2017 (9) TMI 762 - AT - Customs

Jurisdiction - power of DRI to issue SCN - Additional Commissioner (Preventive), proper officer or not - whether DRI is competent to issue show-cause notice? - Held that - 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 - Later on, i.e. for the period subsequent to the amendment, the matter i.e. the DRI officers having the proper jurisdiction to issue the SCN or not had came up before the Hon ble Delhi High Court in the case of Mangali Impex vs. Union of India 2016 (5) TMI 225 - DELHI HIGH COURT , and the High Court inter alia, held that even the new inserted section 28 (11) does not empower either the officers of DRI or the DGCEI to issue the SCN or adjudicate for the period prior to 8.4.2011. Recently, the Hon ble High Court of Delhi in the case of BSNL Vs. UOI 2017 (6) TMI 688 - DELHI HIGH COURT has dealt with the identical issue where the notice was also issued by DRI. The Hon ble High Court of Delhi has considered the judgment in the case of Mangli Impex Vs. UOI which is stayed by the Hon ble Supreme Court. Finally the Hon ble High Court has granted liberty to the petitioner by observing that petitioner is permitted to review the challenge depending on the outcome of the appeals filed by the UOI in the Supreme Court against the judgment of the Court in the case of Mangli Impex Ltd. Appeal allowed by way of remand.

Summary

Issues:
Jurisdiction of the Directorate of Revenue Intelligence (DRI) to issue show-cause notice under the Customs Act.

Analysis:
The appellant argued that the Show Cause Notice was issued by an officer not designated as the proper officer under Section 2(34) of the Customs Act, citing a Delhi High Court decision. The respondent, represented by the Revenue, supported the Commissioner of Customs' order. The Tribunal considered the issue of jurisdiction of the DRI to issue the notice under the Customs Act. The appellant relied on a Supreme Court decision regarding the status of DRI officers as proper officers. Subsequent amendments to the Customs Act and a notification by the CBEC appointed the Additional Director General, DRI as a proper officer. A later amendment assigned proper officer functions to DRI officers with retrospective effect.

The Delhi High Court ruled in favor of the assessee, stating that DRI officers were not empowered to issue notices or adjudicate prior to a specific date. However, conflicting decisions arose from other High Courts. The matter eventually reached the Supreme Court, which stayed the Delhi High Court's judgment, rendering the issue sub judice. Another case in the Delhi High Court granted liberty to review the challenge based on the outcome of appeals filed in the Supreme Court. Following the Delhi High Court's decision in a similar case, the Tribunal set aside the impugned order and remanded the matter to the original authority to decide jurisdiction after the Supreme Court's decision, providing the assessee an opportunity to be heard while maintaining the status quo.

In conclusion, the Tribunal allowed the appeal by remanding the case for further consideration in light of the pending Supreme Court decision, following the principles established by the Delhi High Court.