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"(11) Notwithstanding anything to the contrary contained in any judgment, decree or order of any court of law, tribunal or other authority all persons appointed as officers of Customs under sub-

section (1) of section 4 before the sixth day of July 2011 shall be deemed to have and always had the power of assessment under section 17 and shall be deemed to have been and always had been the proper officers for the purposes of this section."

3. The effect of the amendment is that the Assistant Director (Investigation) who is an officer of the DGCEI was retrospectively recognized w. e. f. 06.07.2011 as a "proper officer" for the purposes of Sections 17 and 28 of the Customs Act, 1962. The circular in paragraph 5, however, goes on to say that the officers of the DRI and DGCEI "shall not exercise authority in terms of clause (8) of section 28; in other words, the circular says that there shall be no change in the present practice and officers of the DRI and DGCEI shall not adjudicate the show-cause notices issued under Section 28 of the said Act."

12. In the other paragraphs of the show-cause notice the specific charges against the other respondents in the present proceedings were made.

13. The show-cause notice summarizing the aforesaid facts and seeking the explanation of DSL and its directors was issued on 14.07.2009 by the Additional Director General of DGCEI, New Delhi. The respondents, after participating in the proceedings pursuant to the issue of the show cause notice for some time, approached the Settlement Commission and filed settlement application Nos.S.A.(E)Nos.2693/20011 to 2697/2011 on 01.08.2011. On 19.08.2011 the Settlement Commission sought the views of the DGCEI on the settlement applications filed by the respondents under Section 32E of the Central Excise Act, 1944. In response to the same the DGCEI objected to the settlement application by reply dated 05.12.2011 (Annexure P-1 to the writ petition). In this reply, which is brief, objection was raised to the application on the ground that there was no full and true disclosure of the duty liability, which is a condition precedent under Section 32E of the Central Excise Act for approaching the Settlement Commission, that DSL has not disclosed its full and true duty liability in the application which was not disclosed before the central excise authorities, that DSL has not also disclosed the manner in which the duty liability was derived and other relevant particulars in respect of which it admitted short levy on account of mis- classification, under valuation, clandestine manufacture or clearance, etc. It was pointed out, relying on the judgment of the Supreme Court in the case of Ajmera Housing Corporation & Another v. CIT, (2010) 326 ITR 642 and CIT v. Express Newspapers, (1994) 206 ITR 443 (SC) that there has to be a full and true disclosure by the applicant before the Settlement Commission of the additional duty liability and the Settlement Commission has to be first satisfied that this condition has been complied with, and that if the central excise authorities were in possession of material to establish fraud on the part of the assessee, the consequent proceedings cannot be permitted to be defeated by making an application to the Settlement Commission. It was submitted that the applicant had disclosed liability in a paltry amount of `81,75,625/- as against liability of `245,67,44,509/- raised by the show-cause notice and this prima facie showed that the applicant had not made a full and true disclosure of its duty liability before the Settlement Commission. It was also pointed out to the Settlement Commission that the stand of the applicants before the Settlement Commission was contradictory in the sense that at one breath they say that there was no clandestine manufacture/ clearance of catechu and at the same breath they say that there are some doubts raised with regard to the entries regarding purchase of catechu and, therefore, they want to pay commensurate duty on the same. It was prayed, for the above reasons, that the settlement application should not be entertained.

17. It would appear that the letter dated 19.12.2011 written by the DGCEI objecting to the Settlement Commission proceeding with the settlement applications and requesting that the case be relegated to the adjudication authorities already started by the Commissioner by the issue of show-cause notice was considered by the Settlement Commission which forwarded the same to the Commissioner (Investigation) for verification. A report of the Commissioner (Investigation) was forwarded to the DGCEI from the office of the Settlement Commission on 10.01.2012 for comments. On 01.02.2012, the DGCEI, through its Additional Director General, furnished a 5 page reply to the report. In this reply, strong objection was taken to the manner in which the investigation was carried by the Commissioner (Investigation) and it was pointed out that several crucial points of the Revenue were not considered by the Commissioner (Investigation). In particular the following points were highlighted: -

18. It will thus be seen that the DGCEI had strongly objected to the correctness of the conclusions and the manner in which the Commissioner (Investigation) had carried out the investigation into the settlement applications filed by the respondents. To the reply, the DGCEI also attached an Annexure containing its comments on the claim of the applicants and the views expressed by the Commissioner (Investigation) in a columnar form.

19. On 02.02.2012, brief written arguments/ preliminary objections on behalf of the central excise department were filed before the Settlement Commission by the special counsel for DGCEI and a copy thereof is marked as Annexure P-4 to the writ petition. These were followed up on 09.02.2012 with additional written arguments/ preliminary objections which are marked as Annexure P-5 to the writ petition. It is necessary and important to refer to them in a summarised form.