2017 (9) TMI 898 - AT - Customs

Jurisdiction - power of DRI to issue SCN - Held that - the notice issued by the DRI who was not a competent authority as per the ratio laid down in the case of Mangali Impex Ltd. Vs. UOI 2016 (5) TMI 225 - DELHI HIGH COURT - In this connection, we note that similar issues have been dealt with in various cases by the Tribunal recently. It is held that the matters have to be remanded back to the original authority for a decision - appeal allowed by way of remand.

Summary

Issues Involved:
1. Jurisdiction of the Directorate of Revenue Intelligence (DRI) to issue show cause notices under the Customs Act.
2. Validity of show cause notices issued by DRI prior to and after the amendment of Section 28 of the Customs Act, 1962.
3. Conflicting judgments of various High Courts regarding the DRI's authority.
4. Pending decision by the Supreme Court on the matter.

Detailed Analysis:

1. Jurisdiction of the DRI to Issue Show Cause Notices:
The primary issue revolves around whether the Directorate of Revenue Intelligence (DRI) officers have the jurisdiction to issue show cause notices under the Customs Act. The appellants contended that the DRI was not competent to issue such notices, citing the Hon'ble Supreme Court's decision in the case of Commissioner of Customs Vs. Sayed Ali, which stated that DRI officers were not proper officers as defined under Section 2(34) of the Customs Act, 1962.

2. Validity of Show Cause Notices Issued by DRI:
The Tribunal noted that after the Supreme Court's decision in Sayed Ali, the Customs Act was amended via the Finance Act, 2011, effective from 08.04.2011. This amendment included Notification No. 44/2011-Cus (NT) dated July 6, 2011, which prospectively appointed Additional Director General, DRI, as the proper officer for the purposes of Section 28. Furthermore, sub-Section (11) was inserted under Section 28 of the Customs (Amendment and Validation) Act, 2011, assigning the functions of proper officers to various DRI officers with retrospective effect.

3. Conflicting Judgments of Various High Courts:
The Tribunal acknowledged the conflicting judgments from different High Courts on the DRI's authority. The Delhi High Court in Mangali Impex Ltd. Vs. UOI held that the newly inserted Section 28(11) did not empower DRI officers to issue show cause notices for the period prior to 08.04.2011. Conversely, the Bombay High Court in Sunil Gupta Vs. Union of India and the High Court of Telangana and Andhra Pradesh in Vuppalamritha Magnetic Components Ltd. Vs. DRI held views contrary to the Delhi High Court.

4. Pending Decision by the Supreme Court:
The Tribunal highlighted that the matter is currently sub-judice before the Hon'ble Supreme Court, which granted a stay on the Delhi High Court's judgment in Mangali Impex Ltd. Vs. UOI. The Supreme Court's decision will ultimately settle the legal issue regarding the DRI's jurisdiction to issue show cause notices.

Conclusion and Order:
In light of the above, the Tribunal decided to remand the matters for a fresh decision. The original adjudicating authority is directed to first resolve the jurisdictional issue based on the Supreme Court's forthcoming decision in the Mangali Impex Ltd. case and then decide on the merits of each case, ensuring that the assessee is given an opportunity to be heard. Until the final decision, the status quo will be maintained. The appeals filed by the assessees are allowed by way of remand.

(Dictated & pronounced in the open court)