The Supreme Court on Tuesday handed multinationals Nikon, Canon, Sony and Samsung a major relief when it quashed an order of the Central Excise and Service Tax Appellate Tribunal (CESTAT) and upheld an exemption given to the companies from paying basic customs duty for import of their digital still image video cameras.
The exemption from paying duty charges was on the basis of a 2005 notification, which was amended in 2012.
The companies had moved the apex court against CESTAT’s 2107 order denying them the exemption, leading to confiscation of goods, demand of interest and imposition of penalty under various sections of the Customs Act of 1962.
The CESTAT order was based on a Directorate of Revenue Intelligence (DRI) action to recover the duty from the companies for cameras imported by them to Delhi in 2012. An Additional Director General of DRI had issued notice under Section 28(4) of the Customs Act to the companies for recovery of duty.
The DRI action was taken despite the cameras having been cleared for import after a team led by a Deputy Commissioner of Customs at the Delhi airport found them eligible for duty exemption.
The DRI had argued that Customs authorities were “induced” by “willful misstatements and suppression of facts” about the cameras.
A three-judge Bench led by Chief Justice of India Sharad A. Bobde, in a 21-page judgment said the DRI had no authority to initiate recovery against the companies.
The DRI’s Additional Director General was not even the “proper officer” to authorise recovery, it held.
Justice Bobde, who wrote the judgment, said the “proper officer” was the Deputy Commissioner of Customs or his successor as it was his office which had assessed the cameras initially and found them fit for exemption per the notification.
“Where one officer has exercised his powers of assessment, the power to order re-assessment must also be exercised by the same officer or his successor and not by another officer of another department though he is designated to be an officer of the same rank. In our view, this would result into an anarchical and unruly operation of a statute,” the bench said in its verdict.