2014 (9) TMI 186 - HC - Customs

Seizure of the imported goods - Jurisdiction of DRI - proper officer - import of Eucalyptol - Directorate of Revenue Intelligence, however, under a belief that the petitioners had made misdeclaration and the goods actually wore not Eucalyptol - Eucalyptol is classifiable under Customs Tariff Heading No. 2909 20 00 - Held that - under notification dated 2-5-2012, the officers of DRI have not been assigned specific function of adjudication under Section 28 of the Customs Act. - Under the notification dated 7-3-2002, the officers of DRI have been given jurisdiction over the whole of India. Most significant notification is one of 6-7-2011. As noted, the notification, for the purpose of Section 2(34) of the Customs Act, assigns functions of the proper officer to the various officers including those under the Directorate of Revenue Intelligence, such as Additional Director, Joint Director, Deputy Directors and Assistant Directors for the purposes of Sections 17 and 28 of the Customs Act. The show cause notice was issued on 24-1-2013, that is, after the notification dated 6-7-2011. To our mind, therefore, respondent No. 1 had the jurisdiction to issue show cause notice. - Decided against the petitioner.

Issues Involved:
1. Jurisdiction and authority of the Directorate of Revenue Intelligence (DRI) to issue show cause notices.
2. Validity of the seizure and provisional release of imported goods.
3. Legality of the conditions imposed for the provisional release of goods.
4. Requirement for the proper officer to issue show cause notices under Section 28 of the Customs Act, 1962.
5. The impact of various notifications and amendments on the authority of DRI officers.

Issue-wise Detailed Analysis:

1. Jurisdiction and Authority of DRI to Issue Show Cause Notices:
The petitioners challenged the jurisdiction of the DRI, particularly the Joint Director stationed at Ahmedabad, to issue a show cause notice under Section 28 of the Customs Act, 1962, for goods imported at Nhava Sheva port. The petitioners contended that only the proper officer, as defined under Section 2(34) of the Customs Act, could issue such notices. The court referred to the Supreme Court's decision in Commissioner of Customs v. Sayed Ali, which emphasized that only officers assigned specific functions of assessment and re-assessment by the Board or Commissioner of Customs could issue notices under Section 28. The court also noted the introduction of sub-section (11) to Section 28, which retrospectively validated the powers of officers appointed under Section 4(1) of the Customs Act before 6th July 2011.

2. Validity of the Seizure and Provisional Release of Imported Goods:
The petitioners argued that the detention and seizure of their goods by the DRI were illegal and without jurisdiction. They also contested the conditions imposed for the provisional release of the goods, which included paying higher duty and furnishing a bond and bank guarantee. The court noted that the goods were imported as "Eucalyptol" but were classified by the DRI as "Eucalyptus Oil," attracting a higher duty rate. The court did not find the seizure and provisional release conditions to be unfair or harsh, given the circumstances.

3. Legality of the Conditions Imposed for Provisional Release of Goods:
The court observed that the petitioners had already complied with the conditions imposed for the provisional release of the goods, including paying the differential duty and furnishing the required bond and bank guarantee. The court did not see any reason to alter these conditions at this stage, especially since the goods had already been released.

4. Requirement for the Proper Officer to Issue Show Cause Notices under Section 28:
The court emphasized the significance of the term "proper officer" as defined under Section 2(34) of the Customs Act. It noted that the proper officer is the one assigned specific functions by the Board or Commissioner of Customs. The court referred to various notifications, including those dated 7-7-1997, 7-3-2002, and 6-7-2011, which assigned functions to DRI officers. The court concluded that the notification dated 6-7-2011 specifically assigned functions under Sections 17 and 28 to DRI officers, making them proper officers for issuing show cause notices under Section 28.

5. Impact of Various Notifications and Amendments on the Authority of DRI Officers:
The court examined the impact of various notifications and amendments on the authority of DRI officers. It noted that the notification dated 6-7-2011 assigned functions under Sections 17 and 28 to DRI officers. The subsequent notification dated 2-5-2012 did not rescind the earlier notification but assigned additional functions to various officers. The court concluded that both notifications co-exist, and the DRI officers retained their authority to issue show cause notices under Section 28.

Conclusion:
The court held that the respondent No. 1, Joint Director of Revenue Intelligence, had the jurisdiction to issue the show cause notice under Section 28 of the Customs Act. The petition challenging the show cause notice was dismissed, and the interim relief was vacated. The court directed the petitioners to file their reply to the show cause notice by 15-3-2014 and urged the competent authority to finalize the assessment without further delay.

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