Difference among officers over recording capacity of an imported video camera followed by Supreme Court ruling has led critical amendments in the Custom Act though the Finance Bill 2022 related with reassessment and the status of the proper officer for DRI (Directorate of Revenue Intelligence) official.
The Bill has proposed to insert section 110AA in the Custom Act 1962, with a view to affirming the principle that, wherever, an original function duly has been exercised by an officer, he will have the sole authority to exercise jurisdiction for further action like reassessment, adjudications, etc. consequent to the completion of such inquiry, investigation, audit or any other purpose.
A senior government official further explained to BusinessLine that such a mechanism will bring in more clarity. Also, this will be applicable only when assessment has been completed and not in the case of just show case notice has been issued.
The amendment follows the March 9, 2020 ruling of the Supreme Court in the matter of Canon India vs Commissioner of Customs, where the Court had observed that in case one officer has exercised his powers of assessment, the power to order re-assessment must also be exercised by the same officer or his successor and not by another officer of another department though he is designated to be an officer of the same rank. “In our view, this would result into an anarchical and unruly operation of a statute which is not contemplated by any canon of construction of statute,” a bench headed by then Chief Justice S A Bobde said.
Recovery of duties
The bench also discussed the question about whether the DRI had authority in law to issue a show cause notice for recovery of duties, when the goods have been cleared for import by a Deputy Commissioner of Customs who decided that the goods are exempted. The court observed that the legislature does not intend to confer the power on any ‘proper officer’, but only on “the proper officer.”
The bench also said that as Additional Director General of DRI was not “the proper officer” who had undertaken the original assessment, it cannot issue the show cause notice. Accordingly, the bench said: “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.”
Show cause notice set aside
This ruling cast doubt on number of show cause notices issued by DRI. Also, some High Courts, while relying on the apex court ruling, set aside show cause notice. Official, quoted above, said that considering the impact of functioning of DRI, an amendment has been proposed through Finance Act 2022 to “to specifically include the officers of DRI, Audit and Preventive formation in the class of Officers. This amendment has been made to remove any ambiguity as regards the class of officers of Customs.”
The precursor to all these amendment was capacity of a video camera. First, a Deputy Commissioner cleared the consignment as product was exempted. However, DRI issued a show-cause notice saying facts about camera were suppressed. Issue was whether camera was capable of recording more than a single video sequence of less than 30 minutes or not.