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2018 (7) TMI 794 - HC - CustomsValidity of SCN - Jurisdiction - proper officer - authorization u/s 2(34) - power of Additional Director of Directorate of Revenue Intelligence to invoke the provisions of Section 124 of the Customs Act 1962 - whether the Additional Director of Directorate of Revenue Intelligence has the jurisdiction to invoke Section 124 of the Act of 1962 or not? Held that - Section 2(34) of the Act of 1962 defines a proper officer. A proper officer in relation to any function to be performed under the Act of 1962 means the officer of Customs who is assigned those functions by the Board or the Principal Commissioner of Customs or Commissioner of Customs. Section 4 of the Act of 1962 empowers the Board to appoint persons as officers of Customs. It allows the Board to authorize a Principle Chief Commissioner or Chief Commissioner of Customs or a Joint or Assistant or Deputy Commissioner of Customs to appoint officers of Customs below the rank of Assistant Commissioner of Customs. Section 6 of the Act of 1962 allows the Central Government to entrust the functions of the Board or any officer of the Customs on any officer of the Central or State Government or a local authority either conditionally or unconditionally. Section 152 of the Act of 1962 allows the Central Government to delegate the powers exercisable by the Board Commissioner of Customs Joint or Assistant Commissioner of Customs on the persons specified therein. Section 2(34) of the Act of 1962 mandates that an officer of the Customs must be duly authorised either by the Board or the Commissioner of Customs to discharge a function under the Act of 1962. In absence of such authorization by the Board or the Commissioner of Customs under the Act of 1962 no officer can discharge any function under the Act of 1962 which he is not authorised to discharge. An appointee under Section 4 of the Act of 1962 requires an authorization under Section 2(34) to be considered as proper officer to discharge the functions of a Customs Officer. An employee other than of Customs entrusted with the discharge of functions under the Act of 1962 would also require an authorization under Section 2(34) to be considered as a proper officer entitled to discharge functions under the Act of 1962 - The notification No. 31/97- Customs (N.T.) dated July 7 1997 and notification No. 17/2002 Customs (N.T.) dated March 7 2002 are exercise of powers under Section 4 of the Act of 1962. It is not an exercise of power under Section 2(34) of the Act of 1962. The personnel of Directorate of Revenue Intelligence named in such notifications have not been authorised to discharge any functions under the Act of 1962 by a conferment of authorization by the Board or the Commissioner of Customs exercising powers under Section 2(34) of the Act of 1962. The circular No. 4/99-Cus. dated February 15 1999 is also not an exercise of powers under Section 2(34) of the Act of 1962. There is no notification on record authorizing an Additional Director of Directorate of Revenue Intelligence under Section 2(34) of the Act of 1962 to discharge the functions of a proper officer under Section 124 of the Act of 1962. An authorization under Section 2(34) of the Act of 1962 is sine quo non for any officer of Customs or any officer entrusted under Section 6 of the Act of 1962. As the scheme of the Act of 1962 stands an officer of Customs has to be authorised under Section 2(34) of the Act of 1962 to discharge the functions entrusted. An officer other than a Customs officer entrusted under Section 6 of the Act of 1962 needs an authorization under Section 2(34) to be considered as proper officer authorized to discharge the functions of a Customs officer under the Act of 1962. Additional Director of Directorate of Revenue Intelligence is not entitled to invoke Section 124 of the Customs Act 1962. The impugned show-cause notices are quashed as being without jurisdiction.
Issues Involved:
1. Jurisdiction of the Additional Director of Directorate of Revenue Intelligence (DRI) to invoke Section 124 of the Customs Act, 1962. Detailed Analysis: Jurisdiction Issue: The petitioner challenged the notice to show cause issued by the Additional Director General, DRI, Kolkata, under Section 124 of the Customs Act, 1962, on the grounds of lack of jurisdiction. The petitioner argued that the Additional Director General of DRI is not authorized to issue such a notice as per the provisions of the Customs Act, 1962. Petitioner's Arguments: The petitioner’s counsel contended that only persons specified in Section 122 of the Customs Act, or their delegates under Section 152, have the authority to issue show cause notices under Section 124. They emphasized that the Additional Director General of DRI is not included in these categories. The counsel referenced several sections of the Customs Act, including Section 2(1) (adjudicating authority), Section 2(34) (proper officer), Section 4 (appointment of officers of Customs), Section 5 (powers of officers of Customs), and Section 6 (entrustment of functions to other officers). They argued that the functions of a Customs officer can be entrusted to other officers under Section 6, but the powers cannot be delegated except as permitted under Section 152. Therefore, the issuance of the show cause notice by the Additional Director General of DRI was claimed to be without jurisdiction. Respondent's Arguments: The counsel for the DRI argued that all officers of the DRI are treated as officers of Customs, supported by four notifications issued by the Central Government. They cited Notification No. 31/97-Cus. (N.T.) dated July 7, 1997, which included DRI officers as Customs officers. They argued that the petitioner falls within the ambit of persons who can issue a notice under the Customs Act. They also referenced Sections 112, 122, and 124 of the Customs Act, arguing that the DRI’s role in investigating revenue frauds justifies their authority to issue show cause notices. They supported their arguments with various judicial precedents, including decisions from the Madras High Court and the Gujarat High Court, which recognized the competence of DRI officers to invoke provisions of the Customs Act. Court's Analysis: The court examined the relevant provisions of the Customs Act and the notifications cited by the DRI. It emphasized the necessity of proper authorization under Section 2(34) of the Customs Act for any officer to discharge functions under the Act. The court noted that the notifications relied upon by the DRI, including Notification No. 31/97-Cus. (N.T.) and Notification No. 17/2002-Cus. (N.T.), were issued under Section 4 and not under Section 2(34). Therefore, these notifications did not authorize the Additional Director General of DRI to discharge functions under Section 124 of the Customs Act. The court also referenced the Supreme Court’s decision in Sayed Ali & Anr., which clarified that only officers specifically authorized under Section 2(34) can issue notices under the Customs Act. Conclusion: The court concluded that the Additional Director of DRI is not authorized to invoke Section 124 of the Customs Act, 1962, as there was no notification under Section 2(34) authorizing such action. Consequently, the impugned show cause notices were quashed for lack of jurisdiction. Disposition: The writ petitions were disposed of, and the impugned show cause notices were quashed as being without jurisdiction. The court directed that urgent certified website copies of the order be made available to the parties upon compliance with requisite formalities.
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