2017 (7) TMI 747 - AT - Customs

Jurisdiction - power of DRI to issue SCN - proper officers in terms of section 2(34) of the CA, 1962 - Held that - w.e.f. July 6, 2011, the Additional Director General, DRI was prospectively appointed as proper officer for the purpose of Section 28 of the Customs Act. Hence, from 06.07.2011 ADG-DRI has been empowered to issue demand notice under Section 28 - Subsequently, sub-section 11 was inserted under section 28 of the Customs (Amendment and Validation) Act, 2011 dated 16.9.2011, assigning the functions of proper officers to various DRI officers with retrospective effect. Later on, i.e. for the period subsequent to the amendment, the matter i.e. the DRI officers having the proper jurisdiction to issue the SCN or not had came up before the Hon ble Delhi High Court in the case of Mangali Impex vs. Union of India 2016 (5) TMI 225 - DELHI HIGH COURT , and the High Court inter alia, held that even the new inserted section 28 (11) does not empower either the officers of DRI or the DGCEI to issue the SCN for the period prior to 8.4.11. The impugned order set aside and matter remanded to the original adjudicating authority to first decide the issue of jurisdiction after the availability of Hon ble Supreme Court decision in the case of Mangli Impex and then on merits of the case but by providing an opportunity to the assessee of being heard - appeal allowed by way of remand.

Summary

Issues: Jurisdiction of DRI officers to issue show cause notice under Customs Act

Analysis:
The appellant filed appeals against an order dated 29/10/2007, challenging the jurisdiction of the Directorate of Revenue Intelligence (DRI) to issue show cause notices. The appellant cited a Delhi High Court case stating that DRI lacks competence to issue such notices. The Department's counsel defended the DRI's authority and requested a merit-based decision. The Tribunal considered the jurisdictional issue under the Customs Act, noting the appellant's reliance on a Supreme Court ruling regarding DRI officers not being proper officers. Subsequent amendments to the Customs Act post the Supreme Court decision and a notification assigning proper officer functions to DRI officers were discussed.

The Tribunal highlighted a notification from the Central Board of Excise and Customs (CBEC) empowering an Additional Director General of DRI as a proper officer from July 6, 2011, for issuing demand notices under Section 28. A subsequent amendment in 2011 retroactively assigned proper officer functions to various DRI officers. The Tribunal referred to conflicting High Court decisions on DRI officers' jurisdiction to issue show cause notices, with the matter reaching the Supreme Court for adjudication. The Tribunal also mentioned a recent Delhi High Court case dealing with a similar issue and granting liberty to review the challenge based on the outcome of the Supreme Court appeals.

Based on the Delhi High Court's decision in a similar case and considering all circumstances, the Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority. The Tribunal directed the authority to first decide on jurisdiction post the Supreme Court's decision and then proceed on the merits, ensuring the appellant's right to be heard. The status quo was to be maintained until a final decision, ultimately allowing the appeals by way of remand.