The Supreme Court in the case of CCus. v. Sayed Ali 2011 (265) ELT 17 has held that Collector of Customs (Preventive) is not ‘proper officer’ and hence not competent to issue Show Cause Notice. The Apex Court held that only the customs officer assigned with specific functions of assessment and re-assessment in jurisdictional area where goods are imported are competent to issue show cause notice under Section 28 of Customs Act, 1962 as ‘proper officer’. The Court further ruled that Notifications appointing Collector of Customs (Preventive) to be Collector of Customs for Bombay, Thane and Kolaba Districts do not ipso facto confer jurisdiction on him to exercise power entrusted to ‘proper officers’ under Section 28. The Court explained that the governing test to determine whether an ‘officer of customs’ is ‘proper officer’ is the specific entrustment of function by either CBEC or Commissioner of Customs under section 2(34) of Customs Act, 1962.
Pursuant to the above judgement, an Instruction F.No.437/143/2009- Cus. IV(pt) dated 15.04.2011 was issued by the Board directing the field formations to examine pending Show Cause Notices and wherever these are not hit by time limitation to get these issued afresh by the jurisdictional Commissionerates. Further, as a prospective remedial measure, the officers of Directorate General of Revenue Intelligence (DRI), Commissionerates of Customs (Preventive), Directorate General of Central Excise Intelligence (DGCEI) and Central Excise Commissionerates were assigned the functions of the ‘proper officer' for the purposes of Sections 17 and 28 of the Customs Act by the Board vide Notification No.44/2011-Customs (N.T.), dated 06.07.2011.
With a view to validate the Show Cause Notices issued prior to 06.07.2011, the Board had proposed to retrospectively amend section 28 of the Act by the Customs (Amendment and Validation) Bill, 2011. The President has given assent to the said Bill and the amendment to Section 28 has come into force w.e.f. 16.09.2011. The said Act amends Section 28 of the Customs Act, 1962 by inserting clause (11), which reads as follows:
“(11) Notwithstanding anything to the contrary contained in any judgement, 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 sixth 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.”
Accordingly, as per the amended Section 28 of the Customs Act, 1962 Show Cause Notices issued prior to 06.07.2011 by officers of Customs, which would include officers of Commissionerates of Customs (Preventive), Directorate General of Revenue Intelligence (DRI), Directorate General of Central Excise Intelligence and similarly placed officers stand validated since these officers are retrospectively recognized as ‘proper officers' for the purpose of Sections 17 and 28 of the said Act.
The Board has therefore, withdrawn Instruction F.No.437/143/2009-Cus. IV (pt) dated 15.04.2011 as the matter pertaining to validity of Show Cause Notice has now been settled in terms of Notification No.44/2011-Customs (N.T.) dated 06.07.2011 and amended Section 28 of the Customs Act, 1962.
It may be noted that though in terms of Notification No.44/2011-Customs (N.T.) dated 06.07.2011 the officers of DRI and DGCEI are ‘proper officers' for the purposes of Section 28, the Board has directed that these officers shall not exercise authority in terms of clause (8) of Section 28 of the said Act. In other words, there would be no change in the present practice and officers of DRI and DGCEI shall NOT adjudicate the Show Cause Notices issued under Section 28 of the Act.
[Circular No. 44/2011 Cus dated 23.09.2011]
Source: www.taxindiaonline.com and www.cbec.gov.in
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