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2016 (1) TMI 875 - AT - CustomsProper officers - Whether DRI is the proper officer - jurisdiction of DRI to initiate proceedings - assessment, re-assessment or levy of short remitted Customs duty under Section 17 and 28 of Customs Act, 1962 - Held that - The officers namely those from the Directorate of Revenue Intelligence having been entrusted and assigned the functions as noted above, they are deemed to have been possessing the authority, whether in terms of Section 28 un-amended or amended and substituted. In the wake of Section 28(11) ibid, Show Cause Notices issued by DRI do not suffer from any jurisdictional infirmities and therefore the proceedings relating to show cause notices issued by DRI need not be kept pending to await the disposal of the challenge to Section 28(11) pending before the Hon ble Delhi High Court. - Decided against the appellants.
Issues Involved:
1. Jurisdiction of DRI officers to issue show cause notices under Section 28 of the Customs Act, 1962. 2. Retrospective application of Section 28(11) of the Customs Act, 1962. 3. Constitutional validity of Section 28(11) of the Customs Act, 1962. 4. Whether proceedings should await the decision of the Delhi High Court on the constitutional validity of Section 28(11). Issue-Wise Detailed Analysis: Jurisdiction of DRI Officers to Issue Show Cause Notices: The primary contention was whether officers of the Directorate of Revenue Intelligence (DRI) are "proper officers" authorized to issue show cause notices under Section 28 of the Customs Act, 1962. The appellants argued that DRI officers were not competent to issue such notices, citing that the assessment was done by other officers who became "the" proper officers. The Tribunal noted that Section 28(11) of the Customs Act, 1962, introduced on 16.9.2011, retrospectively validated the authority of DRI officers to issue such notices. The Tribunal concluded that DRI officers appointed before 6.7.2011 are deemed to have always had the power of assessment and are proper officers for the purposes of Section 28. Retrospective Application of Section 28(11): The appellants argued that the retrospective application of Section 28(11) did not cover show cause notices issued before 8.4.2011, as per Explanation 2 to Section 28(11). However, the Tribunal interpreted that the purpose of Section 28(11) was to validate show cause notices issued by DRI and Preventive Commissionerates, and this retrospective validation was intended to prevent revenue loss and disruption. The Tribunal cited the Statement of Objects and Reasons of the Customs (Amendment and Validation) Bill, 2011, to support this interpretation. The Tribunal also referred to the judgments of the Bombay High Court and Gujarat High Court, which upheld the retrospective application of Section 28(11). Constitutional Validity of Section 28(11): The appellants challenged the constitutional validity of Section 28(11) but conceded that the Tribunal is not competent to decide on constitutional matters. The Tribunal agreed, stating that it cannot determine the constitutional validity of any provisions of the Customs Act, 1962, as it is a creature of the statute. The Tribunal noted that the challenge to the constitutional validity of Section 28(11) is pending before the Delhi High Court, but no stay has been granted by the High Court on proceedings related to show cause notices issued by DRI. Whether Proceedings Should Await the Decision of the Delhi High Court: The appellants argued that the proceedings should be stalled until the Delhi High Court decides on the constitutional validity of Section 28(11). The Tribunal rejected this proposition, stating that there is no stay from the Delhi High Court on the proceedings related to DRI show cause notices. The Tribunal emphasized that it is untenable to stall proceedings nationwide merely because the constitutional validity of a provision is under challenge in one High Court. The Tribunal cited the judgments of the Bombay High Court and Gujarat High Court, which have upheld the competence of DRI officers to issue show cause notices under Section 28, even for the period prior to 8.4.2011. Conclusion: The Tribunal concluded that show cause notices issued by DRI officers do not suffer from any jurisdictional infirmities in light of Section 28(11) of the Customs Act, 1962. The proceedings relating to these show cause notices need not await the decision of the Delhi High Court on the constitutional validity of Section 28(11). The respective appeals are to be listed for hearing in the usual course. The Misc. application was disposed of accordingly.
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