The Supreme Court of India on Tuesday began reviewing a significant 2021 judgment which determined that the Directorate of Revenue Intelligence (DRI) does not have the authority to seek recovery of duties on goods that have already been cleared for import by the customs department. This case, initially decided by a bench led by then Chief Justice S A Bobde on March 9, 2021, has significant implications for customs enforcement and the powers of the DRI.
The central legal issue under review concerns whether the DRI can issue a show cause notice under the Customs Act for the recovery of duties that were not levied or paid at the time of import clearance by a Deputy Commissioner of Customs, who had determined that the imports were exempt from duties. Additionally, the court examined whether a provision of the Customs Act empowers the recovery of duty not paid, part paid, or erroneously refunded due to collusion, or any willful misstatement or suppression of facts.
In the 2021 ruling, the Supreme Court concluded that it was “completely impermissible” for an officer, who did not pass the original order of assessment, to re-open the assessment. It also ruled 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.
This ruling was challenged, and a bench headed by successor Chief Justice N V Ramana, in May 2022, agreed to hear the customs department’s review plea in an open court. The current bench, comprising Chief Justice D Y Chandrachud, Justices JB Pardiwala, and Manoj Misra, has now taken up the matter. Additional Solicitor General N Venkataraman presented the customs department’s arguments, critiquing the previous verdict.
The case under review originated from a batch of cases filed by M/S Canon India Private Limited and other firms against the Commissioner of Customs, challenging the 2017 judgment of the Central Excise and Service Tax Appellate Tribunal (CESTAT). The CESTAT had upheld the DRI’s show cause notice to the firms seeking payment of duty and the consequential confiscation of goods, demand of interest, and imposition of penalties under the Customs Act. The private firms contended that the imported cameras were exempt from the levy of basic customs duty as per a 2012 notification, amending a prior exemption from March 1, 2005, for “Digital Still Image Video Cameras.”
