2025 (3) TMI 1106 - HC - Customs

Jurisdiction of Directorate of Revenue Intelligence (DRI) officials under Section 28 of the Customs Act 1962 to issue SCN - proper officer or not - HELD THAT - A common issue raised in all these writ petitions including the present one pertains to the jurisdiction of the DRI officials to issue show cause notices or pass adjudication orders. However there are various other issues that have been raised in some matters which are not common across all petitions. Accordingly in each of these matters the Court will have to determine whether they are liable to be disposed of in light of the Supreme Court s decision in Canon - II 2024 (11) TMI 391 - SUPREME COURT (LB) or if any outstanding issues remain to be adjudicated. In the present petition the show cause notice dated 17th November 2017 issued by the DRI Lucknow Zonal Unit is challenged. This SCN would be covered by directions given in paragraph 168 (vi) (a) of the Canon-II - Accordingly the proceedings in the show cause notice under challenge dated 17th November 2017 shall now proceed before the adjudicating authority in accordance with law. Since the writ petition was pending for a long period the Petitioner is afforded 60 days to file a reply to the show cause notice. The opportunity of a personal hearing shall be granted to the Petitioner and the show cause notice shall then be adjudicated. Petition disposed off.

ISSUES PRESENTED and CONSIDERED

The primary issue considered was whether the Directorate of Revenue Intelligence (DRI) officials have the jurisdiction to issue show cause notices under Section 28 of the Customs Act, 1962. This was challenged based on the Supreme Court decision in Canon India Pvt. Ltd. v. Commissioner of Customs, which held that DRI officials were not 'proper officers' for such proceedings. The judgment also addressed whether the Supreme Court's review decision in Canon-II altered this jurisdictional stance.

ISSUE-WISE DETAILED ANALYSIS

Relevant legal framework and precedents: The legal framework centered around Section 28 of the Customs Act, 1962, which pertains to the recovery of duties not levied or short-levied. The interpretation of who qualifies as a 'proper officer' under this section was crucial. The Canon-I decision initially held that DRI officers were not proper officers, relying on the statutory scheme and precedents like Sayed Ali. However, the Supreme Court's review in Canon-II reconsidered this position in light of additional notifications and circulars not previously considered.

Court's interpretation and reasoning: The Court acknowledged the Supreme Court's revised stance in Canon-II, which clarified that DRI officers were indeed appointed as officers of customs through specific notifications and were empowered to issue show cause notices under Section 28. The Court emphasized the importance of these notifications and circulars, which were overlooked in the original Canon-I decision.

Key evidence and findings: The Supreme Court's review highlighted several key documents: Notification No. 19/90-Cus (N.T.) and Notification No. 17/2002, which appointed DRI officers as customs officers, and Circular No. 4/99-Cus and Notification No. 44/2011, which assigned them functions under Sections 17 and 28. These documents were pivotal in establishing the jurisdiction of DRI officers.

Application of law to facts: Applying the revised legal interpretation, the Court determined that the show cause notice issued by the DRI, Lucknow Zonal Unit, was valid and should proceed before the adjudicating authority. The Court directed that the proceedings continue under the framework established by the Supreme Court's decision in Canon-II.

Treatment of competing arguments: The Court considered the original arguments against DRI jurisdiction based on Canon-I but found them superseded by the Supreme Court's comprehensive review in Canon-II. The Court noted that the review decision addressed the jurisdictional issue while leaving the issue of limitation untouched, thus clarifying the scope of DRI's authority.

Conclusions: The Court concluded that the DRI officers have jurisdiction to issue show cause notices under Section 28, as clarified by the Supreme Court in Canon-II. The pending show cause notice was to proceed before the adjudicating authority, with an opportunity for the petitioner to respond and be heard.

SIGNIFICANT HOLDINGS

The Court preserved the Supreme Court's reasoning that DRI officers are proper officers for the purposes of Section 28, based on the notifications and circulars that were not considered in Canon-I. The decision established that the jurisdictional challenge based on the lack of proper officer status was no longer tenable.

Core principles established: The principle that DRI officers, along with other specified officers, are competent to issue show cause notices under Section 28 was reinforced. The decision also underscored the importance of considering all relevant statutory instruments and administrative notifications when interpreting jurisdictional authority.

Final determinations on each issue: The Court determined that the show cause notice issued by the DRI, Lucknow Zonal Unit, was valid and should proceed to adjudication. The petitioner was granted 60 days to respond, ensuring a fair opportunity to present their case before the adjudicating authority.

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