SC reserves verdict on review plea of customs dept against 2021 judgement

The Supreme Court on Thursday reserved its verdict on the customs department's plea seeking a review of its 2021 judgement that had held that officers of the Directorate of Revenue Intelligence have no authority to seek recovery of duties on goods already cleared for import by the customs.

In a hearing spanning over four days, a bench comprising Chief Justice D Y Chandrachud and Justices JV Pardiwala and Manoj Misra heard submissions from Additional Solicitor General (ASG) N Venkataraman, appearing for the customs department, and a battery of lawyers led by senior advocate Mukul Rohatgi, who represented private companies in the case.

 

Usually, the review pleas against judgements are considered in chambers by the judges and no oral submissions are allowed.However, the review plea of the customs department was heard in an open court.

ASG Venkataraman vehemently sought setting aside of the 2021 judgement, saying the officials of the Directorate of Revenue Intelligence (DRI) are also empowered under the Customs Act to seek recovery of duties on goods already cleared for import.

The law officer said there were as many as six "apparent errors on the face of records" in the judgement which failed to address the requisite provisions of the law while arriving at a conclusion that DRI officials are not customs officers who could seek recovery of duty on goods.

"A DRI officer today can be a customs official tomorrow," the law officer said.

"From 1977 onwards, the customs and the DRI have been part of the (Union) Ministry of Finance and their officers form a class of officers under the law," he said and referred to legal provisions in order to drive home the point that the judgement needed a review.

The judgement proceeds on a "false assumption" that a DRI officer is not the "proper officer" under the Customs Act but an officer of a different department of the central government, the ASG said.

"We are not asking BSF (Border Security Force) officers to reassess the customs duty demands," he said.

Rohatgi and others opposed the review plea saying ordinarily, the apex court judgement cannot be reviewed unless the customs department proves the errors apparent on the face of records of the impugned verdict.

The customs department is seeking a review of the March 9, 2021 judgement in which a three-judge bench headed by the then Chief Justice, S A Bobde, had held that a DRI officer is not the proper officer under the Customs Act, 1962 and lacked the authority to seek recovery of duties on the goods already cleared for import by the customs department.

The top court had quashed the DRI's show cause notices to private firms, including M/S Canon India Private Limited, seeking payment of duty and the consequential confiscation of goods, demand of interest, and imposition of penalty under the Customs Act.

The legal question involved was whether the DRI has the authority to issue a show cause notice under the Customs Act for recovery of duties allegedly not levied or paid when the goods were cleared for import by a Deputy Commissioner of Customs who decided that the imports were exempted from duties.

The judgement under review had also dealt with the issue of whether a provision of the Customs Act empowers the recovery of duty not paid, part paid or erroneously refunded by reason of collusion or any wilful misstatement or suppression of facts by the proper officer.

The apex court had then held that it was "completely impermissible" to allow an officer, who has not passed the original order of assessment, to reopen the assessment.

It had held that the Additional Director General of the DRI was not a "proper officer" under the Customs Act to seek recovery of duty on imported goods.

The matter, which has seen many ups and downs, was first decided by a three-judge bench headed by the then Chief Justice Bobde in 2021.

Later, a bench headed by successor CJI N V Ramana, on May 19, 2022 agreed to hear in an open court the review plea of the customs department against the 2021 judgement.

Now, the present CJI-led bench heard the review plea in open court and reserved the verdict.

The 2021 verdict had come on a batch of cases filed by M/S Canon India Private Limited and other private firms against the Commissioner of Customs challenging the 2017 judgement of the Central Excise and Service Tax Appellate Tribunal (CESTAT).

The CESTAT had upheld the show cause notice of the DRI to private firms seeking payment of duty and the consequential confiscation of goods, demand of interest, and imposition of penalty under the Customs Act.

It was the case of the private firms that the cameras, which were imported, were exempted from levy of basic customs duty as per a 2012 notification.

The exemption from import duty to Digital Still Image Video Cameras was issued on March 1, 2005 and the notification was amended in 2012.