SC lets customs revive notices for Rs20k cr duty

NEW DELHI: In a major victory for Union revenue department, the Supreme Court on Thursday reversed its 2021 judgment and allowed the Central Board for of Indirect Taxes and Customs (CBIC) to revive notices for alleged short levy, non-levy or erroneous refund of customs duty, which cumulatively amount to Rs 20,000 crore, on imported goods.

The SC had in 2021 quashed the notices issued by Department of Revenue Intelligence officers acting as officers of custom on the ground that they were not 'proper officers' under the Customs Act, 1962. However, the review petition filed by the Commissioner of Customs was allowed to be heard in open court by a bench led by then CJI N V Ramana in 2022.

A bench of CJI D Y Chandrachud, and Justices J B Pardiwala and Manoj Misra agreed with additional solicitor general N Venkataraman that DRI officials designated as 'proper officers' and said the SC in 2021 had erred by ruling that all proper officers, who alone can issue show cause notice for customs duty payment, must be officers of customs and not officers from DRI.

Faulting the 2021 judgment for not taking into consideration the 2011 notification assigning functions of the proper officer to DRI officers, the bench said, "the 2021 decision erroneously recorded the finding that since DRI officers were not entrusted with the functions of a proper officer for the purposes of Section 28 in accordance with Section 6, they did not possess the jurisdiction to issue show cause notices for the recovery of duty under Customs Act."

Importantly, Justice Pardiwala, writing the 162-page judgment, said, "Section 97 of the Finance Act, 2022 which, retrospectively validated all show cause notices issued under Section 28 of the Act, 1962, cannot be said to be unconstitutional."