2021 (9) TMI 1397 - HC - Customs

Jurisdiction - proper officer to issue SCN - SCN issued by Additional Director General, DRI, Zonal Unit, Chennai - whether the principle laid down by the Hon'ble Supreme Court or the law declared by the Supreme Court in Canon India case dated 09.03.2021 can be made applicable to the petitioner's case? - HELD THAT - The judgment of the Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS 2021 (3) TMI 384 - SUPREME COURT has already been considered by this Court two times - In earlier occasion, a learned Judge of this Court in QUANTUM COAL ENERGY (P) LTD. VERSUS THE COMMISSIONER, OFFICE OF THE COMMISSIONER OF CUSTOMS, CUSTOM HOUSE, TUTICORIN 2021 (3) TMI 1034 - MADRAS HIGH COURT has considered the import of Canon India case, and allowed those writ petitions. Thereafter, when similar writ petitions came up in DEEPAK GOPALDAS BAJAJ, M/S. TAHER IMPEX PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS, CUSTOM HOUSE, TUTICORIN, THE ADDITIONAL DIRECTOR GENERAL DIRECTORATE OF REVENUE INTELLIGENCE, CHENNAI, THE ASSISTANT COMMISSIONER OF CUSTOMS (ARC) 2021 (10) TMI 122 - MADRAS HIGH COURT , there was an occasion to consider all these aspects, including the import of the law declared by the Canon India case, where it was held that all the queries/objections raised by the learned Standing Counsel appearing for the respondent Customs herein, including that, as against Canon India judgment, review has been field and by virtue of the amendment made in Section 28 by inserting Sub Section (11) the Customs Authorities have every right to issue Show Cause Notice by any official, who can be treated as a proper officer, have been considered and answered. Though a plea was raised by the Revenue side, that even in Deepak Gopaldas Bajaj batch case, as against the Canon India case, the Revenue has filed review, that aspect also has been considered by the learned Judge of the Karnataka High Court in the judgment which has been taken note of in Deepak Gopaldas Bajaj batch case - Also, it is to be noted that, subsequent to Canon India case dated 09.03.2021, a similar issue came up before the Hon'ble Supreme Court in the case of COMMISSIONER OF CUSTOMS, KANDLA VERSUS M/S. AGARWAL METALS AND ALLOYS 2021 (9) TMI 316 - SUPREME COURT , where the Hon'ble Supreme Court has held that In view of decision in CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS 2021 (3) TMI 384 - SUPREME COURT these appeals must fail as the show cause notice(s) in the present cases was also issued by Additional Director General (ADG), Directorate of Revenue Intelligence (DRI), who is not a proper officer within the meaning of Section 28(4) read with Section 2(34) of the Customs Act, 1962. When that being so, merely because the Revenue had filed belated appeal as against the CESTAT order dated 03.01.2018, it would not preclude the petitioner to raise the point of want of jurisdiction, as it goes to the root of matter, when the jurisdiction itself is questioned and the said point is to be answered in favour of the noticee, the question of deciding the adjudicatory process on merits does not arise. Therefore, the said objection as projected by the learned Standing Counsel for the Customs stating that the appeal filed by it since is pending in SR stage, the petitioner cannot file these writ petitions, taking the ground of want of jurisdiction, cannot be countenanced. This Court has no hesitation to hold that the petitioner is entitled to succeed in these writ petitions - Petition allowed.

Summary

Issues Involved:
1. Jurisdiction of Directorate of Revenue Intelligence (DRI) officials to issue show cause notices under Section 28 of the Customs Act.
2. Application of the Supreme Court's ruling in Canon India Pvt. Ltd. case to the present matter.
3. Validity of proceedings initiated by DRI officials prior to the 2011 amendment of Section 28 of the Customs Act.
4. Entitlement of the petitioner to a refund of amounts and bank guarantees deposited during the investigation.

Issue-wise Detailed Analysis:

1. Jurisdiction of Directorate of Revenue Intelligence (DRI) Officials:
The primary issue revolves around whether the DRI officials are considered "proper officers" under Section 28 of the Customs Act, 1962. The petitioner argued that the show cause notice issued by the Additional Director General, DRI, was invalid as the DRI officials are not "proper officers" within the meaning of Section 28(1) and 28(4) of the Customs Act. This argument is supported by the Supreme Court's ruling in Canon India Pvt. Ltd. case, which clarified that only the officer who initially assessed the goods or his successor could issue such notices.

2. Application of the Supreme Court's Ruling in Canon India Pvt. Ltd. Case:
The petitioner contended that the Supreme Court's decision in Canon India Pvt. Ltd. should be applied to their case. The Supreme Court had held that DRI officials are not "proper officers" under Section 28(4) of the Customs Act, making any show cause notices issued by them invalid. The petitioner argued that this ruling should lead to the quashing of the show cause notice issued to them and the refund of amounts deposited during the investigation.

3. Validity of Proceedings Initiated by DRI Officials Prior to the 2011 Amendment:
The court noted that the 2011 amendment to Section 28 of the Customs Act, which included Sub-Section 11, allowed DRI officials to initiate adjudication proceedings. However, the Delhi High Court in Mangali Impex case held that this amendment had only a prospective effect. Therefore, any proceedings initiated by DRI officials prior to 2011 should be governed by the pre-amendment provisions. The Supreme Court's decision in Canon India further reinforced that DRI officials were not proper officers even under the amended provisions, thus invalidating proceedings initiated by them before 2011.

4. Entitlement to Refund of Amounts and Bank Guarantees:
The petitioner sought the refund of amounts and bank guarantees deposited during the investigation, arguing that the entire proceedings were vitiated due to the lack of jurisdiction of the DRI officials. The court agreed with the petitioner, noting that the Supreme Court's ruling in Canon India had been consistently followed in similar cases. The court directed the respondents to refund the amounts and release the bank guarantees deposited by the petitioner.

Conclusion:
The court quashed the impugned show cause notice dated 06.12.2012, issued by the DRI officials, on the ground of lack of jurisdiction as per the Canon India Pvt. Ltd. ruling. The court directed the respondents to refund the amounts and release the bank guarantees deposited during the investigation. The court clarified that the quashment of the show cause notice would not preclude the respondents from initiating fresh proceedings in accordance with the law. The writ petitions were allowed, and the connected miscellaneous petitions were closed.