2025 (1) TMI 158 - HC - Customs

Challenge to seizure proceedings initiated by the appellants - proper officer for the purpose of Section 28 (4) of the Customs Act, 1962 for initiating proceedings and issuing a show cause notice to recovery duty - whether the proceedings initiated by the authorities of the Appellants was justified or not? - HELD THAT - The Supreme Court, in Commissioner of Customs 2021 (3) TMI 384 - SUPREME COURT , has observed ' DRI officers came to be appointed as the officers of customs vide Notification No. 19/90-Cus (N.T.) dated 26.04.1990 issued by the Department of Revenue, Ministry of Finance, Government of India. This notification later came to be superseded by Notification No. 17/2002 dated 07.03.2002 issued by the Department of Revenue, Ministry of Finance, Government of India, to account for administrative changes.' Conclusion - The officers of Directorate of Revenue Intelligence are proper officers for the purposes of Section 28 and are competent to issue show cause notice thereunder. Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions addressed in the judgment include:

Whether the seizure proceedings and subsequent notices/summons issued by the Directorate of Revenue Intelligence (DRI) were valid under the Customs Act, 1962.
Whether the officers of the DRI are considered "proper officers" under Section 28(4) of the Customs Act, 1962, for initiating proceedings and issuing show cause notices.
The applicability of the Supreme Court's decision in Canon India Pvt. Ltd. v. Commissioner of Customs to the current case.
Whether the review of the Canon India decision by the Supreme Court affects the validity of the proceedings initiated by the DRI.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of Seizure Proceedings and Notices/Summons

Relevant Legal Framework and Precedents: The Customs Act, 1962, particularly Section 28(4) regarding the authority to issue show cause notices, and Section 105 concerning search and seizure. The precedent set by Canon India Pvt. Ltd. v. Commissioner of Customs was initially relied upon by the Single Judge.
Court's Interpretation and Reasoning: The Single Judge quashed the seizure and notices based on the Canon India judgment, which held that DRI officers were not "proper officers" under Section 28(4) of the Customs Act.
Key Evidence and Findings: The seizure involved significant quantities of gold and silver from the writ petitioner's premises, linked to an earlier interception at Raipur Railway Station.
Application of Law to Facts: The Single Judge applied the Canon India precedent, which questioned the jurisdiction of DRI officers to issue such notices.
Treatment of Competing Arguments: The appellants argued that the DRI officers were authorized under various notifications and were proper officers as per the Customs Act, which the Single Judge did not accept initially.
Conclusions: The Single Judge quashed the seizure and notices, relying on Canon India, which was later reviewed by the Supreme Court.

Issue 2: DRI Officers as Proper Officers

Relevant Legal Framework and Precedents: Section 4(1) of the Customs Act and various notifications appointing DRI officers as customs officers. The Supreme Court's review of Canon India in Commissioner of Customs.
Court's Interpretation and Reasoning: The review by the Supreme Court clarified that DRI officers are indeed proper officers under the Customs Act, thus overturning the basis of the Single Judge's decision.
Key Evidence and Findings: Historical notifications and the Supreme Court's recent review decision were critical in establishing the jurisdiction of DRI officers.
Application of Law to Facts: The appellate court applied the Supreme Court's review findings, which validated the authority of DRI officers to conduct the proceedings.
Treatment of Competing Arguments: The appellants' argument that DRI officers have always been customs officers was upheld by the Supreme Court's review, countering the writ petitioner's position.
Conclusions: The appellate court found the seizure and notices valid, overturning the Single Judge's decision in light of the Supreme Court's review.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "The officers of Directorate of Revenue Intelligence...are proper officers for the purposes of Section 28 and are competent to issue show cause notice thereunder."
Core Principles Established: The Supreme Court's review established that DRI officers are proper officers under the Customs Act, thus validating their authority to issue notices and conduct seizures.
Final Determinations on Each Issue: The appellate court set aside the Single Judge's order, reinstating the validity of the proceedings initiated by the DRI, and dismissed the writ petition.

In conclusion, the appellate court allowed the appeal, setting aside the Single Judge's order based on the Supreme Court's review, which clarified the jurisdiction and authority of DRI officers under the Customs Act, 1962.

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