Chief Justice D.Y. Chandrachud presided over the case, with Additional Solicitor General N. Venkataraman representing the customs department and senior advocate Mukul Rohatgi leading the legal team for private companies. The arguments from both sides were heard over a span of four days.
NEW DELHI: The Supreme Court reserved its decision today (19th Sept) on the customs department’s request to review its 2021 ruling, which had denied Directorate of Revenue Intelligence (DRI) officers the authority to collect duties on goods that had been cleared for import by customs.
Chief Justice D.Y. Chandrachud presided over the case, with Additional Solicitor General N. Venkataraman representing the customs department and senior advocate Mukul Rohatgi leading the legal team for private companies. The arguments from both sides were heard over a span of four days.
The 2021 verdict, reviewed in open court rather than through the usual chamber proceedings, determined that a DRI officer does not qualify as the “proper officer” under the Customs Act to pursue duty recovery. The customs department contended that DRI officials should be classified as customs officers, while the opposing side argued that the original judgment was based on evident errors.
Typically, review pleas against judgments are considered in chambers without oral arguments. However, the customs department’s review plea was heard in open court.
Additional Solicitor General Venkataraman argued strongly for overturning the 2021 judgment, asserting that Directorate of Revenue Intelligence (DRI) officials should also be authorized under the Customs Act to recover duties on goods that had already been cleared for import.
He identified six “apparent errors” in the judgment, claiming it overlooked critical legal provisions and wrongly concluded that DRI officials are not customs officers capable of recovering duties.
Venkataraman emphasized that DRI officers, who have been part of the Ministry of Finance since 1977, should be considered customs officials. He argued that the judgment wrongly assumed a DRI officer is not a “proper officer” under the Customs Act but rather belongs to a different central government department. He stressed that the review plea did not seek a reassessment of customs duty by Border Security Force officers.
Senior advocate Mukul Rohatgi, representing the opposing side, argued that Supreme Court judgments are typically not reviewed unless clear errors are demonstrated.
The review plea concerns a March 9, 2021 judgment, where a three-judge bench led by then Chief Justice S.A. Bobde ruled that DRI officers are not “proper officers” under the Customs Act and lacked authority to recover duties on goods already cleared by customs.
This ruling had nullified DRI’s show cause notices to private companies, including M/S Canon India Private Limited, which sought duty payments, confiscation of goods, and penalties.
The legal question was whether DRI could issue show cause notices under the Customs Act for duties allegedly unpaid when goods were cleared as exempt by a Deputy Commissioner of Customs.
The 2021 judgment also addressed whether the Customs Act allows recovery of unpaid, partially paid, or erroneously refunded duties due to collusion or misstatement by “the proper officer.”
The Supreme Court had ruled that it was impermissible for an officer who did not issue the original assessment order to reopen the assessment and determined that the Additional Director General of the DRI was not a “proper officer” for duty recovery.
The case, initially decided by Chief Justice Bobde’s bench in 2021, was revisited when the bench led by successor CJI N.V. Ramana agreed to hear the customs department’s review plea in open court on May 19, 2022. The current Chief Justice-led bench has now reserved its verdict.
The 2021 judgment followed a series of cases filed by M/S Canon India Private Limited and other firms challenging a 2017 Central Excise and Service Tax Appellate Tribunal (CESTAT) ruling that had upheld DRI’s show cause notices for duty payment, confiscation, interest, and penalties. The private firms had argued that their imported cameras were exempt from basic customs duty under a 2012 notification, which amended an earlier 2005 exemption.
