Legal principle

A DRI officer to whom a notification (such as that dated 6.7.2011) specifically assigns functions under sections 17 and 28 for the purposes of section 2(34) is a 'proper officer' competent to issue a show cause notice under section 28(1), and a subsequent notification assigning different functions does not rescind or dilute that assignment.

Court decision

The court held that respondent No.1 had jurisdiction to issue the show cause notice: since the notice was issued on 24.1.2013, after the notification dated 6.7.2011 which specifically assigned functions under sections 17 and 28 to DRI officers (including the Joint Director) for the purposes of s.2(34), he was a proper officer competent to issue a notice under s.28(1). The notification dated 2.5.2012 did not supersede the 6.7.2011 notification; both co-exist. The petition was dismissed, rule discharged and interim relief vacated, with liberty to file reply to the SCN till 15.3.2014, direction to finalize assessment expeditiously, and the provisional release conditions, deposit, security and bank guarantee to stand subject to the adjudication outcome.

Facts

Swati Menthol & Allied Chemicals Ltd imported 14,400 kg of goods from China at Nhava Sheva Port, declaring them as 'Eucalyptol' under CTH 29092000 (7.5% duty) vide Bill of Entry No.5563058 dated 26.12.2011. The Directorate of Revenue Intelligence (DRI), believing the goods were mis-declared 'Eucalyptus Oil' classifiable under CTH 33012924 (20% duty), prevented clearance, and the goods were provisionally released on 21.2.2012 on deposit of Rs.10,04,049/- as duty, a bond of Rs.68,00,127/- and a bank guarantee of Rs.17,25,000/-. The Joint Director, DRI, Ahmedabad issued a show cause notice dated 24.1.2013 proposing reclassification, confiscation under s.111(m), recovery of differential duty under s.28(4), interest under s.28AA and penalties under ss.114A and 112(a). The petitioners filed a writ petition in the Gujarat High Court challenging, principally, the jurisdiction of the DRI officer to issue the show cause notice.

Key provisions

• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 2(34), Customs Act, 1962 — Definitions
• Section 17, Customs Act, 1962 — Assessment of duty
• Section 4(1), Customs Act, 1962 — Appointment of officers of customs
• Section 18, Customs Act, 1962 — Provisional assessment of duty
• Section 114A, Customs Act, 1962 — Penalty for short-levy or non-levy of duty in certain cases
• Section 111(d), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 28AA, Customs Act, 1962 — Interest on delayed payment of duty
• Section 112(a), Customs Act, 1962 — Penalty for improper importation of goods