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August 25, 2023

Canon India Private Limited versus Commissioner of Customs

Canon India Private Limited versus Commissioner of Customs

Directorate of Revenue Intelligence has no Jurisdiction to issue show cause notice (SCN)


The present case is about Applicant (Appellant) that is Canon India who had imported Digital Still image Video Cameras. These Cameras were under the exempted category for taxation purpose.  The goods were duly checked by the customs and cleared without any duty (tax). After a gap of quite some time the Directorate of Revenue Intelligence issued a show cause notice to the Appellants to pay the duty on the goods so imported. Here the question is that whether the DRI had the authority to issue the show cause notice?

Facts of the Case

The appellants (applicants) in this case had imported Digital Still image video cameras and these were exempted from basic customs duty as per a notification to that effect. After elapse of some good time the Directorate of Intelligence on his own accord thought otherwise and he issued a show cause notice to the importer stating that the importer had not revealed full facts, there was suppression of material aspect, misleading statements and so on. Now the DRI wants to levy the customs duty and fine. The importer went to the CESTAT the appellate body and the appellate body also upheld the order of the DRI.  The importer had to move the Supreme Court to get relief by way of this appeal.


The issue here is the rejection of the refund claim filed by the appellant who had paid 50% of the tax instead of 5% due to a clerical error. The authorities were directed to allow correction to the error. The correction was allowed but the refund was refused on the grounds of limitation. The importer had move the Supreme Court in appeal and sought relief.


The question from the importer is that whether the Directorate of Intelligence had authority to issue a show cause notice under section 28(4) of the Act for recovery of duties allegedly not levied or paid when the goods have been cleared for import by a Deputy Commissioner of Customs who decided that the goods are exempted. It is necessary that Section 28 (4) is judiciously used as it empowers the recovery but this should be done by the ‘proper officer’

The power to review an order passed by the ‘proper officer” lies with an officer of the same rank and from the same department. Any other officer is not the proper officer.

Observation and Judgement

The court holds that the entire proceedings in the present case initiated by the Additional Director General of DRI by issuing a show cause notice in all matters before the court are invalid without any authority of law and are liable to be set aside and additional demands are also set aside.

The court also looked if there was any wilful omission, suppression of facts, they did not find any. The limitation of Five years is not tenable as the goods were checked with the bill of entry whilst clearing the goods was done.

The court observed that there was no need for further enquiry and allowed the appeal. The order passed by CESTAT is set aside. Parties to bear their own costs.


The importer had bought cameras of the specification where it could do 29 minutes of recording and there was literature to that effect inside the camera boxes.  When the goods arrived the importer allowed verification of the goods before clearing them. The goods were of exempt category the proper officer had no objections to it.

Later on the DRI issued a show cause notice about recovery of dues levelling various charges. The importer replied to the SCN. After lot of deliberation a conclusion has been drawn that the SCN is not in order and it is set aside. The appeal of the importer is allowed.

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