2018 (1) TMI 1687 - AT - Customs

Jurisdiction - proper officer to issue SCN - Whether DRI/SIIB is not competent to issue show-cause notice? - HELD THAT - From the record, it appears that the preliminary issue which emerges in the present appeal is regarding the jurisdiction of the DRI to issue the show-cause notice under the Customs Act. The assessee-Respondent has taken a stand that in terms of the Hon ble Apex Court decision in the case of COMMISSIONER OF CUSTOMS VERSUS SAYED ALI 2011 (2) TMI 5 - SUPREME COURT , the DRI officers were not proper officers in terms of section 2(34) of the Customs Act, 1962 - It is also seen that after the declaration of law by the Hon ble Supreme Court (Supra), the provisions of section 28 of the Customs Act, 1962 were amended with effect from 08.04.2011 vide Finance Act, 2011. It is also noticed that in order to overcome the situation created by the judgment of Hon ble Supreme Court in the case of Sayed Ali, Notification No.44/2011-Cus (NT), dated July 6, 2011 was issued by the CBEC, assigning the functions of the proper officer to various officers (including Additional Director General, DRI) mentioned in the notification, for the purposes of Section 28 of the Act. Thus, w.e.f. July 6, 2011, the Additional Director General, DRI was prospectively appointed as proper officer for the purpose of Section 28 of the Customs Act. Hence, from 06.07.2011 ADG-DRI has been empowered to issue demand notice under Section 28 - Subsequently, sub-section 11 was inserted under section 28 of the Customs (Amendment and Validation) Act, 2011 dated 16.9.2011, assigning the functions of proper officers to various DRI officers with retrospective effect. Being conflicting decisions of various High Courts, finally the matter reached to Hon ble Supreme Court who on 07.10.2016 granted the stay of operation of the judgment passed by the High Court of Delhi. Thus the issue is subjudice before the Hon ble Supreme Court in UNION OF INDIA VERSUS MANGALI IMPEX LTD. 2016 (8) TMI 1181 - SC ORDER . The impugned order is set aside and the appeal is allowed by way of remand to the adjudicating authority to decide the issue afresh after the judgment of the Hon ble Supreme Court in the case of Mangli Impex.

Summary

Issues involved:
Jurisdiction of DRI to issue show-cause notice under Customs Act, 1962.

Detailed Analysis:

1. Background and Initiation of Proceedings:
The case involved a show-cause notice issued by the DRI, challenged by the appellant. The High Court's observation in a related case questioned the competence of DRI/SIIB to issue such notices, leading to the request to set aside the proceedings initiated by the DRI/DGCEI.

2. Jurisdiction of DRI and Legal Precedents:
The primary issue revolved around the jurisdiction of the DRI to issue show-cause notices under the Customs Act. The appellant contended that, as per a Supreme Court decision, DRI officers were not considered proper officers under the Customs Act.

3. Amendments and Notifications:
Following the Supreme Court decision, amendments were made to the Customs Act in 2011, empowering the Additional Director General, DRI, as the 'proper officer' for issuing demand notices under Section 28. Subsequent notifications and amendments further clarified the functions of DRI officers as proper officers with retrospective effect.

4. Judicial Interpretations and Conflicting Views:
Various High Courts, including Delhi, Mumbai, and Telangana/Andhra Pradesh, had conflicting views on whether DRI officers had the jurisdiction to issue show-cause notices. The matter eventually reached the Supreme Court, which granted a stay on the Delhi High Court's judgment, indicating that the issue was pending before the apex court.

5. Recent High Court Decision and Tribunal's Ruling:
A recent decision by the Delhi High Court in a similar case granted liberty to review the challenge based on the outcome of appeals filed in the Supreme Court. Following this, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority to decide the jurisdiction issue after the Supreme Court's decision, ensuring the appellant's right to be heard.

6. Final Decision and Status Quo:
In line with the Delhi High Court's ruling, the Tribunal allowed the appeal by remanding the case for fresh adjudication post the Supreme Court's decision. The status quo was to be maintained until a final decision was reached, emphasizing the importance of the pending Supreme Court judgment in the Mangli Impex case.

This comprehensive analysis highlights the legal complexities surrounding the jurisdiction of DRI officers in issuing show-cause notices under the Customs Act, emphasizing the need for clarity from the Supreme Court to resolve conflicting interpretations by various High Courts.