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Where statute confers same power on different officers, such powers cannot be exercised in same case

M/s Canon India Private Limited v. Commissioner of Customs

Civil Appeal No.1827 of 2018 with Civil Appeal No. 1875 of 2018 with Civil Appeal No.1832 of 2018 with Civil Appeal No.3213 of 2018

Decided on 9th March 2021.

A three judge bench of the Supreme Court consisting of Hon'ble Chief Justice S.A. Bobde, Justice A.S. Bopanna and Justice V. Balasubramanian decided the current case.

The dispute is regarding the exemption of basic customs duty on the DSIC, Digital Still Image Video Cameras, imported by 4 companies- Nikon India Pvt. Ltd, Canon India Pvt. Ltd., Sony India Pvt. Ltd. and Samsung India Electronics Pvt. Ltd. Since all these appeals involved similar questions related to the exemption under Notification No. 15/2012, these cases were decided together by this Court.

The facts of the case state that the Customs Authorities checked the consignment of cameras that arrived and the Deputy Commissioner, Delhi Air Cargo, cleared the goods on 24.03.2012, as being exempt from duty in terms of the Notification No.15/2012 which was issued on 17.3.2012. On 19.8.2014, the Additional Director General, Directorate of Revenue Intelligence issued a show cause notice under Section 28 (4) of the Customs Act, 1962 alleging that the Customs Authorities had been induced to clear the cameras by wilful mis-statement and suppression of facts about the cameras.

The Court crystallized the issue before them: The main issue is whether after clearance of the cameras on the basis that they were exempted from levy of basic Customs duty under Notification No.15/2012, the proceedings initiated by the Directorate of Revenue Intelligence for recovery of duty not paid under Section 28(4) of the Customs Act, 1962 are valid in law. (Para 4)

The Court viewed:

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 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. (Para 13)

The Court stated:

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 Section28 (4)]. (Para 14)

The Court stated that the Additional Director General of DRI was not “the” proper officer to exercise the power under Section 28(4) and the initiation of the recovery proceedings in the present case is without any jurisdiction and liable to be set aside.

Further, the Court examined whether the Additional Director General of the DRI who issued the recovery notice under Section 28(4) was even a proper officer. 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, which shows that all Additional Directors General are appointed as Commissioners of Customs.

In this regard, the Court stated:

The notification which purports to entrust functions as proper officer under the Customs Act has been issued by the Central Board of Excise and Customs in exercise of non-existing power under Section 2 (34) of the Customs Act. The notification is obviously invalid having been issued by an authority which had no power to do so in purported exercise of powers under a section which does not confer any such power. (Para 21)

Therefore, the Court held that the entire proceeding in the present case initiated by the Additional Director General of the DRI is liable to be set aside.

Addressing the question on limitation, the Court stated:

It is difficult in such circumstances to infer that there was any wilful mis-statement of facts. In these circumstances, it must, therefore, follow that the extended period of limitation of five years was not available to any authority to re-open under Section 28(4). (Para 28)

In this view of the matter, we consider it unnecessary to answer the issue whether the cameras that were cleared on the basis that they were exempted from customs duty under Exemption Notification No.15/2012 were in fact eligible for the exemption or not. The goods must be taken to have been validly cleared by the Customs officer. (Para 29)

The Court allowed the appeals and set aside the impugned demand notices.

Yashwardhan Bansal



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