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2025 (3) TMI 1107 - HC - CustomsJurisdiction of Directorate of Revenue Intelligence (DRI) officials under Section 28 of the Customs Act 1962 to issue SCN - proper officer or not - HELD THAT - In this matter there were two grounds for challenge. One is that the DRI did not have jurisdiction which is now settled by the Canon - II 2024 (11) TMI 391 - SUPREME COURT (LB) and the next ground is to the fact that while passing the Order-in-Original dated 26th February 2021 no hearing was afforded to the Petitioner. List for hearing on 8th April 2025 at 2 30 p.m. Petition disposed off.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment are: 1. Whether the Directorate of Revenue Intelligence (DRI) officials have the jurisdiction to issue show cause notices and pass adjudication orders under Section 28 of the Customs Act, 1962. 2. Whether the lack of a hearing afforded to the petitioner in the passing of the Order-in-Original dated 26th February, 2021, constitutes a valid ground for challenge. ISSUE-WISE DETAILED ANALYSIS 1. Jurisdiction of DRI Officials under Section 28 of the Customs Act, 1962 Relevant legal framework and precedents: The primary legal framework involves Section 28 of the Customs Act, 1962, which pertains to the recovery of duties not levied or short-levied. The Supreme Court's decision in Canon India Pvt. Ltd. v. Commissioner of Customs (Canon-I) initially held that DRI officials were not "proper officers" for the purpose of issuing show cause notices under this section. However, this was revisited in a review petition. Court's interpretation and reasoning: The Court relied on the Supreme Court's subsequent decision (Canon-II), which clarified that DRI officers are indeed proper officers for the purposes of Section 28. The review petition highlighted that previous notifications and circulars empowering DRI officers were not considered in Canon-I, thus affecting its correctness. Key evidence and findings: The Supreme Court's judgment emphasized the notifications and circulars that had appointed DRI officers as customs officers, which were overlooked in the Canon-I decision. Application of law to facts: The Court applied the Supreme Court's findings from Canon-II, which validated the jurisdiction of DRI officers to issue show cause notices under Section 28. Treatment of competing arguments: The Court acknowledged the previous decision in Canon-I but deferred to the Supreme Court's revised interpretation in Canon-II. Conclusions: The challenge to the jurisdiction of DRI officials was resolved in favor of the DRI, as per the Supreme Court's decision in Canon-II. 2. Lack of Hearing in Passing the Order-in-Original Relevant legal framework and precedents: The principles of natural justice require that parties be given a fair hearing before any adjudicatory decision is made. This is a fundamental aspect of administrative law. Court's interpretation and reasoning: The Court recognized the petitioner's claim that no hearing was afforded before the Order-in-Original was passed. This issue was not resolved within the current proceedings and was scheduled for further hearing. Key evidence and findings: The petitioner alleged the absence of a hearing, which was not contested by the Department's counsel at this stage. Application of law to facts: The Court acknowledged the need to address this procedural lapse, which could potentially invalidate the Order-in-Original if proven. Treatment of competing arguments: The Department's counsel did not provide substantial arguments against the petitioner's claim at this stage. Conclusions: The issue of lack of hearing was not resolved in this judgment and was scheduled for further consideration. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning: The Court referenced the Supreme Court's decision in Canon-II, which stated: "DRI officers came to be appointed as the officers of customs... and are competent to issue show cause notice thereunder." Core principles established: The judgment reinforced the principle that proper officers, as defined by statutory notifications and circulars, have jurisdiction under Section 28 of the Customs Act. It also highlighted the importance of adhering to procedural fairness in adjudicatory processes. Final determinations on each issue: The jurisdictional challenge was resolved in favor of the DRI based on the Supreme Court's Canon-II decision. The issue regarding the lack of a hearing was left open for further adjudication.
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