as under:
“1. The Court may review its judgment or order, but
no application for review will be entertained in a civil
proceeding except on the ground mentioned in Order 47
Rule 1 of the Code and in a criminal proceeding except on
the ground of an error apparent on the face of the record.”
59. Order XLVII Rule 1(1) of the Code of Civil Procedure, 1908 provides
for an application for review which reads as under:
“1. Application for review of judgment. — Any person
considering himself aggrieved—
(a) by a decree or order from which an appeal is allowed,
but from which no appeal has been preferred,
(b) by a decree or order from which no appeal is allowed,
or
(c) by a decision on a reference from a Court of
Small Causes, and who, from the discovery of
new and important matter or evidence which, after
the exercise of due diligence, was not within his
knowledge or could not be produced by him at the
time when the decree was passed or order made,
or on account of some mistake or error apparent
on the face of the record, or for any other sufficient
reason, desires to obtain a review of the decree
passed or order made against him, may apply for
a review of judgment to the court which passed the
decree or made the order.”
60. Thus, in view of the above, the following grounds of review are
maintainable as stipulated by the statute:
(i) Discovery of new and important matter or evidence which, after
the exercise of due diligence, was not within the knowledge
[2024] 12 S.C.R. 253

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of the petitioner or could not be produced by him at the time
when the decree was passed or order made;
(ii) Mistake or error apparent on the face of the record; or
(iii) Any other sufficient reason.
61. The words “any other sufficient reason” have been interpreted by
the Privy Council in the case of Chhajju Ram v. Neki reported in
1922 SCC OnLine PC 11 and approved by this Court in Moran
Mar Basselios Catholicos v. Mar Poulose Athanasius reported in
1954 SCC OnLine SC 49 to mean a reason sufficient on grounds,
at least analogous to those specified in the rule.
62. In the case of Tinkari Sen v. Dulal Chandra Das reported in
1966 SCC OnLine Cal 103, the Calcutta High Court held that if
the court overlooks or fails to consider a legal provision that grants
it the authority to act in a specific manner, this may amount to an
error analogous to one apparent on the face of the record. Such an
oversight would fall within the scope of Order XLVII, Rule 1 of the
Code of Civil Procedure, 1908 which allows for reviews. Relevant
parts are extracted below:
“18. Consider, in this context, Sir Hari Sankar Pal v. Anath
Nath Mitter, AIR 1949 FC 106. Mr. Chittatosh Mookerjee
refers me to Mukherjee, J. (as his Lordship then was),
observed, Kania C.J. Fazl Ali, Patanjali Sastri and Mahajan,
JJ. (as their Lordships then were) agreeing:
“That a decision is erroneous in law is certainly no
ground for ordering review. If the Court has decided
a point and decided it erroneously, the error could
not be one apparent on the face of the record or even
analogous to it “When, however, the Court disposes of
a case without adverting to or applying its mind to a
provision of law which gives it jurisdiction to act in a
particular way that may amount to an error analogous
to one apparent on the face of the record sufficient to
bring the case within the purview of Order 47, rule 1
of the CPC.”
[Emphasis supplied]
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63. In Girdhari Lal Gupta v. D. H. Mehta reported in (1971) 3 SCC
189, this Court allowed the review on the ground that its attention
was not given to a particular provision of the statute. The relevant
observations read as follows:
“15. The learned counsel for the respondent State
urges that this is not a case fit for review because it is
only a case of mistaken judgment. But we are unable
to agree with this submission because at the time of
the arguments our attention was not drawn specifically
to sub-section 23-C(2) and the light it throws on the
interpretation of sub-section (1).
16. In the result the review petition is partly allowed and
the judgment of this Court in Criminal Appeal No. 211 of
1969 modified to the extent that the sentence of six months'
rigorous imprisonment imposed on Girdharilal is set aside.
The sentence of fine of Rs 2000 shall, however, stand.”
[Emphasis supplied]
64. In M/s Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi
reported in (1980) 2 SCC 167, the scope of the power of review was
explained by this Court wherein it was held that:
“8. It is well-settled that a party is not entitled to seek a
review of a judgment delivered by this Court merely for the
purpose of a rehearing and a fresh decision of the case.
The normal principle is that a judgment pronounced by
the Court is final, and departure from that principle is
justified only when circumstances of a substantial and
compelling character make it necessary to do so: Sajjan
Singh v. State of Rajasthan [AIR 1965 SC 845 : (1965) 1
SCR 933, 948 : (1965) 1 SCJ 377] . For instance, if the
attention of the Court is not drawn to a material statutory
provision during the original hearing, the Court will
review its judgment: G.L. Gupta v. D.N. Mehta [(1971) 3
SCC 189 : 1971 SCC (Cri) 279 : (1971) 3 SCR 748, 750] .
The Court may also reopen its judgment if a manifest wrong
has been done and it is necessary to pass an order to do
full and effective justice: O.N. Mohindroo v. Distt. Judge,
Delhi [(1971) 3 SCC 5 : (1971) 2 SCR 11, 27]. ….
[Emphasis supplied]
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65. This Court in Yashwant Sinha v. CBI reported in (2020) 2 SCC 338,
has observed that if a relevant law has been ignored while arriving
at a decision, it would make the decision amenable to review. The
relevant observations read as follows:
“78. The view of this Court, in Girdhari Lal Gupta [Girdhari
Lal Gupta v. D.H. Mehta (1971) 3 SCC 189 : 1971 SCC
(Cri) 279 : AIR 1971 SC 2162 : (1971) 3 SCR 748] as
also in Deo Narain Singh [Deo Narain Singh v. Daddan
Singh, 1986 Supp SCC 530] , has been noticed to be
that if the relevant law is ignored or an inapplicable
law forms the foundation for the judgment, it would
provide a ground for review. If a court is oblivious to the
relevant statutory provisions, the judgment would, in fact,
be per incuriam. No doubt, the concept of per incuriam
is apposite in the context of its value as the precedent
but as between the parties, certainly it would be open
to urge that a judgment rendered, in ignorance of
the applicable law, must be reviewed. The judgment,
in such a case, becomes open to review as it would
betray a clear error in the decision.”
[Emphasis supplied]
66. In Sow Chandra Kant and Anr. v. Sheikh Habib reported in
(1975) 1 SCC 674, this Court held:
“1. Mr Daphtary, learned counsel for the petitioners, has
argued at length all the points which were urged at the
earlier stage when we refused special leave thus making
out that a review proceeding virtually amounts to a
re-hearing. May be, we were not right is refusing special
leave in the first round; but, once an order has been
passed by this Court, a review thereof must be subject to
the rules of the game and cannot be lightly entertained. A
review of a judgment is a serious step and reluctant
resort to it is proper only where a glaring omission or
patent mistake or like grave error has crept in earlier
by judicial fallibility. A mere repetition, through different
counsel, of old and overruled arguments, a second trip
over ineffectually covered ground or minor mistakes of
inconsequential import are obviously insufficient. The
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very strict need for compliance with these factors is the
rationale behind the insistence of counsel’s certificate
which should not be a routine affair or a habitual step. It is
neither fairness to the Court which decided nor awareness
of the precious public time lost what with a huge backlog
of dockets waiting in the queue for disposal, for counsel to
issue easy certificates for entertainment of review and fight
over again the same battle which has been fought and lost.
The Bench and the Bar, we are sure, are jointly concerned
in the conservation of judicial time for maximum use. We
regret to say that this case is typical of the unfortunate
but frequent phenomenon of repeat performance with the
review label as passport. Nothing which we did not hear
then has been heard now, except a couple of rulings on
points earlier put forward. May be, as counsel now urges
and then pressed, our order refusing special leave was
capable of a different course. The present stage is not a
virgin ground but review of an earlier order which has the
normal feature of finality.”
[Emphasis supplied]
67. Thus, the decisions referred to above make it abundantly clear that
when a court disposes of a case without due regard to a provision
of law or when its attention was not invited to a provision of law, it
may amount to an error analogous to one apparent on the face of
record sufficient to bring the case within the purview of Order XLVII
Rule 1 of the Code of Civil Procedure, 1908. In other words, if a
court is oblivious to the relevant statutory provisions, the judgment
would in fact be per incuriam. In such circumstances, a judgment
rendered in ignorance of the applicable law must be reviewed.
68. From here onwards, our endeavour is to ascertain whether the
relevant provisions of law including the notifications issued by the
Board from time to time were brought to the notice of the Court while
deciding Canon India (supra).
69. A three-Judge Bench in Canon India (supra) examined whether
officers of the DRI are proper officers for the purpose of issuing
recovery notices under the provisions of Section 28 of the
Act, 1962.
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70. The Court while deciding the aforesaid question held as under:
“11. 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”.
12. 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 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, 1962 [ “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;”] .
13. 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
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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 reopen 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.
14. 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 reassessment 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.”
71. The aforesaid observations are in line with the decision of this Court
in Sayed Ali (supra). However, it is relevant to note that when Sayed
Ali (supra) was decided, Section 17 read differently and the true
purport of Section 4 of the Act, 1962 was not considered. We shall
deal with this aspect subsequently.
72. The Court further held as under:
“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
[2024] 12 S.C.R. 259

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

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 (N.T.),
dated 7-3-2002 to show all Additional Directors General
of the DRI have been appointed 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.
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 I, Section 3, Sub-section (i)]
Government of India
Ministry of Finance
(Department of Revenue)
Notification No. 40/2012-Customs (N.T.)
New Delhi, dated the 2nd May, 2012
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S.O. (E). - In exercise of the powers conferred by
subsection (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)
Commissioner of Customs (i) Section 33
Additional Commissioner (i) Sub-section (5)
or Joint Commissioner of of section 46; and
Customs (ii) Section 149
Deputy Commissioner or (i) ….. (ii) ….. (iii)
Assistant Commissioner ….. (iv)….. (v) …..
of Customs and Central
(vi) Section 28;
Excise
………”

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 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 :-
[2024] 12 S.C.R. 261

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

“2. Definitions. - In this Act, unless the context
otherwise requires, - … 136/163 https://www.
mhc.tn.gov.in/judis W.P.Nos.33099 of 2015
& etc., (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
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 4-12-1957 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
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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 v. Sayed Ali and Another [(2011) 3 SCC 537 =
2011 (265) E.L.T. 17 (S.C.)] 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, -
[2024] 12 S.C.R. 263

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(a) in the case of any import made by
any individual 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 been levied or charged or
which has been so short-levied 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 misstatement
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
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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 :
‘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 under section 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
set aside.”
[2024] 12 S.C.R. 265

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

73. It is not in dispute that Canon India (supra) is based on the decision
of this Court in Sayed Ali (supra). We say so because in Canon
India (supra), the petitioner had not questioned the jurisdiction of
the officers of DRI either before the departmental authorities or
before the Tribunal. We must, therefore, first look into the judgment
rendered in Sayed Ali (supra).

ii. The decision in Commissioner of Customs v. Sayed Ali
74. In Sayed Ali (supra), a show cause notice dated 28.08.1991 was
issued by the Assistant Collector of Customs (Preventive), Mumbai,
alleging a violation of the provisions of Section 111(d) of the
Act, 1962. It culminated in an order dated 03.02.1993 which was
appealed before the Collector of Customs (Appeals). An order was
passed by the Collector of Customs (Appeals) on 14.12.1993. The
Collector of Customs (Appeals) allowed the appeal by holding that
the matter involved demand of duty beyond a period of six months
and therefore the show cause notice could have been issued only
by the Collector and not by the Assistant Collector of Customs
(Preventive). At that point of time, there were circulars of the Board,
which stipulated pecuniary limits for officers to exercise powers
under various provisions of the Act. Thus, the Collector (Appeals)
granted liberty to the department to re-adjudicate the case by issuing
a proper show cause notice.
75. The Collector of Customs (Preventive) thus issued a show cause
notice dated 16.04.1994, calling upon the importer to show cause
as to why the goods seized should not be confiscated, why the
customs duty amounting to Rs.5,07,274/- should not be levied in
terms of Section 28(1) of the Act, 1962, by invoking the extended
period of limitation, and why the penalties under Sections 112(a)
and (b)(i) and (ii) of the Act, 1962, should not be imposed on the
said importer.
76. The jurisdiction of the Collector of Customs (Preventive) to issue
the show cause notice was questioned in the reply to the show
cause notice by referring to Notification No. 251/83 and Notification
No.250/83. The Collector of Customs (Preventive) rejected the
submission on the point of jurisdiction. The demand was thus affirmed
by the Collector of Customs (Preventive) vide Order dated 19.08.1996.
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The matter was taken up before the Tribunal, which held that the
Commissioner of Customs (Preventive) had no jurisdiction to issue
the show cause notice and therefore did not have the jurisdiction to
adjudicate the matter when the imports had taken place within the
Bombay Customs House.
77. This Court, after referring to Section 28 of the Act, 1962 as it stood
during the period in dispute, concluded that from a conjoint reading
of Section 2(34) and Section 28 of the Act, 1962, it is manifest that
only such a customs officer who has been assigned the specific
functions of assessment and re-assessment of duty in the jurisdictional
area where the import concerned has been effected, either by the
Board or the Commissioner of Customs, in terms of Section 2(34)
of the Act, 1962, was competent to issue notice under Section 28
of the Act, 1962.
78. This Court further held that “…any other reading of Section 28 would
render the provisions of Section 2(34) of the Act otiose in as much
as the test contemplated under Section 2(34) of the Act of the Act
is that of specific conferment of such functions”. It further held that
“Moreover, if the Revenue’s contention that once territorial jurisdiction
is conferred, the Collector of Customs (Preventive) becomes a “proper
officer” in terms of Section 28 of the Act, 1962 is accepted, it would
lead to a situation of utter chaos and confusion, in as much as all
officers of customs, in a particular area be it under the Collectorate of
Customs (Imports) or the Preventive Collectorate, would be “proper
officers” ”.
79. This Court concluded that “It is only the officers of customs, who
are assigned the functions of assessment, which of course, would
include re- assessment, working under the jurisdictional Collectorate
within whose jurisdiction the bills of entry or baggage declarations
had been filed and the consignments had been cleared for home
consumption, will have the jurisdiction to issue notice under
Section 28 of the Act”. Thus, the proceedings impugned therein
were set aside.
80. Thereafter, a Review Petition was filed by the Department in the
aforesaid case. This Court dismissed the Review Petition on the
ground of delay in filing the review.
[2024] 12 S.C.R. 267

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

⁠ he decision in Sayed Ali (supra) proceeds on the assumption that
81. T
for the “proper officer” to exercise the functions under Section 28 of
the Act, 1962, such officer must necessarily possess the power of
assessment and reassessment under Section 17. However, a plain
reading of Sections 17 and 28 of the Act, 1962 does not bring out any
such inter-dependence between the two provisions. Having looked
into the statutory scheme of the Act, 1962, we are of the view that
the observations pertaining to the interlinkage between Sections 17
and 28 respectively of the Act, 1962 made in Sayed Ali (supra) do
not lay down the correct position of law.
82. Even otherwise, the decision in Sayed Ali (supra) could have been
arrived at without deciding on the interdependence of Section 17 and
Section 28 of the Act, 1962 as the Customs (Preventive) officers,
whose jurisdiction to issue show cause notices was under challenge
in that case, were not assigned the functions of the “proper officer”
for the purposes of Section 28 through a notification issued by the
appropriate authority. As we have observed in the foregoing parts of
this judgment, assignment of functions is a mandatory requirement for
the exercise of jurisdiction by the “proper officer”. The observations
made in Sayed Ali (supra) on the connection between Sections 17
and 28 of the Act, 1962 are obiter dicta at best and do not constitute
the binding ratio decidendi of that judgment.
83. Further, Sayed Ali (supra) could not have been relied upon by this
Court in Canon India (supra) as it could not have been applied for the
period subsequent to 08.04.2011 in view of the fact that Section 17
of the Act, 1962 has undergone a radical change by virtue of the
amendments made by the Finance Act, 2011.

iii. Changes to Section 17 w.e.f. 11.04.2011 – the assessment
of bill(s) of entry and shipping bill(s)
84. Section 17 of the Act, 1962 was amended by Section 38 of the
Finance Act, 2011 with effect from 08.04.2011. The amendment
altered the method of assessment of bill(s) of entry and shipping
bill(s). This change appears not to have been brought to the notice
of this Court while Canon India (supra) was heard.
85. We note that with effect from 08.04.2011, the functions of the proper
officer under Section 17 also underwent certain changes. One such
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change is that the assessment of bill(s) of entry and shipping
bill(s) was no longer the task of the “proper officer”. With effect
from 08.04.2011, Bill(s) of Entry and/or Shipping Bill(s) are self-
assessed. This self-assessment is to be accepted or rejected by
the proper officer subject to verification in certain cases.
86. The “proper officer” appointed for the purpose of Section 17 of
the Act, 1962 under a notification issued under Section 2(34) of
the Act, 1962 could only make a re-assessment of the bill(s) of
entry and shipping bill(s) in case they did not agree with the self-
assessment of the importer or the exporter as the case may be.
87. The purport of Section 17 as it stood before 08.04.2011 and
after 08.04.2011 was analysed by a learned Single Judge of the
Madras High Court in the case of M/s. N.C. Alexander v. The
Commissioner of Customs, Chennai in W.P. Nos. 33099 of 2015.
The relevant paragraphs of the judgment are reproduced below:
“207. Thus, there was a paradigm shift in the method of
assessment with effect from 08.04.2011. Till 07.4.2011,
the assessment of Bill of Entry(s) or the Shipping Bill(s)
was by a “proper officer” appointed for that purpose under
Section 2(34) of the Custom Act, 1962. The assessment
was left to the Group ‘B’ Gazetted Officers and it is only
such officers were appointed as “proper officers” for
assessment under Section 17.
208. However, after 08.04.2011, Bill(s) of Entry (in the case
of import) or Shipping Bill(s) (in the case of export) are
to be self assessed by an importer or an exporter under
Sections 46 and 50 of the Customs Act, 1962 respectively.
The changes are shown in bold in the above Table.
209. A “proper officer” has to merely verify the entries
made in the Bill(s) of Entry under Section 46 (in case
of import) or Shipping Bill(s) under Section 50 (in case
of export). The “Proper Officer” may examine or test
imported goods or export goods or such part thereof as
may be necessary. If required, such an officer can only
re-assess the goods under Section 17 of the Act. Thus,
a “Proper Officer” under Section 17(1) & 17(4) of
[2024] 12 S.C.R. 269

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the Act is merely required to re-assess the imported
goods or export goods where he differs with the
self assessment of an importer or an exporter. This
important change was not brought to the attention
of the Hon’ble Supreme Court in Canon India Pvt
Ltd Case.
210. As mentioned above, an importer or an exporter is
merely required to make a self-assessment in the Bill(s) of
Entry or Shipping Bill(s) as may be in the case of import
or export respectively and file the same.
211. Officers who are appointed as “Proper Officers” for
the purpose of Section 17 of the Customs Act, 1962 are
“Officers of Customs” like any “Officer of Customs” as
per Section 3 and 4 read with notification issued under
these provisions. There is delegation of functions by the
Board and senior officers to different class of officers by
the Board. This is an internal arrangement with a view
for better tax administration. Thus, officers of Directorate
of Revenue Intelligence are also one among the class
“Officers of Customs” like any Officer of Customs as
per Section 3 and 4 read with notification issued for
the said purpose are competent to issue show cause
notice. The “proper officer” at the Port at the time
of clearance of import or export, merely reassess
the self-assessment already made on the Bill(s) of
Entry and/or Shipping Bill(s). They are normally not
assigned with the function to adjudicate Show Cause
Notices and/or Demand Notices under the various
provisions of the Customs Act, 1962.
212. With effect from, 08.04.2011, there was no question of
assessment of Bill(s) of Entry /Shipping Bill(s) by a “proper
officer”. There is only self assessment by an importer or
an exporter. There could be only re-assessment of Bill
of Entry(s) or the Shipping Bill(s) by the “proper officer”
under Section 17 of the Customs Act,1962.
213. If the “proper officer” was inclined to disagree
with the self assessment made by an importer or an
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exporter as the case may be, the “proper officer” could
make a re-assessment and pass a speaking order under
Section 17(5) of the Customs Act, 1962.
214. If the self assessment is accepted, the “proper
officer” appointed under Section 17 of the Customs
Act, 1962 becomes “functus officio” under the scheme
of the Act and the Notification issued for the aforesaid
purpose.
215. Likewise, where there was a re-assessment, again
such an officer becomes “functus officio”, after such
an order of re-assessment and a speaking order under
Section 17(5) of the Customs Act, 1962 is passed.
216. An importer or an exporter aggrieved by such an
order of reassessment and the speaking order is entitled
to file an appeal under Section 128 of the Custom
Act,1962 before the Appellate Commissioner. Only
circumstances, where such an officer who makes an
order of reassessment can re-visit the re-assessment
and/or speaking order is under Section 28 (if specifically
authorized) or under Section 149 or under Section 154
of the Customs Act, 1962.
217. The power to issue Show Cause Notice whether
under Section 28 or under Chapter XIV of Customs
Act, 1962 or under any other provisions and to pass
orders has been by and large exercised by the Superior
Officers from Group ‘A’ Cadre Officer of the Custom
Department in terms of Notification issued under
Section 2(34) of the Act. The Officers from the Directorate
of Revenue Intelligence (DRI) being “Officers of Custom”
have been recognized as a “Proper Officer” for the
aforesaid purpose.
218. The “proper officer” who is/was involved at the
stage of assessment under Section 17 of the Act
upto 08.04.2011 and reassessment after 08.04.2011
have rarely been involved in collateral adjudication
of notices issued under Section 28 of the Act.
[2024] 12 S.C.R. 271

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

However, once again at the stage of recovery of duty or
penalty under other provision of the Customs Act, 1962
or redemption fine under Section 125 of the Customs
Act, 1962, they are authorized.
219. Mostly, at the time of clearance of imported
goods or export goods for the purpose of assessment
under Section 17 of the Custom Act,1962, it is the
Superintendent/Appraisers of Customs from Group ‘B’
Executive - Gazetted Officers who act as “proper officers”.
They are merely required to verify the entries made in the
Bill(s) of Entry filed under Section 46 of the Act (in case
of import) and or Shipping Bill(s) filed under Section 50
of the Act (in case of export). As “proper officers” are
required to merely examine or test any imported or export
goods or such parts thereof. Such Officer of Customs
under the Scheme of the Act and Notification issued
thereunder can only re-assess the self-assessment made
by the importer or the exporter.
220. Earlier, the Officers from the Directorate of
Revenue Intelligence (DRI) were mostly confined
with the task of investigation. Over a period of time,
they were empowered to issue Show Cause Notices
and/or Demand Notices under various provisions of
the Customs Act. Adjudication of the Show Cause
Notices/Demand Notices were however left to the
senior officer of customs from Group ‘A’ cadre of the
Customs Department. However, they are empowered
to act as “proper officers” not only for issuance of
Show Cause Notice and/or Demand Notices but also
for adjudication of such Show Cause Notices and/or
Demand Notices.”
[Emphasis supplied]
88. In case of re-assessment, such a “proper officer” is bound to pass
a “Speaking Order” to enable the aggrieved party to file an appeal.
Section 17 as it read before 08.04.2011 and after 08.04.2011 is
reproduced below to better appreciate the nuances of the issue:
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Section 17: Assessment of Duty
Before 08.04.2011 Between 08.04.2011 and
28.03.2018
(1) After an importer has entered (1) An importer entering any
any imported goods under imported goods under section 46,
section 46 or an exporter has or an exporter entering any export
entered any export goods under goods under section 50, shall,
section 50, the imported goods save as otherwise provided in
or the export goods, as the case section 85, self-assess the duty,
may be, or such part thereof as if any, leviable on such goods.
may be necessary may, without
undue delay, be examined and
tested by the proper officer.
(2) After such examination and (2) The proper officer may
testing, the duty, if any, leviable verify the self-assessment
on such goods shall, save as of such goods and for this
otherwise provided in section 85, purpose, examine or test any
be assessed. imported goods or export goods
or such part thereof as may be
necessary.
(3) For the purpose of assessing (3) For verification of self-
duty under sub-section (2), the assessment under sub-section
proper officer may require the (2), the proper officer may require
importer, exporter or any other the importer, exporter or any other
person to produce any contract, person to produce any contract,
broker’s note, policy of insurance, broker’s note, insurance policy,
catalogue or other document catalogue or other document,
whereby the duty leviable on the whereby the duty leviable on
imported goods or export goods, the imported goods or export
as the case may be, can be goods, as the case may be, can
ascertained, and to furnish any be ascertained, and to furnish
information required for such any information required for
ascertainment which is in his such ascertainment which is in
power to produce or furnish, and his power to produce or furnish,
thereupon the importer, exporter and thereupon, the importer,
or such other person shall produce exporter or such other person
such document and furnish such shall produce such document or
information. furnish such information.
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(4) Notwithstanding anything (4) Where it is found on verification,
contained in this section, imported examination or testing of the
goods or export goods may, prior to goods or otherwise that the self-
the examination or testing thereof, assessment is not done correctly,
be permitted by the proper officer the proper officer may, without
to be assessed to duty on the basis prejudice to any other action which
of the statements made in the entry may be taken under this Act, re-
relating thereto and the documents assess the duty leviable on such
produced and the information goods. Amendment of section 18.
furnished under sub-section (3);
but if it is found subsequently on
examination or testing of the goods
or otherwise that any statement
in such entry or document or any
information so furnished is not true
in respect of any matter relevant
to the assessment, the goods may,
without prejudice to any other
action which may be taken under
this Act, be re-assessed to duty.
(5) Where any assessment done (5) Where any re-assessment
under sub-section (2) is contrary done under sub-section (4) is
to the claim of the importer or contrary to the self-assessment
exporter regarding valuation of done by the importer or exporter
goods, classification, exemption regarding valuation of goods,
or concessions of duty availed classification, exemption or
consequent to any notification concessions of duty availed
therefor under this Act, and in consequent to any notification
cases other than those where issued therefor under this Act
the importer or the exporter, as and in cases other than those
the case may be, confirms his where the importer or exporter,
acceptance of the said assessment as the case may be, confirms
writing, the proper officer shall pass his acceptance of the said re-
a speaking order within fifteen days assessment in writing, the proper
from the date of assessment of the officer shall pass a speaking order
bill of entry or the shipping bill, as on the re-assessment, within
the case may be. fifteen days from the date of re-
assessment of the bill of entry
or the shipping bill, as the case
may be.
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[(6) Where re-assessment has
not been done or a speaking
order has not been passed on
re-assessment, the proper officer
may audit the assessment of
duty of the imported goods or
export goods at his office or at
the premises of the importer or
exporter, as may be expedient,
in such manner as may be
prescribed.] * Explanation.— For
the removal of doubts, it is hereby
declared that in cases where an
importer has entered any imported
goods under section 46 or an
exporter has entered any export
goods under section 50 before the
date on which the Finance Bill,
2011 receives the assent of the
President, such imported goods
or export goods shall continue to
be governed by the provisions of
section 17 as it stood immediately
before the date on which such
assent is received.”

89. The examination of Section 17, as amended vide the Finance
Act, 2011 vis-à-vis the provisions of the old Section 17 as it stood
prior to 08.04.2011, highlights the following major changes:
(a) Self-assessment of duty: The concept of self-assessment of
duty was introduced by way of the amendment to Section 17
wherein there is no role of the proper officer to assess the duty
at the first instance. The onus for providing the duty leviable
has been shifted to the assessee itself.
(b) Discretion to verify: Sub-section (2) of the new Section 17
states that “The proper officer may verify the self-assessment
of the goods…”. The use of the word “may” indicates two
things:
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(i) that the actions to be taken by the proper officer under
the old Section 17 are no longer compulsory. The proper
officer may choose to accept the self-assessment made
by the assessee, thereby becoming functus officio and
there is no compulsion on him or her to examine or test
any goods for reaching a first instance assessment;
(ii) The proper officer is not involved in the assessment of
duty under Section 17 at the first instance except for his
or her role in accepting or not accepting the self-assessed
duty. There can be three situations that may result from
such limited role of the proper officer:
• The proper officer accepts the self-assessed duty
without verification of such duty under sub-section
(2) of the new Section 17,
• The proper officer accepts the self-assessed duty after
verifying the same in accordance with sub-sections
(2) and (3) of the new Section 17,
• The proper officer does not accept the self-assessed
duty after verifying the same in accordance with
sub-sections (2) and (3) of the new Section 17, in which
case, the re-assessment of duty will be undertaken
by the proper officer as per sub-sections (4) and (5)
of the new Section 17.
In the first two cases, the scope of the function of the proper
officer is limited. Such proper officer is not entitled to exercise
the function of the assessment of duty, which is a noteworthy
deviation from the earlier procedure.
The proper officer is entitled to exercise his or her functions of
re-assessment of duty only if the verification process shows
that the self-assessment done by the assessee was incorrect.
(c) Condition precedent for re-assessment: It is worthwhile to
note that the old Section 17 allowed for self-assessment of duty,
only under sub-section (4) and that too with the permission of
the proper officer. However, upon a subsequent finding that the
statements made by the assessee were not true, the proper
officer was entitled to re-assess the duty so levied. Therefore,
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re-assessment was allowed under both the old and the new
Section 17 only after a self-assessment by the assessee. The
only point of difference with respect to re-assessment is that
self-assessment was not a matter of course prior to the
amendment and was possible only upon the proper officer
permitting for the same. After 08.04.2011, self-assessment
is ipso jure the procedure and has replaced the assessment
process previously undertaken by the proper officer.
(d) Scheme of Section 17(5): The old Section 17(5) requires the
proper officer to provide a speaking order within 15 days of the
date of assessment of duty if the same is contrary to the claim
of the assessee or is not accepted in writing by the assessee.
The new Section 17(5) is analogous to the old sub-section (5)
except that it requires a speaking order within 15 days from the
date of the “re-assessment” of duty. Such change shows the
legislative intent to transfer the process of “assessment” under
the old Section 17 to the stage of “re-assessment” under the
new Section 17 and replace the “assessment” to be done by
the proper officer under the old Section 17 with the process of
“self-assessment”.
90. These changes highlight that the competence of the proper officer
to conduct “assessment” is completely taken away by the legislature
vide the amendment to Section 17. The new Section 17 empowers
the proper officer to perform the functions of verification of self-
assessment and subsequent re-assessment, if found necessary.
However, such re-assessment is not a mandatory function on the
same footing as “assessment” under the old Section 17. Therefore,
in our considered view the scope of the functions of the proper officer
under the new Section 17 is limited.
91. It is evident from the aforesaid that the attention of this Court in Canon
India (supra) was not drawn to the important changes brought to
Section 17 of the Act, 1962 vide Section 38 of the Finance Act, 2011
with effect from 08.04.2011.
92. The observation in paragraph 13 in Canon India (supra) that “where
one officer has exercised his powers of assessment, the power to
order reassessment 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” has been made
[2024] 12 S.C.R. 277

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without taking note of the changes to Section 17 of the Act, 1962
with effect from 08.04.2011.
93. Similarly, the observation in paragraph 14 in Canon India (supra) is
erroneous. The relevant paragraph is reproduced below:
“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, the conclusion that an officer who did the assessment,
could only undertake reassessment under Section 28(4) was arrived at
without taking note of the abovementioned amendment to Section 17
of the Act, 1962 with effect from 08.04.2011 vide Section 38 of
the Finance Act, 2011. The judgment in Canon India (supra) also
recorded an erroneous finding that the function of re-assessment
is with reference to Section 28(4) when in fact it is an exercise of
function under Section 17.
94. Further, in Canon India (supra) the subject show cause notice was
dated 19.09.2014 in respect of the Bill of Entry filed on 20.03.2012.
This Court appears to have erroneously applied the provisions of
Section 17 of the Act, 1962, as they stood prior to 08.04.2011 as
opposed to the amended Section 17 which ought to have been
applied.

iv. Scheme of Sections 17 and 28 of the Act, 1962
95. Section 17 read with Sections 46 and 47 of the Act, 1962 deals
with the assessment and re-assessment at the first instance that
is, upon entry of the consignments and clearance of bill(s) of
entry. The amendment to Section 17 introduces the process of
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self-assessment and subsequent re-assessment upon verification
by the proper officer, if so required, for undertaking a check at the
first instance.
96. The proceedings under Section 28 are subsequent to the completion
of the process set out in Section 17 of the Act, 1962. The procedure
envisaged under Section 28 is in the nature of a quasi-judicial
proceeding with the issuance of the show cause notice by the proper
officer followed by adjudication of such notices by the field customs
officers. It is also worth noting that in the case of DRI, the proceedings
under Section 28 start only after an investigation has been undertaken
by DRI. This is reaffirmed by Circular No. 4/99-Cus dated 15.02.1999
and Circular No. 44/2011-Customs dated 23.11.2011. Therefore, the
nature of review under Section 28 is significantly different from the
nature of assessment and re-assessment under Section 17. The ambit
of Section 28 has also been restricted to the review of assessments
and re-assessments done under Section 17 for ascertaining if there
has been a short-levy, non-levy, part-payment, non-payment or
erroneous refund.
97. Keeping this statutory scheme in mind, we are unable to subscribe to
the view taken in both Sayed Ali (supra) and Canon India (supra),
namely, that the vesting of the functions of assessment and re-
assessment under Section 17 is a threshold, mandatory condition
for a proper officer to perform functions under Section 28. This
scheme does not flow from the scheme of the statute and was
judicially read in to avoid the possibility of chaos and confusion due
to the potential for multiple proper officers exercising jurisdiction
under Section 28. We find that such apprehensions of misuse are
unfounded considering that no substantial empirical evidence has
been brought forth by the respondents in this case to support such
a view. Regardless, the the parameters under Section 28 cannot be
reduced to an administrative review of assessment/re-assessment
done under Section 17.
98. We are conscious of the fact that Section 110AA of the Act, 1962, which
has been introduced by the Finance Act, 2022, stipulates that a show
cause notice under Section 28 of the Act, 1962 can only be issued
by that “proper officer” who has been conferred with the jurisdiction,
by an assignment of functions under Section 5 of the Act, 1962,
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to conduct assessment under Section 17 of the Act in respect of
such duty. However, we are of the view that the introduction of
Section 110AA doesn’t alter the statutory scheme of Sections 17
and 28 of the Act, 1962 as it stood prior to the introduction of
Section 110AA. The legislature in its wisdom may introduce certain
new provisions keeping in mind the exigencies of administration and
taking into account the evolution of law. However, this would not by
itself mean that the procedure which was being followed prior to the
introduction of such changes was incorrect or in contravention of the
law. The legality and correctness of an action has to be adjudged
based on the statutory scheme prevailing at the time when such action
took place, and incorrectness or invalidity cannot be imputed to it on
the basis of subsequent changes in law. Seen thus, the contention
of the respondents that Section 110AA of the Act, 1962 amounts to
an admission by the petitioner on the invalidity of the legal position
existing prior to its introduction, deserves to be rejected.
99. Therefore, in our considered view, the scheme of Sections 17 and 28
of the Act, 1962 indicates that there cannot be a mandatory condition
linking the two provisions and the interpretation of this Court in the
cases of Sayed Ali (supra) and Canon India (supra) is patently
erroneous.

v. Use of the article ‘the’ in the expression “the proper officer”
100. This Court in Canon India (supra), while laying much emphasis on the
use of the expression “the proper officer” observed that the Parliament
had employed the article “the” instead of “a/an” in Section 28 of the
Act, 1962 so as to give effect to its intention of specifying that the
proper officer referred to in Section 28 is the same officer as the
one referred to in Section 17. The Court further observed that the
use of a definite article instead of an indefinite article is indicative of
the fact that the proper officer referred to in Section 28 is not “any”
proper officer but “the” proper officer assigned with the function of
assessment and reassessment under Section 17.
101. However, there is an error apparent in the aforesaid view.
Undoubtedly, a definite article “the” has been used before “proper
officer” with a view to limit the exercise of powers under Section 28
by a specific proper officer and not any proper officer. But, in the
absence of any statutory linkage between Sections 17 and 28 of the
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Act, 1962 respectively, there was no legal footing for this Court in
Canon India (supra) to hold that “the proper officer” in Section 28
must necessarily be the same proper officer referred to under
Section 17 of the Act, 1962.
102. As we have discussed in the foregoing parts of this judgment, the
statutory scheme of the Act, 1962 necessitates that a proper officer
can only perform specific functions under the Act if he has been
assigned as “the proper officer” to perform such functions by an
appropriate notification issued by the competent authority. Seen thus,
it becomes clear that an officer of Customs can only perform the
functions under Section 28 of the Act, 1962 if such officer has been
designated as “the proper officer” for the purposes of Section 28
by an appropriate notification. The use of the article “the” in the
expression “the proper officer” should be read in the context of that
proper officer who has been conferred with the powers of discharging
the functions under Section 28 by conferment under Section 5. In
other words, the proper officer is qua the function or power to be
discharged or exercised.
103. Thus, the definite article “the” in Section 28 refers to a “proper officer”
who has been conferred with the powers to discharge functions
under Section 28 by virtue of a notification issued by the competent
authority under Section 5. In other words, the use of article “the” in
Section 28 has no apparent relation with the proper officer referred
to under Section 17. The proper officer under Section 28 could
be said to be determinable only in the sense that he is a proper
officer who has been empowered to perform the functions under
Section 28 by means of a notification issued under Section 5 of
the Act, 1962.
104. In Canon India (supra), this Court held that DRI officers did not have
the power of issuing show cause notices under Section 28 as they
did not fall within the meaning of the expression “the proper officers”
used in Section 28 for the reason that they did not possess the power
of assessment under Section 17 of the Act, 1962. However, as we
have discussed in the previous parts of this judgment, contrary to
the aforesaid observations of the Court, DRI officers were notified
as “the proper officer” for the purposes of Sections 17 and 28 of
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the Act, 1962 respectively vide Notification No. 44/2011–Cus–N.T.
dated 06.07.2011 issued by the Central Government. Hence, those
officers of DRI who were designated as “the proper officer” for the
purpose of Section 28 by the aforesaid notification were competent
to issue show cause notices under Section 28.
105. Craies on Statute Law1 has stated that “the language of statutes
is not always that which a rigid grammarian would use, it must
be borne in mind that a statute consists of two parts, the letter
and the sense”. It was observed by this Court in State of Andhra
Pradesh v. Ganesweara Rao, reported in AIR 1963 SC 1850 that
the aforesaid rule of construction that the provisions of a statute
are to be read together and given effect to and that it is the duty
of the court to construe a statute harmoniously has gained general
acceptance. In Management, S.S.L. Rly. Co. v. S.S.R.W. Union
reported in AIR 1969 SC 513, this Court observed that the principle
that literal meaning of the word in a statute is to be preferred is
subject to the exception that if such literal sense would give rise to
any anomaly or would result in something which would defeat the
purpose of the Act, a strict grammatical adherence to the words
should be avoided as far as possible. The above principles would
help us to desist from affording undue stress on the definite article
“the” used before the expression “proper officer” in Section 28 of
the Act, 1962.
vi. DRI officers as proper officers under section 2(34)
106. In Canon India (supra), this Court erroneously concluded that an
officer from the Directorate of Revenue Intelligence (DRI) was not
an officer of customs and therefore cannot function as a “Proper
Officer”. The finding of the Court that the power conferred by the Board
under Notification No. 40/2012-Customs (N.T.) dated 02.05.2012 was
ill-founded is an error apparent.
107. By way of Notification No. 40/2012-Customs (N.T.) dated 02.05.2012,
the Board appointed several persons including the Officers of
Directorate of Revenue Intelligence (DRI) as “Proper Officers” under
Section 2(34) of the Act, 1962.

1 7th Ed., Page 83
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108. Section 2(34) of the Act, 1962 also stood amended under the
Finance Act, 2022. Section 2(34) of the Act, 1962 together with the
amendment is reproduced below:

Section 2(34) of the Customs Section 2(34) of the Customs
Act, 1962 till passing of Finance Act, 1962 after amendment vide
Act, 2022 Finance Act, 2022

“Proper Officer”, in relation to “Proper Officer”, in relation to
any functions to be performed any functions to be performed
under this Act, means the officer under this Act, means the officer
of customs who is assigned of customs who is assigned
those functions by the Board or those functions by the Board or
the Principal Commissioner of the Principal Commissioner of
Customs or Commissioner of Customs or Commissioner of
Section 2(34) of the Customs Section 2(34) of the Customs
Act, 1962 till passing of Finance Act, 1962 after amendment vide
Act, 2022 Finance Act, 2022

Customs. Customs under Section 5.

109. The Notification No. 40/2012-Customs (N.T.) dated 02.05.2012, issued
under Section 2(34) of the Act, 1962 cannot be read in isolation. It
has to be read in conjunction with Section 4(1) of the Act, 1962 and
the Notification issued thereunder.
110. The view that the “Proper Officer” for the purpose of Section 28
and other provisions of the Act, 1962 could only mean the person
who cleared the goods or the officer who succeeds such officer
and not any other officer from any other department requires
reconsideration in view of the changes to the Act, 1962 vide
the Finance Act, 2011 and also in the light of Section 4 and the
notification issued thereunder.
111. This Court in paragraphs 11 to 15 of Canon India (supra) proceeded
on the footing that under the provisions of the Act, 1962, the Board
has no power to appoint “Proper Officers”.
112. As per Section 4 of the Act, 1962, the Board constituted under the
provisions of Central Board of Revenue Act, 1963 is vested with
the power to appoint such persons as it thinks fit to be “officers of
customs”.
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113. Under sub-section (1) to Section 4(1) of the Act, 1962, the Board
may appoint such person as Officers of Customs as it thinks fit.
Under Section 4(2) of the Act, 1962 the Board can even authorize
a Chief Commissioner of Customs or a Joint or Assistant or Deputy
Commissioner of Customs to appoint any officers below the rank of
Assistant Commissioner of Customs as an “officer of customs”. It
appears that this aspect was also not brought to the notice of this
Court in Canon India (supra).
vii. Section 4 of the Act, 1962
114. For an easy reference, Section 4 of the Act, 1962 is reproduced below:
“Section 4 : Appointment of “Officers of Customs”:
1) The Board may appoint such persons as it thinks fit
to be Officers of Customs.
2) Without prejudice to the provisions of sub-section (1),
[Board may authorise a Principal Chief Commissioner
of Customs or a Chief Commissioner of
Customs Principal Commissioner of Customs
or Commissioner of Customs) or Joint or Assistant
Commissioner of Customs or Joint or Assistant
Commissioner of Customs or Deputy Commissioner
of Customs to appoint officers of customs below the
rank of Assistant Commissioner of Customs.]”
115. It is relevant to note that it is only an officer of customs, appointed
under Section 4(1) of the Act, 1962 who can be designated as the
“proper officer” as defined in Section 2(34) of the Act, 1962 by a
notification. The notifications issued under Section 2(34) and 4(1) of
the Act, 1962 are nothing but an internal arrangement for the purpose
of allocation of work among the officers of customs.
116. In M/s. N.C. Alexander (supra), the High Court has extensively
explained how officers of the DRI are officers of customs. We quote
the relevant observations:
“236. The officers of the Directorate of Revenue Intelligence
(DRI) have already been appointed as “Officers of Customs”
under Notification issued under Section 4(1) of the
Customs Act, 1962 vide Notification of the Government of
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India in the Ministry of Finance (Department of Revenue)
No.186-Cus, dated 4 th August, 1981. The said Notification
was later superseded by Notification No.19/90- Cus (N.T.),
dated 26.04.1990.
237. By Notification No.19/90- Cus (N.T.), dated 26.04.1990,
the officers from the Directorate of Revenue Intelligence
(DRI) were appointed as Collectors and Assistant Collectors
of Customs in the area mentioned in Column-I of the said
notification.
238. Notification No.19/90- Cus (N.T.), dated 26.04.1990
was later superseded by Notification No.17/2002-Cus.
(N.T.) dated 07.03.2002, whereby, various officers from the
Directorate General of Revenue Intelligence and Directorate
of Revenue Intelligence were appointed as Commissioner
of Customs and as Additional Commissioner and Joint
Commissioner of Customs and Deputy Commissioner/
Assistant Commissioner of Customs. Thus, they were
appointed as Officers of Customs. Relevant portion
Notification No.17/2002-Cus. (N.T.), dated 07.03.2002 is
reproduced below:- Directorate of Revenue Intelligence
(D.R.I.) Officers appointed as Customs Officers –
Notification No.19/90 - Cus. (N.T.) superseded. In exercise
of the powers conferred by sub-section (1) of Section 4 of
the Customs Act, 1962 (52 of 1962) and in supersession
of notification of the Government of India in the Ministry
of Finance (Department of Revenue) No.19/90- Customs
(N.T.), dated the 26th April, 1990, the Central Government
appoints the officers mentioned in Column (2) of the
Table below to the Commissioner of Customs, the officers
mentioned in column (3) thereof to be the Additional
Commissioners or Joint Commissioners of Customs
and Officers mentioned in column(4) thereof to be the
Deputy Commissioners or Assistant Commissioners of
Customs for the areas mentioned in the corresponding
entry in column(1) of the said Table with effect from the
date to be notified by the Central Government in the
Official Gazette:-
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Area of Designation of the Officers
Jurisdiction
(1) (2) (3) (4)
Whole of Additional Additional Deputy
India Director Directors Directors, or
or Joint
General, Directors, of Assistant
Directorate Directorate Directors of
General of of Revenue Directorate
Revenue Intelligence of Revenue
Intelligence posted at Intelligence
posted at Headquarters posted at
Headquarters and Zonal/ Headquarters
and Zonal/ regional and Zonal/
regional units. region al
units units
239. Notification No.17/2002-Cus. (N.T.), dated 07.03.2002
came into force on 25.10.2002 vide Notification No.63/2002-
Cus. (N.T.) dated 03.10.2002. Notification No.17/2002-
Cus. (N.T.), dated 07.03.2002 was further amended by
Notification No.82/2014-Cus. (N.T.), dated 16.09.2014.
240. Thus, the officers from the Directorate of Revenue
Intelligence have been appointed as “Officers of Customs”
under Section 4 of the Customs Act, 1962 and therefore
they are “Proper Officers” for the purpose of Section 2(34)
of the Customs Act, 1962. This aspect was not brought
to the attention of the Hon’ble Supreme Court in Canon
India Private Ltd. case referred to supra.
241. With a view to streamline the allocation of work
and for the purposes of Section 17 and Section 28 of
the Customs Act, 1962, Notification No. 44/2011-Cus.
(N.T.), dated 06.07.2011 was issued by the Board under
Section 2(34) of the Act.
242. Notification No.44/2011-Cus. (N.T.), dated 06.07.2011
was issued under Section 2(34) of the Customs Act, 1962
for the purpose of identifying officers of customs for
exercising the power and function under the Customs
Act,1962.
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243. Notification No.44/2011-Cus. (N.T.), dated 06.07.2011
was later amended by Notification No.53/2012-Cus.
(N.T.) dated 21.06.2012 and still later by Notification
No.43/2019-Cus. (N.T.) dated 18.06.2019 and eventually
has been rescinded/superseded by Notification
No.25/2022-Cus. (N.T.) dated 31.03.2022 in tune with
the amendment proposed in the Finance Bill, 2022
and passed by Finance Act, 2022.
244. Among various officers of the Customs, following
officers were also assigned to act and function as the
“Proper Officer” under Notification No.44/2011 – Cus.
(N.T.) dated 06.07.2011:-
TABLE

Sl.No. Designation of the officers
(1) (2)
1. Additional Director Generals, Additional Directors
or Joint Directors, Deputy Directors or Assistant
Directors in the Directorate General of Revenue
Intelligence.
2. Commissioners of Customs (Preventive),
Additional Commissioners or Joint Commissioners
of Customs (Preventive), Deputy Commissioners
or Assistant Commissioners of Customs
(Preventive).
3. Additional Director Generals, Additional Directors
or Joint Directors, Deputy Directors or Assistant
Directors in the Directorate General of Central
Excise Intelligence.
4. Commissioners of Central Excise, Additional
Commissioners or Joint Commissioners of
Central Excise, Deputy Commissioners or
Assistant Commissioners of Central Excise.

245. Thus, over a period of time, the officers of Directorate
of Revenue Intelligence (DRI) who are primarily drawn
from the Customs Department were also given the task
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of issuing show cause notice and adjudicating the same
in terms of Notifications issued as “Proper Officer”, as
defined in Section 2(34) of the Customs Act, 1962.
246. Now, under the amended Section 2(34), the word
“under Section 5” has been inserted. Thus, what was
implicit in the Customs Act, 1962 has now been made
explicit in the amendment to the Customs Act, 1962 vide
Finance Act, 2022.
247. As per Section 5(1) of the Act, an “Officer of
Customs” may exercise the powers and discharge the
duties conferred or imposed on him under the Customs
Act, 1962, subject to such conditions and limitations as
the Board may impose.
248. The power to be exercised may be subject to such
conditions and limitations as the Board may impose on
such an “Officer of Customs”. Such officers can also
exercise the powers and discharge the duties conferred
or imposed on any other officers of customs who is
subordinate to such officers. This aspect was also not
brought to the attention of the Hon’ble Supreme Court in
Canon India Private Limited Vs. Commissioner of Customs
case referred to supra.
249. Only exception that has been provided was in Sub-
Section (3) to Section 5 of the Act. As per Sub-Section 3
to Section 5 of the Act, a Commissioner (Appeals) cannot
exercise the power and discharge the duties conferred
or imposed on an “Officer of Customs” other than those
specified in Section 108 of the Act and Chapter XV deals
with the Appeals and Revisions.
250. Section 5 of the Customs Act, 1962 has also been
amended in the Finance Act, 2022. Sub-Section (1A), (1B)
and Sub-Section (4) and (5) to Section 5 of the Customs
Act, 1962 have been now inserted. Section 5 as it stood
prior to amendment and as it stands after amendment
read as under:-
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TABLE

5. Powers of Officers of Customs of the Customs
Act, 1962
Before the After the 2022 amendment
amendment Section
(1) Subject to such conditions and limitations as the Board
may impose, an officer of customs may exercise the powers
and discharge the duties conferred or imposed on him
under this Act.
1(A) : Without prejudice to
the provisions contained in
subsection (1), the Board may, by
notification, assign such functions
as it may deem fit, to an officer
of customs, 91 who shall be the
proper officer in relation to such
functions.
(1B) Within their jurisdiction
assigned by the Board, the
Principal Commissioner of
Customs or Commissioner of
Customs, as the case may be,
may, by order, assign such
functions, as he may deem fit, to
an “Officer of Customs”, who shall
be the “Proper Officer” in relation
to such functions.”
(2) An Officer of Customs may excise the powers and
discharge the duties conferred or imposed under this Act
on any other officer of Customs who is subordinate to him.
(3) Notwithstanding anything contained in this Section, a
Commissioner (Appeals) shall not exercise the powers and
discharge the duties conferred or imposed on an officer
of customs other than those specified in Chapter XV and
Section 108.
“(4) In specifying the conditions
and limitations referred to in
sub-section (1), and in assigning
functions under sub-section (1A),
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the Board may consider any one
or more of the following criteria,
including, but not limited to––
a) territorial jurisdiction; b) persons
or class of persons; c) goods or
class of goods; d) cases or class
of cases; e) computer assigned
random assignment; f) any other
criterion as the Board may, by
notification, specify.
(5) The Board may, by notification,
wherever necessary or
appropriate, require two or more
officers of customs (whether or
not of the same class) to have
concurrent powers and functions
to be performed under this Act.”.

251. During the interregnum in 2012, a more
comprehensive notification was issued vide
Notification No.40/2012-Cus. (N.T.), dated 02.05.2012.
This notification fell for consideration in Canon India
Private Limited Vs. Commissioner of Customs, 2021
(376) E.L.T.3(S.C). However, No.40/2012-Cus. (N.T.),
dated 02.05.2012 cannot be read in isolation. It had to
be read along with notifications issued under Section
4 of the Customs Act, 1962.
252. Notification No.40/2012-Cus. (N.T.), dated 02.05.2012
was also amended from time to time and has now
been eventually rescinded/superseded by Notification
No.26/2022-Cus. (N.T.), dated 31- 3-2022 in tune with
the amendment proposed in the Finance Bill, 2022 and
passed by Finance Act, 2022.
253. Both Notification No.44/2011-Cus. (N.T.), dated
06.07.2011 and Notification No. 40/2012-Cus. (N.T.), dated
02.05.2012 as amended from time to time have also not
been challenged directly by any of the petitioners.
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254. Although, the vires of Notification No.40/2012-
Cus. (N.T.), dated 02.05.2012 was neither challenged
or questioned before the Court in Canon India Private
Limited Vs. Commissioner of Customs, 2021 (376)
E.L.T.3(S.C) nor the issue of jurisdiction was canvassed
before the Tribunal, the Hon’ble Supreme has held that
the officers of the Directorate of Revenue Intelligence
were not “Proper Officers” as they are not Officers
of Customs and therefore there had to be issue of
an independent Notification under Section 6 of the
Customs Act, 1962.”
[Emphasis supplied]

viii. Section 6 of the Act, 1962
117. This Court in Canon India (supra) made certain observations on the
purport of Section 6 of the Act, 1962 and held that the Notification
No. 40/2012 dated 02.05.2012 which empowered the DRI officers to
perform functions under Section 28 was invalid. The relevant portion
of the judgment is reproduced below:
“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
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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.”
[Emphasis supplied]
118. It was held that Section 6 is the only section which provides for the
entrustment of the functions of customs officers to other officers
of the Central or State Government or local authority. As a result
of the judgment in Canon India (supra), the respondents herein
vociferously argued that Section 5 of the Act, 1962 only deals with
the powers and duties and not functions and it is Section 6 which
refers to functions. Such argument proceeded on the erroneous
footing that any notification empowering the DRI should have been
issued under Section 6 of the Act, 1962 and not having been done
so, the show cause notice issued by the DRI was without jurisdiction.
119. Section 6 of the Act, 1962 reads thus:
“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 functions of the Board or any officer
of customs under this Act.”
[Emphasis supplied]
120. It is evident on a plain reading of Section 6 of the Act, 1962 referred
to above that the same contemplates the entrustment of the functions
of the Board or any officer of customs under the Act, 1962 to any of
the officers of the Central or the State Government or a local authority.
Such entrustment could be either conditional or unconditional. As
per Section 6 of the Act, 1962, the Central Government may by
notification in the Official Gazette entrust the functions of the Board
or the officers of Customs to any of the following officers, namely,
any officer of:
(i) The Central Government; or
(ii) The State Government; or
(iii) A local authority.
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121. Section 6 replaced Section 8 of the erstwhile Sea Customs Act, 1878
under which the powers of officers of customs, at places where there
is no Customs House, are exercised by the land revenue officers of
the district. This is no longer necessary as the Central Excise officers
are available all over the country. Further the powers of customs
officers at times need to be conferred on other officers, like police
officers. Section 6, therefore, makes a general provision empowering
the Central Government to entrust the functions of the Board or an
officer of customs to any officer of the Central or State government
or a local authority.
122. The object of this Section is to confer powers of search, seizure,
arrest and recording of statements, to the officers working in border
states like officers of police service, Border Security Force, Tehsildar,
Indo Tibet Border Police Force and others. Similarly, officers working
in the coast guard or the navy may also be given such powers as
they may be involved in anti-smuggling operations.
123. The Board has notified entrustment of powers to various officers
working in different departments either under the State services or
Central services from time to time. An illustration of this is M.F.(D.R.)
Notification No. 161-Cus. dated the 22.06.1963 which empowered
specified officers of DRI with the power to search premises. It is
worth noting that this notification under Section 6 was issued prior
to the notification no. 17/2002 dated 07.03.2002.
124. Notification No. 17/2002 dated 07.03.2002 was issued under
Section 4(1) of the Act appointing DRI officers as officers of customs.
The powers of officers of customs to discharge duties under the Act
is derived from Section 5.
125. A plain reading of Section 6 of the Act, 1962 referred to above,
makes it abundantly clear that it applies only to officers from
departments other than the officers of the customs under Section 4
of the Act, 1962. The officers of DRI are not any other officers of the
Central Government or the State Government or the local authority
to be entrusted with the functions of the Board and the Customs
Officers. It has been rightly observed by the High Court of Madras
in M/s N.C. Alexander (supra) that post 07.03.2002, a notification of
the Central Government under Section 6 is not required to recognise
the officers from DRI as officers of customs.
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126. The observations of the High Court in M/s N.C. Alexander (supra)
in the aforesaid context with which we are in complete agreement
are reproduced hereinbelow:
“269. By such entrustment, these officers of other
Departments do not become Officers of Customs.
They can merely function as such officers. Since
entrustment under Section 6 is on the officers from
other department, the Parliament by design has given
the powers to the Central Government and not to the
Board.
270. As the Officers from the Directorate of Revenue
Intelligence, Ministry of Finance (MOF) are already “Officers
of Customs” before their induction and deputation to the
Board in various Directorates, there is no impediment on
their being appointed as proper officers for the purpose
of Section 2(34) of the Customs Act, 1962.
271. Merely because the Officers of the Customs and
Central Excise Department are selected and are deputed
in the respective Directorates does not mean that they
cease to be Officers of the respective Departments as
these Directorates are created only to assist the Board
to implement the object of respective fiscal enactments. It
is an internal arrangement within the Ministry of Finance,
Department of Revenue (DRI).
272. If Section 3 and Section 4 of the Act and the
Notification issued thereunder referred to supra were
perhaps brought to the attention of the Hon’ble Supreme
Court in Canon India Private Limited Vs. Commissioner of
Customs, 2021 (376) E.L.T.3(S.C.), the Hon’ble Supreme
Court would have given a different interpretation. In any
event, these discussion are academic in the light of the
validation in Section 97 of the Finance Act, 2022.
273. It must also be remembered that the “Officers of
Customs” in Section 3(1)(a) to (h) of the Customs Act, 1962
(as amended under Section 3(1) (a) to (j) after 2022
amendment) are Officers from Group ‘A’ Cadre of the
Customs Department (IRS) like their counterparts from
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the Central Excise Department as Central Tax Officers
under GST.
274. A reading of Section 2(34) with Section 4 of
the Customs Act, 1962 also makes it clear that the
expression “proper officer” means the “Officer of
Customs” who has been assigned those functions
either by the Board or by the Principal Commissioner
of Customs or by Commissioner of Customs in relation
to any function to be performed under the Act.
275. Notifications which have been issued to appoint
these officers from Directorate of Revenue Intelligence
(DRI) to act as “Proper Officers” are enabling
Notification notwithstanding the fact that they are
already “Officers of Customs” under Notification
issued under Section 4(1) of the Customs Act,1962.
276. Further, the Board can also authorize the Principal
Commissioner of Customs or Chief Commissioner of
Customs or Principal Chief Commissioner or Commissioner
of Customs or Joint or Assistant or Deputy Commissioner
of Customs, to appoint Officers of Customs below the rank
of Assistant Commissioner of Customs. Thus, the following
Group ‘B’ Executive - Gazetted and Non-Gazetted Officers
assist in the initial stage of assessment of goods as:-

Sl. No. Group ‘B’ Executive Group ‘B’ Executive
Gazetted Officer Non – Gazetted Officer
1 Superintendent of Preventive Officers
Customs (Preventive) (Customs)
2 Appraiser of Customs Examiner (Customs)

277. As mentioned above, assessment is neither by the
Group ‘B’ Executive – Gazetted Officer nor by Group ‘B’
Executive – Non-Gazetted Officer after 08.04.2011. Only,
prior to 08.04.2011, the assessment of goods at the port
was vested with the Group ‘B’ Executive – Gazetted
Officer. However, after the said date, the fundamental of
assessment has undergone a sea change and changed
permanently as mentioned above.
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278. These fundamental changes brought to the manner of
the assessment under the Customs Act, 1962 with effect
from 08.04.2011 appear to have not been brought to the
attention of the Hon’ble Supreme Court and therefore the
assumption in the paragraph Nos.12 to 15 in the case of
Canon India Private Limited Vs. Commissioner of Customs,
2021 (376) E.L.T.3(S.C.) may require a re-consideration
insofar as pending cases before the Hon’ble Supreme
Court and other Courts.”
[Emphasis supplied]
127. Mr. N. Venkataraman, the Ld. ASG is correct in his submission that
the distinction sought to be made between Section 5 and Section 6
of the Act, 1962 (powers and duties vis-à-vis functions) could be
said to be imaginary and may have very serious legal implications.
128. The assignment of functions of the proper officer for the purposes
of any section under the Act to an officer of customs is expressly
mentioned in Section 2(34). Section 5 empowers the customs officer
to discharge the duties of proper officer so conferred. Even prior
to the amendment to Sections 2(34) and 5, this could be the only
understanding with respect to the question of entrustment of functions
of the proper officer to a customs officer.
129. In our view, the assignment of functions of proper officers as
mentioned in Section 2(34) and entrustment of functions of customs
officers as mentioned in Section 6 operate on different planes. The
assignment of functions of the proper officer is to be done only to
officers of customs (whether they be appointed under Section 4 or
entrusted with certain functions under Section 6). There may be some
overlap between the assignment of functions of proper officers under
Section 2(34) read with Section 5 and the entrustment of functions
of officers of customs under Section 6 in some instances but there
can be no scenario in which we can hold that the “functions” under
Section 6 and Section 2(34) are congruent.
130. One of the bases for the decision in Canon India (supra) was that no
entrustment of functions under Section 6 was done in favour of the
DRI officers. This, however, is a glaring misapplication of Section 6
of the Act and is in ignorance of the applicable law which is in fact
Sections 2(34) read with Section 5 of the Act, 1962. Therefore, in light
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of the judgment of this Court in Yashwant Sinha (supra), we find
that it is necessary to allow this review petition to do complete justice.

ix. Observations on the constitutional validity of Section 28(11)
of the Act, 1962
131. The question as to who are the “proper officers” for the purpose
of issuance of show cause notices under Section 28 was raised
before the High Court of Delhi in the case of Mangali Impex (supra).
The specific challenge therein was to the constitutional validity
of Section 28(11) of the Act which was inserted by the Customs
(Amendment and Validation) Act, 2011 (the “Validation Act”) with
effect from 16.09.2011.
132. A Division Bench of the High Court held that sub-section (11) of
Section 28 could not validate the show cause notices issued by the
DRI officers prior to 08.04.2011, i.e., the date when Section 28 was
amended.
133. With a view to understanding the true purport of Section 28(11) and the
issues pertaining thereto, it is necessary to first examine the changes
to Section 28 that were introduced prior to the Validation Act. Section
28 as it stood prior to the Finance Bill 2011 is reproduced below:
“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 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 short-levied 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:
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Provided that where any duty has 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.
Provided further that where the amount of duty which has
not been levied or has been short-levied or erroneously
refunded or the interest payable has not been paid, part
paid or erroneously refunded is one crore rupees or less,
a notice under this sub-section shall be served by the
Commissioner of Customs or with his prior approval by
any officer sub-ordinate to him:
Provided also that where the amount of duty has not been
levied or has been short-levied or erroneously refunded or
the interest payable thereon has not been paid, part paid
or erroneously refunded is more than one crore rupees, no
notice under this subsection shall be served except with
the prior approval of the Chief Commissioner of Customs.
Explanation : Where the service of the notice is stayed
by an order of a court, the period of such stay shall be
excluded in computing the aforesaid period of one year
or six months or five years, as the case may be.
(2) The proper officer, after considering the representation,
if any, made by the person on whom notice is served
under sub-section (1), shall determine the amount of duty
or interest due from such person (not being in excess of
the amount specified in the notice) and thereupon such
person shall pay the amount so determined.
(2A) Where any notice has been served on a person under
sub-section (1), the proper officer –
(i) in case any duty has not been levied or has been
short-levied, or the interest has not been paid or
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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, where it is
possible to do so, shall determine the amount of such
duty or the interest, within a period of one year: and
(ii) in any other case, where it is possible to do so,
shall determine the amount of duty which has not
been levied or has been short-levied or erroneously
refunded or the interest payable which has not been
paid, part paid or erroneously refunded, within a
period of six months,
from the date of service of the notice on the person under
sub-section (1).
(2B) Where any duty has not been levied, or has been
short-levied or erroneously refunded, or any interest
payable has not been paid, part paid or erroneously
refunded, the person, chargeable with the duty or the
interest, may pay the amount of duty or interest before
service of notice on him under sub-section (1) in respect
of the duty or the interest, as the case may be, and inform
the proper officer of such payment in writing, who, on
receipt of such information, shall not serve any notice under
sub-section (1) in respect of the duty or the interest so paid:
Provided that the proper officer may determine the amount
of short-payment of duty or interest, if any, which in his
opinion has not been paid by such person and, then, the
proper officer shall proceed to recover such amount in the
manner specified in this section, and the period of “one
year” or “six months” as the case may be, referred to in
sub-section (1) shall be counted from the date of receipt
of such information of payment.
Explanation 2. For the removal of doubts, it is hereby
declared that the interest under Section 28AB shall be
payable on the amount paid by the person under this
sub-section and also on the amount of short-payment of
duty, if any, as may be determined by the proper officer,
but for this sub-section.
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(2C) The provisions of sub-Section (2B) shall not apply
to any case where the duty or the interest had become
payable or ought to have been paid before the date on
which the Finance Bill 2001 receives the assent of the
President.
(3) For the purposes of sub-section (1), the expression
"relevant date" means,-
(a) in a case where duty is not levied, or interest is not
charged, the date on which the proper officer makes
an order for the clearance of the goods;
(b) in a case where duty is provisionally assessed under
section 18, the date of adjustment of duty after the
final assessment thereof;
(c) in a case where duty or interest has been erroneously
refunded, the date of refund;
(d) in any other case, the date of payment of duty or
interest.”
134. Thereafter, Section 28 was re-cast and a new scheme of the section
was introduced vide the Finance Act, 2011 promulgated with effect
from 08.04.2011. Section 28, as it stands after the amendment, is
reproduced below:
“28. Recovery of duties not levied or short-levied or
erroneously refunded.
(1) Where any duty has not been levied or has been
short- levied or erroneously refunded, or any interest
payable has not been paid, part-paid or erroneously
refunded, for any reason other than the reasons of collusion
or any wilful mis-statement or suppression of facts,-
(a) the proper officer shall, within one year from the
relevant date, serve notice on the person chargeable
with the duty or interest which has not been so
levied 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;
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(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.
(2) The person who has paid the duty along with interest
or amount of interest under clause (b) of sub-section (1)
shall inform the proper officer of such payment in writing,
who, on receipt of such information shall not serve any
notice under clause (a) of that sub-section in respect of
the duty or interest so paid or any penalty leviable under
the provisions of this Act or the rules made thereunder in
respect of such duty or interest.
(3) Where the proper officer is of the opinion that the
amount paid under clause (b) of sub-section (1) falls short
of the amount actually payable, then, he shall proceed
to issue the notice as provided for in clause (a) of that
sub-section in respect of such amount which falls short
of the amount actually payable in the manner specified
under that sub-section and the period of one year shall
be computed from the date of receipt of information under
sub-section (2).
(4) Where any duty has not been levied or has been short-
levied or erroneously refunded, or interest 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 employee of
the importer or exporter, the proper officer shall, within five
years from the relevant date, serve notice on the person
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chargeable with duty or interest which has not been so
levied 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.
(5) 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 the employee of the importer or the exporter,
to whom a notice has been served under sub- section (4)
by the proper officer, such person may pay the duty in full
or in part, as may be accepted by him, and the interest
payable thereon under section 28AA and the penalty equal
to twenty five per cent. of the duty specified in the notice
or the duty so accepted by that person, within thirty days
of the receipt of the notice and inform the proper officer
of such payment in writing.
(6) Where the importer or the exporter or the agent or
the employee of the importer or the exporter, as the case
may be, has paid duty with interest and penalty under
sub-section (5), the proper officer shall determine the
amount of duty or interest and on determination, if the
proper officer is of the opinion-
(i) that the duty with interest and penalty has been
paid in full, then, the proceedings in respect of such
person or other persons to whom the notice is served
under sub-section (1) or sub- section (4), shall,
without prejudice to the provisions of sections 135,
135A and 140 be deemed to be conclusive as to the
matters stated therein; or
(ii) that the duty with interest and penalty that has been
paid falls short of the amount actually payable, then
the proper officer shall proceed to issue the notice
as provided for in clause (a) of sub-section (1) in
respect of such amount which falls short of the amount
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actually payable in the manner specified under that
sub-section and the period of one year shall be
computed from the date of receipt of information
under sub-section (5).
(7) In computing the period of one year referred to in
clause (a) of sub-section (1) or five years referred to in
sub-section (4), the period during which there was any stay
by an order of a court or tribunal in respect of payment of
such duty or interest shall be excluded.
(8) The proper officer shall, after allowing the concerned
person an opportunity of being heard and after
considering the representation, if any, made by such
person, determine the amount of duty or interest due
from such person not being in excess of the amount
specified in the notice.
(9) The proper officer shall determine the amount of duty
or interest under sub-section (8),- (a) within six months
from the date of notice in respect of cases falling under
clause (a) of sub- section (1); (b) within one year from
the date of notice in respect of cases falling under sub-
section (4).
(10) Where an order determining the duty is passed by the
proper officer under this section, the person liable to pay
the said duty shall pay the amount so determined along
with the interest due on such amount whether or not the
amount of interest is specified separately.
Explanation 1 – For the purposes of this section, “relevant
date” means,-
(a) in a case where duty is not levied, or interest is not
charged, the date on which the proper officer makes
an order for the clearance of goods;
(b) in a case where duty is provisionally assessed under
section 18, the date of adjustment of duty after the
final assessment thereof;
(c) in a case where duty or interest has been erroneously
refunded, the date of refund;
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(d) in any other case, the date of payment of duty or
interest.
Explanation 2. - For the removal of doubts, it is hereby
declared that any non-levy, short-levy or erroneous refund
before the date on which the Finance Bill, 2011 receives
the assent of the President, shall continue to be governed
by the provisions of Section 28 as it stood immediately
before the date on which such assent is received.”
135. Parliament, therefore, made changes to the scheme of Section
28 and added the Explanation 2 which stated that any non-levy,
short-levy or erroneous refund before the date of presidential assent
to the Finance Bill, 2011 shall be governed by the provisions of
Section 28 as it stood prior to the amendment.
136. On 06.07.2011, Customs Notification No. 44/2011 was issued under
Section 2(34), which designated inter alia DRI officers as proper
officers for the purposes of Sections 17 and 28 of the Act, 1962
and empowered such officers to perform functions under Section 28
including the function of issuing show cause notices.
137. Subsequently, on 16.09.2011, sub-section (11) of Section 28 came
to be enacted vide the Validation Act. It provided that:
“(11) Notwithstanding anything to the contrary contained in
any judgment, decree or order of any court of law, tribunal
or other authority, all persons appointed as officers of
Customs under sub-section (1) of section 4 before the 6th
day of July, 2011 shall be deemed to have and always had
the power of assessment under section 17 and shall be
deemed to have been and always had been the proper
officers for the purposes of this section.”
138. As stated in the foregoing extract, sub-section (11) was introduced
in the statute to remedy the defects highlighted by this Court in the
case of Sayed Ali (supra) and the same retrospectively empowered
all officers of customs appointed under Section 4(1) before 06.07.2011
to conduct assessments under Section 17 of the Act and to be proper
officers for the purpose of Section 28.
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139. The Statement of Objects and Reasons of the Validation Act
explained that the introduction of Section 28(11) was necessary
because the position of law on the functions of proper officers as
interpreted by this Court in Sayed Ali (supra) and the consequent
invalidation of show cause notices issued by the Commissionerates
of Customs (Preventive), DRI and others, was not the legislative
intent. Parliament clarified that show cause notices issued by officers
of the Commissionerates of Customs (Preventive), DRI, Directorate
General of Central Excise Intelligence (DGCEI) and Central Excise
Commissionerates for demanding customs duty not levied or short
levied or erroneously refunded under Section 28 in respect of goods
imported are valid, irrespective of whether any specific assignment
as proper officer was issued.

140. The Validation Act was first challenged before the High Court of
Bombay in the case of Sunil Gupta (supra) on the grounds that it
is violative of Articles 14, 19 and 21 of the Constitution and that it
fails to take note of Explanation 2 to Section 28. Relying on Sayed
Ali (supra), the petitioners therein challenged the Validation Act on
the ground that it is only the officers of customs who are assigned
functions of assessment including the reassessment and they alone
are competent to issue notice under Section 28.

x. Bombay High Court decision in Sunil Gupta (supra)

141. Similar grounds were taken by the petitioners before the High
Court of Delhi in the case of Mangali Impex (supra) wherein it was
submitted that there was an apparent conflict between Explanation 2
and Section 28(11) which rendered the Validation Act inapplicable
to show cause notices issued prior to 08.04.2011 i.e., the date on
which the new Section 28 came into force. It was further submitted
that Section 28(11), by conferring powers of the proper officer to
multiple sets of customs officers without any territorial or pecuniary
jurisdictional limit, would result in utter chaos and confusion as
envisaged in Sayed Ali (supra) and therefore, does not cure the
defects pointed out therein.

142. The very same argument has been canvassed before us by the
respondents herein. To comprehensively address the submissions
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made before us, we find it necessary to address the following three
issues:
(i) What is the scope of Explanation 2 to Section 28?
(ii) Whether the field of operation of Section 28(11) and Explanation
2 overlaps? In other words, what is the scope of the non-obstante
clause in sub-section (11)?
(iii) Whether Section 28(11) cures the defect pointed out in Sayed
Ali (supra)?
143. Explanation 2 was introduced as a part of the new Section 28 enacted
by the Finance Act, 2011 with effect from 08.04.2011. Explanation 2
to Section 28 reads as follows:
“Explanation 2. - For the removal of doubts, it is hereby
declared that any non-levy, short-levy or erroneous refund
before the date on which the Finance Bill, 2011 receives
the assent of the President, shall continue to be governed
by the provisions of section 28 as it stood immediately
before the date on which such assent is received.”
144. It was vehemently argued on behalf of the respondents that reading
Section 28(11) with Explanation 2 narrows down the period for the
purposes of retrospective validation of the show cause notices
issued and limits the application of sub-section (11) to the period
from 08.04.2011 (enactment of new Section 28) to 16.09.2011
(enactment of the Validation Act). This challenge is based on the
reasoning that the non-obstante clause contained in Section 28(11)
is limited to “…judgment, decree or order of any court of law,
tribunal or other authority…” and does not oust the application of
other provisions of the Act including Explanation 2. It was argued
that the phrase “…this section…” in sub-section (11) when read
harmoniously with Explanation 2 refers to the new Section 28 only
and will not be applicable to the old provision as it stood prior
to 08.04.2011.
145. The determination of the soundness of the aforesaid argument
necessitates a comparison of Section 28, prior to the amendment
and subsequent to the amendment.
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Provisions of old Corresponding Comparison and
Section 28 provisions of new Remarks
[running in continuation from Section 28
sub-sections (1) to (3)]
28. Notice for payment of 28. Recovery of duties
duties, interest, etc. not levied or short-levied
or erroneously refunded.
(1) When any duty has not (1) Where any duty has not The legislature vide
been levied or has been short- been levied or has been the amendment,
levied or erroneously refunded, short-levied or erroneously has removed the
or when any interest payable refunded, or any interest distinction between
has not been paid, part paid payable has not been paid, the purposes for
or erroneously refunded, the part-paid or erroneously which the imports
proper officer may, refunded, for any reason are to be used. Sub-
other than the reasons of section (1)(b) of the
(a) in the case of any import
collusion or any wilful mis- old Section 28 is
made by any individual for his
statement or suppression analogous to the
personal use or by government
of facts, sub-section (1)(a) of
or by any educational, research
the new Section 28.
or charitable institution or (a) the proper officer shall,
The only change
hospital, within one year; within one year from the
that has been
relevant date, serve notice
(b) in any other case, within made herein is the
on the person chargeable
six months, from the relevant period of limitation
with the duty or interest
date, serve notice on the for service of show
which has not been so
person chargeable with the cause notice which
levied or which has been
duty or interest which has has been increased
short-levied or short-paid
not been levied or charged or from six months to
or to whom the refund has
which has been short-levied or one year.
erroneously been made,
part paid or to whom the refund
requiring him to show
has erroneously been made,
cause why he should not
requiring him to show cause
pay the amount specified
why he should not pay the
in the notice;
amount specified in the notice:
Provided that where any duty (4) Where any duty has In respect of the
has been levied or has been not been levied or has provision relating
short- levied or the interest been short- to issuance of show
has not been charged or has levied or erroneously cause notice for non-
been part paid or the duty or r e f u n d e d , o r i n t e r e s t levy, short-levy, not-
interest has been erroneously payable has not been paid, paid, part-paid and
refunded by reason of collusion part-paid or erroneously erroneous refund
or any wilful mis-statement or refunded, by reason of,- of duty by reasons
suppression of facts by the of collusion, wilful
importer or the exporter or (a) collusion; or mis-statement or
the agent or employee of the (b) any wilful mis-statement; s u p p r e s s i o n o f
importer or exporter, the or facts, no change
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provisions of this sub-section (c) suppression of facts, h a s b e e n m a d e
shall have effect as if for the by the importer or the and the time period
words “one year” and “six exporter or the agent or of five years for
months”, the words “five years” employee of the importer service of notice
were substituted. or exporter, the proper has been retained.
officer shall, within five
The legislature has
years from the relevant
further clarified the
date, serve notice on the
procedure following
person chargeable with
the service of notice.
duty or interest which has
not been so levied or which Sub-section (5) of
has been so short-levied the new Section
or short-paid or to whom 28 provides for the
the refund has erroneously levy of interest on
been made, requiring him the amount due
to show cause why he and permits part-
should not pay the amount p a y m e n t o f t h e
specified in the notice. amount mentioned
in the notice to
(5) Where any duty has not
the extent that the
been levied or has been
short-fall in duty has
short- levied or the interest
been accepted by
has not been charged or
the notice.
has been part- paid or the
duty or interest has been Sub-section (6) of
erroneously refunded by the new Section
reason of collusion or 28 lays down the
any wilful mis-statement manner in which
or suppression of facts the proceedings
by the importer or the f o l l o w i n g t h e
exporter or the agent or the service of the show
employee of the importer cause notice will
or the exporter, to whom be either closed on
a notice has been served payment of the full
under sub- section (4) by amount mentioned
the proper officer, such T h e l e g i s l a t u r e
person may pay the duty h a s r e m o v e d
in full or in part, as may be t h e p e c u n i a r y
accepted by him, and the d i s t i n c t i o n a n d
interest payable thereon t h e c o n s e q u e n t
under section 28AA and a p p r o v a l s f r o m
t h e p e n a l t y e q u a l t o different authorities
twenty- five per cent of the for issuance of show
duty specified in the notice cause notices.
or the duty so accepted by
that person, within thirty
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days of the receipt of the
notice and inform the
proper officer of such
payment in writing.
(6) Where the importer or
the exporter or the agent
or the employee of the
importer or the exporter,
as the case may be, has
paid duty with interest and
penalty under sub-section
(5), the proper officer shall
determine the amount of
duty or interest and on
determination, if the proper
officer is of the opinion-
(i) that the duty with
interest and penalty has
been paid in full, then,
the proceedings in respect
of such person or other
persons to whom the
notice is served under
sub-section (1) or sub-
section (4), shall, without
prejudice to the provisions
of sections 135, 135A
and 140 be deemed to
be conclusive as to the
matters stated therein; or
(ii) that the duty with
interest and penalty that
has been paid falls short
of the amount actually
payable, then the proper
o ff i c e r s h a l l p r o c e e d
to issue the notice as
provided for in clause (a) of
sub-section (1) in respect
of such amount which
falls short of the amount
actually payable in the
manner specified under
that sub-section and the
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period of one year shall be
computed from the date
of receipt of information
under sub-section (5).

Provided further that where The legislature
the amount of duty which has has removed
not been levied or has been the pecuniary
short-levied or erroneously distinction and
refunded or the interest the consequent
payable has not been paid, approvals from
part paid or erroneously different authorities
refunded is one crore rupees for issuance of show
or less, a notice under this cause notices.
sub-section shall be served by
the Commissioner of Customs
or with his prior approval by
any officer sub-ordinate to
him:
Provided also that where
the amount of duty has not
been levied or has been
short-levied or erroneously
refunded or the interest
payable thereon has not been
paid, part paid or erroneously
refunded is more than one
crore rupees, no notice
under this sub- section shall
be served except with the
prior approval of the Chief
Commissioner of Customs.
Explanation : Where the (7) In computing the period This is an analogous
service of the notice is stayed of one year referred to in provision.
by an order of a court, the clause
period of such stay shall be
(a) of sub-section (1)
excluded in computing the
or five years referred to
aforesaid period of one year
in sub-section (4), the
or six months or five years,
period during which there
as the case may be.
was any stay by an order
of a court or tribunal in
respect of payment of
such duty or interest
shall be excluded.
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(2) The proper officer, after (8) The proper officer This is an analogous
considering the representation, shall, after allowing the p r o v i s i o n a n d
if any, made by the person on concerned person an p e r t a i n s t o t h e
whom notice is served under opportunity of being heard a d j u d i c a t i o n /
sub-section (1), shall determine and after considering the determination of the
the amount of duty or interest representation, if any, amount specified
due from such person (not made by such person, in the show-cause
being in excess of the amount determine the amount of notice when issued
specified in the notice) and duty or interest due from under sub-section
thereupon such person shall such person not being ( 1 ) o f t h e n e w
pay the amount so determined. in excess of the amount Section 28.
specified in the notice.
(2A) Where any notice has (9) The proper officer shall This is an analogous
been served on a person under determine the amount provision.
sub- section (1), the proper of duty or interest under
Sub-section (9)(a)
officer - sub-section (8),-
of the new Section
(i) in case any duty has not (a) within six months 28 is analogous to
been levied or has been from the date of notice sub-section (2A)(ii)
short-levied, or the interest in respect of cases falling of the old provision
has not been paid or has under clause (a) of sub- and provides for
been part paid or the section (1); a time period of
duty or interest has been six months for
erroneously refunded by (b) within one year from the a d j u d i c a t i o n o f
reason of collusion or any date of notice in respect of n o t i c e s i s s u e d
wilful mis-statement or cases falling under sub- under new Section
suppression of facts, where section (4). 28(1)(a).
it is possible to do so, shall
determine the amount of Sub-section (9)(b)
such duty or the interest, of the new Section
within a period of one year: 28 is analogous to
and sub-section (2A)(i)
of the old provision
(ii) in any other case, where it and provides for a
is possible to do so, shall time period of one
determine the amount of year for adjudication
duty which has not been of notices issued in
levied or has been short- cases of collusion,
levied or erroneously wilful mis-statement
refunded or the interest and suppression of
payable which has not facts.
been paid, part paid or
erroneously refunded, within
a period of six months, from
the date of service of the
notice on the person under
sub- section (1).
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(2B) Where any duty has not (1) … In both the old and
been levied, or has been short- (a) … new Section 28, the
levied or erroneously refunded, law has provided an
or any interest payable has (b) the person chargeable opportunity to the
not been paid, part paid or with the duty or interest, person chargeable
erroneously refunded, the may pay before service of with duty or interest
person, chargeable with the notice under clause (a) on to make payment
duty or the interest, may pay the basis of,- before the show
the amount of duty or interest (i) his own ascertainment c a u s e n o t i c e i s
before service of notice on of such duty; or issued to him and
him under sub-section (1) inform the proper
(ii) the duty ascertained
in respect of the duty or the officer of such
by the proper officer, the
interest, as the case may be, payment in writing.
amount of duty along
and inform the proper officer of
with the interest payable The legislature, in
such payment in writing, who,
thereon under section the new Section
on receipt of such information,
28AA or the amount of 2 8 ( 1 ) ( b ) h a s
shall not serve any notice under
interest which has not clarified the basis
sub-section (1) in respect of
been so paid or part-paid. for ascertainment of
the duty or the interest so paid:
(2) The person who has amount to be paid
paid the duty along with prior to issuance of
interest or amount of show cause notice.
interest under clause (b)
of sub-section (1) shall
inform the proper officer
of such payment in writing,
who, on receipt of such
information shall not serve
any notice under clause
(a) of that sub-section
in respect of the duty or
interest so paid or any
penalty leviable under the
provisions of this Act or the
rules made thereunder in
respect of such duty or
interest.
Provided that the proper officer (3) Where the proper These provisions
may determine the amount officer is of the opinion are analogous.
of short-payment of duty or that the amount paid under
interest, if any, which in his clause (b) of sub-section
opinion has not been paid by (1) falls short of the amount
such person and, then, the actually payable, then, he
proper officer shall proceed shall proceed to issue the
to recover such amount in the notice as provided for in
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manner specified in this clause (a) of that sub-
section, and the period of section in respect of such
“one year” or “six months” amount which falls short
as the case may be, referred of the amount actually
to in sub-section (1) shall be payable in the manner
counted from the date of receipt specified under that sub-
of such information of payment. section and the period
of one year shall be
computed from the date
of receipt of information
under sub-section (2).
Explanation 2. For the removal ( 1 0 ) W h e r e a n o r d e r This provision is
of doubts, it is hereby declared determining the duty is for the recovery of
that the interest under Section passed by the proper interest.
28AB shall be payable on the officer under this section,
amount paid by the person the person liable to pay
under this sub-section and the said duty shall pay
also on the amount of short- the amount so determined
payment of duty, if any, as may along with the interest due
be determined by the proper on such amount whether or
officer, but for this sub-section. not the amount of interest
is specified separately.
(2C) The provisions of sub-
Section (2B) shall not apply to
any case where the duty or the
interest had become payable or
ought to have been paid before
the date on which the Finance
Bill 2001 receives the assent of
the President.
(3) For the purposes of sub- Explanation 1 - For the This provision is
section (1), the expression purposes of this section, identical to the old
“relevant date” means,- “relevant date” means,- provision.
(a) in a case where duty is (a) in a case where duty
not levied, or interest is not is not levied, or interest is
charged, the date on which the not charged, the date on
proper officer makes an order which the proper officer
for the clearance of the goods; makes an order for the
clearance of goods;
(b) in a case where duty
(b) in a case where duty
is provisionally assessed
is provisionally assessed
under section 18, the date of
under section 18, the
adjustment of duty after the
date of adjustment of duty
final assessment thereof;
after the final assessment
thereof;
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(c) in a case where duty or (c) in a case where duty
interest has been erroneously o r i n t e r e s t h a s b e e n
refunded, the date of refund; erroneously refunded, the
date of refund;
(d) in any other case, the date
of payment of duty or interest.” (d) in any other case, the
date of payment of duty
or interest.
Explanation 2. - For the The Explanation 2
removal of doubts, it is was added to the
hereby declared that any n e w S e c t i o n 2 8
non-levy, short-levy or to demarcate the
erroneous refund before date from which the
the date on which the said section shall
F i n a n c e B i l l , 2 0 1 1 become applicable
receives the assent of the and any recoveries
President, shall continue o f d u t y p r i o r t o
to be governed by the such date would
provisions of Section 28 be governed by the
as it stood immediately old Section 28.
before the date on which
such assent is received.”

146. What is discernible from the aforesaid modifications made by the
Parliament is as under:
(a) Distinction in the time-period: In sub-section (1) of new
Section 28, the difference in the purpose of the duty has been
removed and for all cases of short-levy, non-levy, part-payment,
non-payment and erroneous refund except for cases falling under
new Section 28(4), the period of one year has been provided
for the service of the show cause notice, which under the old
provision was six months.
(b) Additional provision in respect of short-levy, non-levy,
part-payment, non-payment and erroneous refund by
reasons of collusion, willful misstatement and suppression
of facts: An additional provision has been inserted by way of
Section 28(5) stipulating that, to the extent the amount mentioned
in the show cause notice has been accepted by the person
chargeable with payment of such duty, the payment of a part
of such amount is allowed.
(c) Self-ascertainment of recovery amount before the issuance
of a show cause notice: Parliament introduced the mechanism
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of self-ascertainment of the recovery amount by the person
chargeable with the payment of duty and payment of such
amounts before the service of a show cause notice, subject to
final adjudication or determination by the proper officer.
(d) Insertion of Explanation 2: For the removal of doubts regarding
the applicable provision for recoveries of duty arising before
and after the enactment of new Section 28, Parliament added
Explanation 2 to clarify that recoveries arising prior to 08.04.2011
shall be governed by old Section 28 of the Act.
147. Having analysed the aforesaid modifications made by Parliament to
old Section 28, we can say with certainty that none of the changes
made by the amendments to Section 28 has any impact on the
competence of the proper officer for the purposes of fulfilment of
functions under Section 28. In our considered view, the only major
change that warrants the clarification provided under Explanation 2
is the distinction with respect to the limitation period for the issuance
of show cause notices.
148. Therefore, the application of sub-section (11), which pertains
only to the empowerment of proper officers to issue show cause
notices under Section 28, cannot be said to be limited only to new
Section 28 but also to the provision as it stood prior to 08.04.2011.
The legislative intent is that sub-section (11) was meant to apply to
Section 28 without any restriction as to time. This is apparent from the
Statement of Objects and Reasons of the Validation Act. Therefore,
the contention of the respondent that the phrase “…this section…” in
sub-section (11) means only new Section 28, which was also accepted
by the High Court of Delhi in Mangali Impex (supra), is erroneous.
149. Since, there is no overlap in the field of operation of Section 28(11)
and Explanation 2, the interpretation of the non-obstante clause in
Section 28(11) and the consequent harmonious construction of the
two provisions in Mangali Impex (supra) is otiose.
150. Thus, we are in complete agreement with the view taken by the High
Court of Bombay in the case of Sunil Gupta (supra) with respect to
the first two questions raised by us in this case. The relevant portion
of that judgment is reproduced below:
“25. As a result of the above discussion and finding that
Explanation 2 has not been dealing with the case, which
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was specifically dealt with by sub- section (11) of section 28
of the Act, that we are of the opinion that the challenge
in the writ petition is without any merit. The Explanation
removes the doubts and states that even those cases
which are governed by section 28 and whether initiated
prior to the Finance Bill 2011 receiving the assent of the
President shall continue to be governed by section 28,
as it stood immediately before the date on which such
assent is received. The reference to the Finance Bill
therein denotes the Bill by the section itself was substituted
by Act 8 of 2011 with effect from April 8, 2011. Prior to
this Bill by which the section was substituted receiving
the assent of the President of India, some cases were
initiated and section 28 was resorted to by the authorities.
Explanation 2 clarifies that they will proceed in terms
of the unamended provision. The position dealt with
by insertion of section 28 (11) is distinct and that is
about competence of the officer. The officers namely
those from the Directorate of Revenue Intelligence
having been entrusted and assigned the functions
as noted above, they are deemed to have been
possessing the authority, whether in terms of section
28 unamended or amended and substituted as above.
In these circumstances, for these additional reasons
as well, the challenge to this sub-section must fail.”
[Emphasis supplied]
151. Further, the finding in Mangali Impex (supra) that Section 28(11) is
overbroad and confers the powers of the proper officer to multiple sets
of customs officers without any territorial or pecuniary jurisdictional
limit which in turn may lead to “utter chaos and confusion” as
highlighted in Sayed Ali (supra), is misconceived in our view. The
apprehension of the petitioner therein was that plurality of proper
officers empowered under Section 28 would result in more than one
show cause notice and a consequent misuse of the provision, which
would be detrimental to the interests of the persons chargeable with
the payment of duty. Although, Mangali Impex (supra) declared
Section 28(11) to be invalid on this ground, it suggested that the
Board should issue instructions in its administrative capacity that once
a show cause notice is issued specifying an adjudicating authority
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subject to such an officer being the proper officer for the purposes of
Section 28, then he or she alone should proceed to adjudicate that
particular show cause notice to the exclusion of all other officers who
may have power in relation to that subject matter. We find this to be a
reasonable construal of the import and application of Section 28(11).
152. It is a settled position of law that the possibility of misuse or abuse of
a law which is otherwise valid cannot be a ground for invalidating it.
This principle of law has been expounded by this Court in the case
of Shreya Singhal v. Union of India reported in (2015) 5 SCC 1.
The relevant portion of the judgment is reproduced below:
“In The Collector of Customs, Madras v. Nathella
Sampathu Chetty & Anr., [1962] 3 S.C.R. 786, this Court
observed: “....This Court has held in numerous rulings, to
which it is unnecessary to refer, that the possibility of the
abuse of the powers under the provisions contained
in any statute is no ground for declaring the provision
to be unreasonable or void. Commenting on a passage
in the judgment of the Court of Appeal of Northern Ireland
which stated:
“If such powers are capable of being exercised
reasonably it is impossible to say that they may not
also be exercised unreasonably” and treating this
as a ground for holding the statute invalid Viscount
Simonds observed in Belfast Corporation v. O.D.
Commission [ 1960 AC 490 at pp. 520-521] : “It
appears to me that the short answer to this contention
(and I hope its shortness will not be regarded as
disrespect) is that the validity of a measure is not to be
determined by its application to particular cases.... If
it is not so exercised (i.e. if the powers are abused) it
is open to challenge and there is no need for express
provision for its challenge in the statute.”
The possibility of abuse of a statute otherwise
valid does not impart to it any element of invalidity.
The converse must also follow that a statute
which is otherwise invalid as being unreasonable
cannot be saved by its being administered in a
reasonable manner. The constitutional validity of
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the statute would have to be determined on the
basis of its provisions and on the ambit of its
operation as reasonably construed. If so judged
it passes the test of reasonableness, possibility
of the powers conferred being improperly used
is no ground for pronouncing the law itself
invalid and similarly if the law properly interpreted
and tested in the light of the requirements set out
in Part III of the Constitution does not pass the test
it cannot be pronounced valid merely because it is
administered in a manner which might not conflict
with the constitutional requirements.” (at page 825)”
[Emphasis supplied]
153. We were apprised by the learned Additional Solicitor General
during the course of the hearing that the Customs department has
been following the protocol suggested in Mangali Impex (supra)
since 1999. Further, no substantial empirical evidence of the misuse of
Section 28(11) which was enacted over a decade ago, was presented
by the parties. Therefore, we are inclined to accept the policy of the
Customs department that once a show cause notice is issued, the
jurisdiction of other empowered proper officers shall be excluded for
such notice. We find that such policy acts as a sufficient safeguard
against the apprehension of chaos or confusion or misuse.
154. Thus, we are of the considered view that the enactment of
sub-section (11) of Section 28 cures the defect pointed out in Sayed
Ali (supra) and the judgment in Mangali Impex (supra) deserves to
be set aside.
155. It follows from the above discussion that sub-section (11) of Section
28 is constitutionally valid, and its application is not limited to the
period between 08.04.2011 and 16.09.2011.
156. For the reasons in the foregoing paragraphs, we hold that the Bombay
High Court judgment in Sunil Gupta (supra) lays down the correct
position of law, whereas the Delhi High Court decision in Mangali
Impex (supra) is incorrect and is consequently set aside.

xi. Amendments made by the Finance Act, 2022
157. The third cluster of the present batch of cases relates to the challenge
to the constitutional validity of Sections 86, 87, 88, 94 and 97 of the
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Finance Act, 2022 respectively. We take this opportunity to consider
this issue as the constitutional validity of the said provisions has been
challenged with specific reference to the findings made in Canon
India (supra), which is the judgment under review herein.
158. The validation amendment vide Section 97 has been challenged
before this Court specifically in WP (C) 526 of 2022 titled Daikin
Air Conditioning India Pvt. Ltd. v. Union of India. The respondent
herein has canvassed the following grounds for declaring the provision
unconstitutional on the touchstone of Article 14 of the Constitution:
(i) The Finance Act, 2022 does not cure the defect pointed out in
Canon India (supra) and no notification or amendment of law
deeming DRI officers to be the proper officers would cure the
defect of ouster of jurisdiction of DRI once the original act of
assessment has been undertaken by a different group of officers.
The Finance Act, 2022 is manifestly arbitrary as no attempt has
been made to cure the defect highlighted in Canon India (supra).
(ii) This Court in Canon India (supra) made a determination of
fact that the DRI officers did not have jurisdiction to perform
functions under Section 28 of the Act, 1962. Such judicial
determination of fact relating to actual exercise of jurisdiction
cannot be retrospectively overruled.
(iii) The legislature has selectively adhered to the legal findings made
in Canon India (supra) only for future actions by enactment of
Section 110AA and has proceeded to ignore the findings for past
show cause notices by validating the same vide Section 97 of
the Finance Act, 2022. Such a distinction creates two classes of
assessees without any reasonable basis for this differentiation.
(iv) Section 97 of the Finance Act, 2022 fails the test of proportionality
as it is a sweeping validation of all acts under the chapters
specified in the section and does not provide certainty to the
assessees as to which rights have been abrogated.
(v) The writ petitioner in the WP (C) No. 520 of 2022 titled Dish TV
India Ltd. v. Union of India and Ors. has also challenged the
application of Section 97 on the ground that Section 97(iii) of the
Finance Act, 2022 gives the amendments made to Sections 2,
3 and 5 retrospective effect which would make sub-sections (4)
and (5) of Section 5 applicable to the show cause notices issued
[2024] 12 S.C.R. 319

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in the past. It is the case of the writ petitioner that Customs
Notifications Nos. 44/2011 dated 06.07.2011 and 40/2012 dated
02.05.2012 do not in any way satisfy the mandatory and salutary
criteria laid down in Sections 5(4) and 5(5).
159. From the grounds summarized above, we find that the writ petitioners
have challenged the constitutionality of the validation of past actions
by Section 97 of the Finance Act, 2022. Therefore, we shall limit our
ruling to this provision alone.
160. It is a settled position of law that the legislature is empowered to
enact validating legislations to validate earlier acts declared illegal
and unconstitutional by courts by removing the defect or lacuna
which led to the invalidation of the law. With the removal of the
defect or lacuna resulting in the validation of any act held invalid by
a competent court, the act may become valid, if the validating law
is lawfully enacted.
161. This Court in the case of Empire Industries Ltd. v. Union of India
reported in (1985) 3 SCC 314 observed that:
“51. In the view we have taken of the expression
“manufacture”, the concept of process being embodied in
certain situation in the idea of manufacture, the impugned
legislation is only making “small repairs” and that is a
permissible mode of legislation. In 73rd vol. of Harvard
Law Review p. 692 at p. 795, it has been stated as follows:
“It is necessary that the Legislature should be able
to cure inadvertent defects in statutes or their
administration by making what has been aptly
called “small repairs”. Moreover, the individual
who claims that a vested right has arisen from
the defect is seeking a windfall since had the
legislature’s or administrator’s action had the
effect it was intended to and could have had, no
such right would have arisen. Thus, the interest
in the retroactive curing of such a defect in
the administration of government outweighs
the individual’s interest in benefiting from the
defect .... The Court has been extremely reluctant to
override the legislative judgment as to the necessity
for retrospective taxation, not only because of
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the paramount governmental interest in obtaining
adequate revenues, but also because taxes are not
in the nature of a penalty or a contractual obligation
but rather a means of apportioning the costs of
government among those who benefit from it…”
[Emphasis supplied]
162. This Court has laid down the tests for determining whether a
validating law is enacted within permissible limits in the case of Indian
Aluminium Company Co. vs. State of Kerala reported in (1996) 7
SCC 637 and the relevant observations therein are reproduced below:
“56. From a resume of the above decisions the following
salient principles would emerge:
…
(3) In a democracy governed by rule of law, the Legislature
exercises the power under Articles 245 and 246 and other
companion Articles read with the entries in the respective
Lists in the Seventh Schedule to make the law which
includes power to amend the law.
(4) The Court, therefore, need to carefully scan the law to
find out: (a) whether the vice pointed out by the Court and
invalidity suffered by previous law is cured complying
with the legal and constitutional requirements;
(b) whether the Legislature has competence to validate
the law; (c) whether such validation is consistent with
the rights guaranteed in Part III of the Constitution.
(5) The Court does not have the power to validate an
invalid law or to legalise impost of tax illegally made and
collected or to remove the norm of invalidation or provide a
remedy. These are not judicial functions but the exclusive
province of the Legislature. Therefore, they are not an
encroachment on judicial power.
(6) In exercising legislative power, the Legislature
by mere declaration, without anything more, cannot
directly overrule, revise or override a judicial decision.
It can render judicial decisions ineffective by enacting
valid law on the topic within its legislative field,
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fundamentally altering or changing its character
retrospectively. The changed or altered conditions
are such that the previous decision would not have
been rendered by the Court, if those conditions had
existed at the time of declaring the law as including
power to amend the law. It is also empowered to give
effect to retrospective legislation with a deeming date or
with effect from a particular date.”
[Emphasis supplied]
163. We shall now proceed to determine whether the enactment of
Section 97 of the Finance Act, 2022 fulfils the tests laid down by
this Court for a validation Act to be legally sustainable. The first leg
of such determination would be to satisfy ourselves as to whether
Section 97 cures the defect pointed out by this Court in Canon India
(supra). In this respect, the following aspects are relevant:
a) The Coordinate Bench in Canon India (supra) observed that:
“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 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)] ”
[Emphasis supplied]
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b) According to Canon India (supra), only “the proper officer”
empowered to undertake the exercise of assessment or
re-assessment under Section 17 in a jurisdictional area can
perform the functions of “the proper officer” under Section 28
of the Act, 1962 as the exercise involved in Section 28 is the
re-assessment of duty. The defect pointed out by the Court
in Canon India (supra) is that the DRI officers were not “the
proper officers” who undertook the exercise of assessment
under Section 17. Hence, they lacked the jurisdiction to issue
show cause notices under Section 28. The reasoning given
by the Court was that any other reading of the expression
“proper officers” would lead to a multiplicity of proper officers
competent to perform functions under Section 28, which would
result in the perpetuation of chaos and confusion as pointed
out in Sayed Ali (supra).
c) However, the apprehension expressed is unfounded in our
opinion especially in context of the Customs department’s policy
of exclusion of jurisdiction of other competent proper officers
once a particular proper officer empowered to issue a show
cause notice under Section 28 has issued it. Such a policy
acts as an adequate safeguard in our view.
d) We find that the ouster of jurisdiction of DRI to issue show cause
notices under Section 28 once an assessment has been done
under Section 17 is not a defect at all in light of Notification No.
44/2011 dated 06.07.2011 and new Section 17 as amended by
the Finance Act, 2011. We have already recorded a finding in
the foregoing segments of this judgment that these facts were
not considered in Canon India (supra) and therefore, become
the basis of the review petition herein.
e) Notification No. 44/2011 dated 06.07.2011 specifically assigned
the functions of the proper officers under Sections 17 and 28
to DRI officers. Such assignment of functions of assessment is
sufficient for the DRI officers to fall in the category of “any other
officer who has been assigned the function of assessment” as
mentioned in Canon India (supra).
f) Furthermore, as discussed previously, the functions of
assessment and re-assessment under Section 17 and recovery
[2024] 12 S.C.R. 323

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of duty under Section 28 are distinct. Canon India (supra)
held erroneously that Section 28(4) involves the function of
re-assessment. The function of recovery of short-levy, non-levy,
part-paid, non-paid and erroneous refund under Section 28
is not the same as the assessment or re-assessment of the
bill(s) of entry. It necessarily has to be a process subsequent
to the completion of functions under Section 17. Further, such
function of determining duty to be recovered requires application
of judicial mind and therefore, cannot be an administrative
review of an act. This is especially so after the introduction
of self-assessment in Section 17 vide the Finance Act, 2011.
g) Therefore, the validating provision under Section 97 of the
Finance Act, 2022 is a mere surplusage with respect to
validation of the show cause notices issued by DRI officers
under Section 28. It cannot be challenged on the ground that
it does not cure the defect pointed out in Canon India (supra)
when no defect can be made out therein as a result of this
review petition.
164. The contention that Section 97 could not have overruled the finding
of fact relating to the actual exercise of jurisdiction in Canon India
(supra) is untenable for the following reasons:
(a) The argument that once a particular officer has exercised
the function of assessment, it is a jurisdictional fact that has
occurred to the exclusion of all other groups in the Customs
Department and therefore, only that officer or his superiors,
who had undertaken assessment under Section 17 in the first
place, shall have the jurisdiction to issue notices for recovery
of duty under Section 28, does not hold water.
(b) As discussed above, the functions of assessment and
re-assessment under Section 17 and the recovery of duty under
Section 28 are distinct. Therefore, the exercise of functions under
Section 17 can only act as a “jurisdictional fact” for the purpose
of excluding the jurisdiction of other proper officers empowered
under that section for the exercise of the rest of the functions
specified therein. Similarly, the exercise of the function of issuing
show cause notices under Section 28 by a particular proper
officer serves as a jurisdictional fact which would exclude the
jurisdiction of other proper officers empowered under Section 28.
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(c) Canon India (supra) proceeded on an erroneous assumption
that the jurisdiction of the proper officer under Sections 17
and 28 is linked. This is due to the erroneous understanding
of the provisions of Act, 1962 that functions under Section 28
involve re-assessment.
(d) Therefore, the very basis of the determination of jurisdictional
fact for exercise of functions under Section 28 has been clarified
by us. Thus, we are of the considered view that the challenge
to Section 97, on the ground of inability of a validating Act to
overrule a finding of fact, is unfounded and liable to be dismissed.
165. While challenging the constitutional validity, it was argued that the
insertion of Section 110AA for future actions while validating the past
actions (which in words of the writ petitioners was contrary to the
intent of Section 110AA) does not create a reasonable classification
as there is no intelligible differentia. It was further argued that
Section 97 is manifestly arbitrary and fails the test of proportionality
under Article 14. In our view, these submissions are not tenable in
law for the following reasons:
a) It is a settled position of law that matters of economic policy are
best left to the wisdom of the legislature and in policy matters,
the accepted principle is that the courts should not interfere.
This principle has been laid down in the case of Bhavesh D.
Parish v. Union and India reported in (2000) 5 SCC 471,
wherein this Court held that:
“26. The services rendered by certain informal
sectors of the India economy could not be belittled.
However, in the path of economic progress, if
the informal system was sought to be replaced
by a more organised system, capable of better
regulation and discipline, then this was an economic
philosophy reflected by the legislation in question.
Such a philosophy might have its merits and
demerits. But these were matters of economic
policy. They are best left to the wisdom of the
legislature and in policy matters the accepted
principle is that the courts should not interfere.
Moreover in the context of the changed economic
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scenario the expertise of people dealing with
the subject should not be lightly interfered with.
The consequences of such interdiction can have
large-scale ramifications and can put the clock back
for a number of years. The process of rationalisation
station of the infirmities in the economy can be put in
serious jeopardy and, therefore, it is necessary that
while dealing with economic legislations, this Court,
while not jettisoning its jurisdiction to curb arbitrary
action or unconstitutional legislation, should interfere
only in those few cases where the view reflected in
the legislation is not possible to be taken at all.”
[Emphasis supplied]
b) A Constitution Bench of this Court in the case of Shri Prithvi
Cotton Mills Ltd. and Ors. v. Broach Borough Municipality
& Ors., reported in (1969) 2 SCC 283 set out the modus of
validation of tax through validating statutes and observed as
follows:
“4. …
Validation of a tax so declared illegal may be done
only if the grounds of illegality or invalidity are capable
of being removed and are in fact removed and the
tax thus made legal. Sometimes this is done by
providing for jurisdiction where jurisdiction had
not been properly invested before. Sometimes
this is done by re-enacting retrospectively a valid
and legal taxing provision and then by fiction
making the tax already collected to stand under
the re-enacted law. Sometimes the Legislature
gives its own meaning and interpretation of
the law under which tax was collected and by
legislative fiat makes the new meaning binding
upon courts. The Legislature may follow any one
method or all of them and while it does so it may
neutralise the effect of the earlier decision of the
court which becomes ineffective after the change
of the law. Whichever method is adopted it must be
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within the competence of the legislature and legal
and adequate to attain the object of validation. If the
Legislature has the power over the subject-matter and
competence to make a valid law, it can at any time
make such a valid law and make it retrospectively
so as to bind even past transactions. The validity of
a Validating Law, therefore, depends upon whether
the Legislature possesses the competence which
it claims over the subject-matter and whether in
making the validation it removes the defect which
the courts had found in the existing law and makes
adequate provisions in the Validating Law for a valid
imposition of the tax.”
[Emphasis supplied]
c) We are of the opinion that the introduction of Section 110AA was
a valid exercise of legislative power to amend the provisions of
the Act, 1962 and it was done with the objective of following the
principle of comity to give effect to the suggestions of this Court
in Sayed Ali (supra) and Canon India (supra). However, we
clarify that a change in law, which the legislature was competent
to enact, having prospective application cannot be a ground
for the writ petitioners to question the sanctity and wisdom of
the legislature in following a different mechanism to assess/
re-assess bills of entry(s) and recover duty under Sections 17
and 28 respectively.
d) No occasion arises for us to discuss the validity of Section 97
with respect to the test of reasonable classification as the
introduction of Section 110AA does not create a class of
assessees to whom the law would apply differentially to, at the
same point in time. The differential mechanism for the exercise
of functions under Section 28 is not for a different class of
assessees but rather for the show cause notices issued during
different periods of time that is, prior to the Finance Act, 2022
and after its enactment.
e) On the strength of such reasoning, we are of the view that
Section 97 is not manifestly arbitrary and discriminatory and
is not disproportional to the object sought to be achieved by it.
[2024] 12 S.C.R. 327

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166. It is also the contention of the writ petitioners that Section 97(iii)
gives retrospective effect to the amendments made in Section 5
thereby making previous show cause notices subject to the provisions
of the newly inserted provisions, i.e., sub-sections (4) and (5) of
Section 5. It is their case that the previous notifications empowering
DRI officers to issue show cause notices under Section 28 do not
fulfil the mandate of Section 5(4) as they cannot be placed in any of
the criteria envisaged therein. We find no merit in the said contention:
a) Section 5(4) reads as follows:
“(4) In specifying the conditions and limitations
referred to in sub-section (1), and in assigning
functions under sub-section (1A), the Board may
consider any one or more of the following criteria,
including, but not limited to
(a) territorial jurisdiction;
(b) persons or class of persons;
(c) goods or class of goods;
(d) cases or class of cases;
(e) computer assigned random assignment;
(f) any other criterion as the Board may, by
notification, specify.”
[Emphasis supplied]
b) From a plain reading of the above-referred sub-section, we find
that the Board has been entrusted with wide powers in respect
of determination of criteria and the use of the word “may” is
indicative of the Board’s discretion in this regard. Therefore,
the writ petitioners are wrong in construing the sub-section as
a mandatory provision for the purpose of invalidation of the
show cause notices issued.
c) A purposive interpretation of Section 97 indicates that clause (i)
therein is the object of its enactment and clause (iii) is an
extension thereof to further clarify that any deficiencies in
law under Sections 2, 3 and 5 of the Act, 1962 as they stood
prior to the Finance Act, 2022 would not be an obstacle to the
validating act under clause (i).
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d) Therefore, the retrospective application of Sections 2, 3 and 5 of
the Act, 1962 respectively is not stand-alone but is restricted to
achievement of the ultimate object of validation under clause (i)
of Section 97. Any interpretation of the amended Sections 2, 3
and 5 arising from the retrospective application thereof, which
is contrary to or not in furtherance of the Section 97(i) would
not hold good in law.
e) This Court in the case of Vivek Narayan v. Union of India
reported in (2023) 3 SCC 1 has held that:
“140. The principle of purposive interpretation has
also been expounded through a catena of judgments
of this Court. A Constitution Bench of this Court in
M. Pentiah v. Muddala Veeramallappa [M. Pentiah
v. Muddala Veeramallappa (1961) 2 SCR 295 :
AIR 1961 SC 1107] was considering a question, as
to whether the term prescribed in Section 34 would
apply to a member of a “deemed” committee under
the provisions of the Hyderabad District Municipalities
Act, 1956. An argument was put forth that, upon a
correct interpretation of the provisions of Section 16,
the same would be permissible. Rejecting the said
argument, K. Subba Rao, J., observed thus : (AIR
pp. 1110-11, para 6)
“6. Before we consider this argument in some
detail, it will be convenient at this stage to
notice some of the well-established rules of
construction which would help us to steer clear
of the complications created by the Act. Maxwell
on the Interpretation of Statutes, 10th Edn.,
says at p. 7 thus:
‘… if the choice is between two interpretations,
the narrower of which would fail to achieve
the manifest purpose of the legislation, we
should avoid a construction which would
reduce the legislation to futility and should
rather accept the bolder construction based
on the view that Parliament would legislate
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only for the purpose of bringing about an
effective result.’…”
[Emphasis supplied]
f) A seven-Judge Bench of this Court in the case of Abhiram
Singh v. C.D. Commachen (Dead) By Lrs. & Ors., reported
in (2017) 2 SCC 629 has held that:
“36. The conflict between giving a literal interpretation
or a purposive interpretation to a statute or a provision
in a statute is perennial. It can be settled only if the
draftsman gives a long-winded explanation in drafting
the law but this would result in an awkward draft that
might well turn out to be unintelligible. The interpreter
has, therefore, to consider not only the text of the
law but the context in which the law was enacted
and the social context in which the law should be
interpreted. This was articulated rather felicitously
by Lord Bingham of Cornhill in R. (Quintavalle) v.
Secy. of State for Health [R. (Quintavalle) v. Secy. of
State for Health, 2003 UKHL 13 : (2003) 2 AC 687 :
(2003) 2 WLR 692 (HL)] when it was said : (AC p.
695 C-H, paras 8-9)
“8. The basic task of the court is to ascertain
and give effect to the true meaning of what
Parliament has said in the enactment to be
construed. But that is not to say that attention
should be confined and a literal interpretation
given to the particular provisions which give
rise to difficulty. Such an approach not only
encourages immense prolixity in drafting,
since the draftsman will feel obliged to
provide expressly for every contingency
which may possibly arise. It may also (under
the banner of loyalty to the will of Parliament)
lead to the frustration of that will, because undue
concentration on the minutiae of the enactment
may lead the court to neglect the purpose
which Parliament intended to achieve when it
enacted the statute. Every statute other than
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a pure consolidating statute is, after all,
enacted to make some change, or address
some problem, or remove some blemish,
or effect some improvement in the national
life. The court’s task, within the permissible
bounds of interpretation, is to give effect to
Parliament’s purpose. So the controversial
provisions should be read in the context of
the statute as a whole, and the statute as a
whole should be read in the historical context
of the situation which led to its enactment.”
[Emphasis supplied]
g) Thus, we are of the opinion that the retrospective application
of Section 5(4) cannot be the basis for the challenge to the
validity of Section 97 of the Finance Act, 2022.
167. For the foregoing reasons, we hold that the challenge to the
constitutional validity of the Finance Act, 2022 and more particularly
Section 97 thereof, being unfounded should fail. We say so more
particularly in light of the judgment in the review of Canon India
(supra) and the various judicial pronouncements of this Court.
Therefore, we hold that Section 97 of the Finance Act, 2022 is
constitutionally valid and the challenge to it is rejected accordingly.
F. CONCLUSION
168. In view of the aforesaid discussion, we conclude that:
(i) DRI officers came to be appointed as the officers of customs
vide Notification No. 19/90-Cus (N.T.) dated 26.04.1990 issued
by the Department of Revenue, Ministry of Finance, Government
of India. This notification later came to be superseded by
Notification No. 17/2002 dated 07.03.2002 issued by the
Department of Revenue, Ministry of Finance, Government of
India, to account for administrative changes.
(ii) The petition seeking review of the decision in Canon India
(supra) is allowed for the following reasons:
a. Circular No. 4/99-Cus dated 15.02.1999 issued by the
Central Board of Excise & Customs, New Delhi which
empowered the officers of DRI to issue show cause notices
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under Section 28 of the Act, 1962 as well as Notification No.
44/2011 dated 06.07.2011 which assigned the functions of
the proper officer for the purposes of Sections 17 and 28
of the Act, 1962 respectively to the officers of DRI were not
brought to the notice of this Court during the proceedings
in Canon India (supra). In other words, the judgment in
Canon India (supra) was rendered without looking into
the circular and the notification referred to above thereby
seriously affecting the correctness of the same.
b. The decision in Canon India (supra) failed to consider the
statutory scheme of Sections 2(34) and 5 of the Act, 1962
respectively. As a result, the decision erroneously recorded
the finding that since DRI officers were not entrusted
with the functions of a proper officer for the purposes of
Section 28 in accordance with Section 6, they did not
possess the jurisdiction to issue show cause notices for
the recovery of duty under Section 28 of the Act, 1962.
c. The reliance placed in Canon India (supra) on the decision
in Sayed Ali (supra) is misplaced for two reasons – first,
Sayed Ali (supra) dealt with the case of officers of customs
(Preventive), who, on the date of the decision in Sayed Ali
(supra) were not empowered to issue show cause notices
under Section 28 of the Act, 1962 unlike the officers of DRI;
and secondly, the decision in Sayed Ali (supra) took into
consideration Section 17 of the Act, 1962 as it stood prior
to its amendment by the Finance Act, 2011. However, the
assessment orders, in respect of which the show cause
notices under challenge in Canon India (supra) were
issued, were passed under Section 17 of the Act, 1962
as amended by the Finance Act, 2011.
(iii) This Court in Canon India (supra) based its judgment on two
grounds: (1) the show cause notices issued by the DRI officers
were invalid for want of jurisdiction; and (2) the show cause
notices were issued after the expiry of the prescribed limitation
period. In the present judgment, we have only considered and
reviewed the decision in Canon India (supra) to the extent
that it pertains to the first ground, that is, the jurisdiction of the
DRI officers to issue show cause notices under Section 28. We
clarify that the observations made by this Court in Canon India
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(supra) on the aspect of limitation have neither been considered
nor reviewed by way of this decision. Thus, this decision will
not disturb the findings of this Court in Canon India (supra)
insofar as the issue of limitation is concerned.
(iv) The Delhi High Court in Mangali Impex (supra) observed
that Section 28(11) could not be said to have cured the defect
pointed out in Sayed Ali (supra) as the possibility of chaos and
confusion would continue to subsist despite the introduction of
the said section with retrospective effect. In view of this, the High
Court declined to give retrospective operation to Section 28(11)
for the period prior to 08.04.2011 by harmoniously construing
it with Explanation 2 to Section 28 of the Act, 1962. We are
of the considered view that the decision in Mangali Impex
(supra) failed to take into account the policy being followed
by the Customs department since 1999 which provides for
the exclusion of jurisdiction of all other proper officers once a
show cause notice by a particular proper officer is issued. It
could be said that this policy provides a sufficient safeguard
against the apprehension of the issuance of multiple show
cause notices to the same assessee under Section 28 of the
Act, 1962. Further, the High Court could not have applied the
doctrine of harmonious construction to harmonise Section 28(11)
with Explanation 2 because Section 28(11) and Explanation 2
operate in two distinct fields and no inherent contradiction can
be said to exist between the two. Therefore, we set aside the
decision in Mangali Impex (supra) and approve the view taken
by the High Court of Bombay in the case of Sunil Gupta (supra).
(v) Section 97 of the Finance Act, 2022 which, inter-alia,
retrospectively validated all show cause notices issued under
Section 28 of the Act, 1962 cannot be said to be unconstitutional.
It cannot be said that Section 97 fails to cure the defect
pointed out in Canon India (supra) nor is it manifestly arbitrary,
disproportionate and overbroad, for the reasons recorded in the
foregoing parts of this judgment. We clarify that the findings in
respect of the vires of the Finance Act, 2022 is confined only
to the questions raised in the petition seeking review of the
judgment in Canon India (supra). The challenge to the Finance
Act, 2022 on grounds other than those dealt with herein, if any,
are kept open.
[2024] 12 S.C.R. 333

Commissioner of Customs v. M/s Canon India Pvt. Ltd.

(vi) Subject to the observations made in this judgment, the officers
of Directorate of Revenue Intelligence, Commissionerates of
Customs (Preventive), Directorate General of Central Excise
Intelligence and Commissionerates of Central Excise and other
similarly situated officers are proper officers for the purposes
of Section 28 and are competent to issue show cause notice
thereunder. Therefore, any challenge made to the maintainability
of such show cause notices issued by this particular class of
officers, on the ground of want of jurisdiction for not being the
proper officer, which remain pending before various forums,
shall now be dealt with in the following manner:
a. Where the show cause notices issued under Section 28 of
the Act, 1962 have been challenged before the High Courts
directly by way of a writ petition, the respective High Court
shall dispose of such writ petitions in accordance with the
observations made in this judgment and restore such notices
for adjudication by the proper officer under Section 28.
b. Where the writ petitions have been disposed of by the
respective High Court and appeals have been preferred
against such orders which are pending before this Court,
they shall be disposed of in accordance with this decision
and the show cause notices impugned therein shall be
restored for adjudication by the proper officer under
Section 28.
c. Where the orders-in-original passed by the adjudicating
authority under Section 28 have been challenged before
the High Courts on the ground of maintainability due to
lack of jurisdiction of the proper officer to issue show
cause notices, the respective High Court shall grant
eight weeks’ time to the respective assessee to prefer
appropriate appeal before the Customs Excise and Service
Tax Appellate Tribunal (CESTAT).
d. Where the writ petitions have been disposed of by the
High Court and appeals have been preferred against
them which are pending before this Court, they shall be
disposed of in accordance with this decision and this Court
shall grant eight weeks’ time to the respective assessee
to prefer appropriate appeals before the CESTAT.
334 [2024] 12 S.C.R.

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e. Where the orders of CESTAT have been challenged before
this Court or the respective High Court on the ground of
maintainability due to lack of jurisdiction of the proper
officer to issue show cause notices, this Court or the
respective High Court shall dispose of such appeals or
writ petitions in accordance with the ruling in this judgment
and restore such notices to the CESTAT for hearing the
matter on merits.
f. Where appeals against the orders-in-original involving
issues pertaining to the jurisdiction of the proper officer
to issue show cause notices under Section 28 are
pending before the CESTAT, they shall now be decided in
accordance with the observations made in this decision.
169. In view of the aforesaid, we allow the Review Petition No. 400/2021
titled Commissioner of Customs v. M/s Canon India Pvt. Ltd.
and the connected Review Petition Nos. 401/2021, 402/2021 and
403/2021 insofar as the issue of jurisdiction of the proper officer to
issue show cause notice under Section 28 is concerned. As discussed,
the findings of this Court in Canon India (supra) in respect of the
show cause notices having been issued beyond the limitation period
remain undisturbed.
170. We set aside the decision of the High Court of Delhi rendered in
the case of Mangali Impex (supra) and uphold the view taken by
the High Court of Bombay in the case of Sunil Gupta (supra). We
also uphold the constitutional validity of Section 97 of the Finance
Act, 2022.
171. The Registry shall take steps to list the connected civil appeals and
writ petitions before the appropriate Bench and they shall be disposed
in terms of the observations made in this judgment.
172. The review petitions are accordingly disposed of.

Result of the case: Review petitions disposed of.

†
Headnotes prepared by: Nidhi Jain