2017 (10) TMI 1608 - AT - Customs

Jurisdiction - power of DRI to issue SCN - section 28 of the Customs Act - HELD THAT - By following the ratio laid down by the Hon ble High Court of Delhi in the case of BHARAT SANCHAR NIGAM LIMITED VERSUS UNION OF INDIA ORS 2017 (6) TMI 688 - DELHI HIGH COURT as well as by considering totality of facts and circumstances, we set aside the impugned order and remand the matter to the original adjudicating authority to first decide the issue of jurisdiction after the availability of Hon ble Supreme Court decision in the case of UNION OF INDIA VERSUS MANGALI IMPEX LTD. 2016 (8) TMI 1181 - SC ORDER and then on merits of the case but by providing an opportunity to the assessee of being heard. Till the final decision, the status quo will be maintained. Matter on remand.

Summary

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

Analysis:
The case involved a challenge to the jurisdiction of the Directorate of Revenue Intelligence (DRI) to issue a show-cause notice under the Customs Act. The appellant contended that DRI officers were not proper officers as per the Customs Act, citing a Supreme Court decision. Following the Supreme Court's ruling, amendments were made to the Customs Act in 2011, empowering Additional Director General, DRI as the proper officer for issuing demand notices. Subsequently, a provision was retroactively inserted in 2011, designating various DRI officers as proper officers. However, conflicting views emerged from different High Courts on the issue. The Delhi High Court held in favor of the assessee, stating that neither DRI nor DGCEI officers had the authority to issue show-cause notices before 2011. In contrast, the Mumbai High Court and the High Court of Telangana and Andhra Pradesh took a different stance. The matter eventually reached the Supreme Court, which stayed the Delhi High Court's judgment, indicating that the issue was pending before the apex court.

Further Development:
A recent case in the Delhi High Court dealt with a similar issue where the notice was issued by DRI. The court considered the stay on the judgment in the Mangli Impex case and granted liberty to the petitioner to review the challenge based on the outcome of appeals filed in the Supreme Court. Following the Delhi High Court's decision in this case, the appellate tribunal set aside the impugned order and remanded the matter to the original adjudicating authority. The tribunal directed the authority to decide on the jurisdiction issue after the Supreme Court's decision in the Mangli Impex case and then proceed with the merits of the case, ensuring the assessee's right to be heard. The status quo was to be maintained until a final decision was reached.

This detailed analysis of the judgment highlights the complex legal issues surrounding the jurisdiction of DRI officers to issue show-cause notices under the Customs Act, the conflicting views of various High Courts, and the subsequent legal developments leading to the matter being sub judice before the Supreme Court.