2025 (1) TMI 1329 - HC - Customs

Jurisdiction to issue SCN - SCN issued u/s 28 of the Customs Act 1962 by different DRI authorities on the ground that they are not proper and competent officers to issue show cause notices - HELD THAT - Hon ble Supreme Court in the case of M/s Canon India Private Limited 2024 (11) TMI 391 - SUPREME COURT (LB) held that the show cause notices in all the matters are invalid without any authority of law and liable to be set aside and the ensuing demands are also set aside. Since in the impugned notices in the present writ petitions the period of 30 days was granted to file reply and further proceedings were stayed by this Court therefore all the petitioners are directed to file reply within a period of 30 days. The time limit of 30 days granted to all the petitioners for filing reply in the impugned notices would start from the date of receipt of copy of this judgment. The respondents are further directed to adjudicate the matter in accordance with law. Application disposed off.

ISSUES PRESENTED and CONSIDERED

The primary legal issue considered was whether the officers of the Directorate of Revenue Intelligence (DRI) were proper officers under Section 28 of the Customs Act, 1962, and thus competent to issue show cause notices for recovery of duties. This issue arose from the interpretation of the term "proper officer" as defined under the Customs Act and the applicability of the Supreme Court's decision in M/s Canon India Private Limited v. Commissioner of Customs.

ISSUE-WISE DETAILED ANALYSIS

Relevant legal framework and precedents: The legal framework revolves around Section 28 of the Customs Act, 1962, which empowers the recovery of duties not paid, short-paid, or erroneously refunded. The term "proper officer" is defined under Section 2(34) of the Act, which specifies that a proper officer is an officer of customs assigned specific functions by the Board or the Commissioner of Customs. The Supreme Court's decision in M/s Canon India Private Limited was a pivotal precedent, which initially held that DRI officers were not proper officers authorized to issue such notices.

Court's interpretation and reasoning: The Court examined whether DRI officers were duly appointed as customs officers under the relevant notifications and whether they were entrusted with the functions of a proper officer under Section 28. The Court relied on the Supreme Court's review decision, which clarified that DRI officers were indeed proper officers for the purpose of issuing show cause notices under Section 28.

Key evidence and findings: The Court considered the notifications and circulars issued by the Central Board of Excise & Customs, which empowered DRI officers to issue show cause notices. The review decision highlighted that these notifications were not considered in the original Canon India case, leading to an erroneous conclusion.

Application of law to facts: The Court applied the revised interpretation from the Supreme Court's review decision to the facts of the case, concluding that the show cause notices issued by DRI officers were valid and within their jurisdiction as proper officers.

Treatment of competing arguments: The petitioners argued that the DRI officers lacked jurisdiction based on the original Canon India decision. However, the Court dismissed these arguments in light of the Supreme Court's review decision, which clarified the jurisdiction of DRI officers.

Conclusions: The Court concluded that the show cause notices issued under Section 28 by DRI officers were valid and restored them for adjudication by the proper officers.

SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: The Court noted the Supreme Court's clarification that "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 decision reinforced the principle that proper officers under Section 28 include DRI officers, as long as they are empowered through appropriate notifications and circulars. It emphasized the importance of considering all relevant notifications and statutory provisions when determining the jurisdiction of customs officers.

Final determinations on each issue: The Court determined that the show cause notices challenged in the writ petitions were validly issued by proper officers and should be adjudicated accordingly. It directed the petitioners to file replies to the notices within 30 days from the receipt of the judgment and instructed the respondents to proceed with adjudication in accordance with the law.

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