Introduction of a Legislative Amendment Bill to amend the Customs Act, 1962 (52 of 1962) with retrospective effect to validate Show Cause Notices issued for demand of Customs duty

The Union Cabinet July 21  gave its approval for introducing a Legislative Amendment Bill to amend Section 28 of the Customs Act, 1962 (52 of 1962) to retrospectively recognize specified Customs officers as 'proper officers' for assessment of Customs duty thereby validating large number of Show Cause Notices involving substantial Customs revenue that are otherwise rendered invalid as a consequence of a judgement of the Hon'ble Supreme Court.

The Legislative Amendment Bill to amend Section 28 of the Customs Act, 1962 will be introduced in the ensuing Monsoon Session of Parliament.

The proposed amendment of Section 28 of the Customs Act, 1962 (52 of 1962) would safeguard Government revenue involved in Show Cause Notices issued by specified Customs officers viz. officers of Commissionerates of Customs (Preventive), Directorate General of Revenue Intelligence (DRI), Directorate General of Central Excise Intelligence (DGCEI) and Central Excise Commissionerates. Officers of DRI alone have issued such notices involving Customs duty to the tune of over Rs. 7,500 Crores. Also, tax evaders will not get benefited at the expense of the exchequer on a mere technical ground of jurisdiction. Finally, this would provide certainty in revenue matters by settling pending proceedings before various judicial and quasi-judicial authorities.

Background:

Hon'ble Supreme Court vide its order dated 18.02.2011 in the case of Commissioner of Customs Vs. Sayed Ali & Anr. [C.A. Nos. 4294-4295 of 2002 along with C.A. Nos. 4603-4604 of 2005] has held that only a Customs officer who has been assigned the specific functions of assessment and re-assessment of Customs duty in the jurisdictional area where the import has been effected, by either the Board or the Commissioner of Customs, in terms of Section 2(34) of the Customs Act, 1962 is competent to issue notice under Section 28 of the said Act. As a result, it is held that the Commissioners of Preventive Wing would not have jurisdiction to issue Show Cause Notice in the instant case since specific function of assessment and re-assessment was not assigned to him. This decision invalidates a large number of Show Cause Notices involving significant revenue thereby warranting remedial measures.