2025 (3) TMI 1108 - 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. The show cause notice/s dated 31st December 2020 issued by the DRI Lucknow Zonal Unit were under challenge. During the pendency of the petitions the adjudicating authority has passed the Order-in-Original dated 20th December 2022 in favour of the Petitioners. The same was brought on record vide separate applications bearing nos. CM APPL. 12354/2023 in W.P.(C) 6850/2021 and CM APPL. 12275/2023 in W.P.(C) 6851/2021. In view of the fact that the Order-in-Original is passed in favour of the Petitioners the challenge in these matters no longer survives. In the present petition the show cause notice which is under challenge is SCN dated 31st December 2020 issued by the DRI Mumbai Zonal Unit. This would be covered by directions given in paragraph 168 (vi) (a) of the Canon-II 2024 (11) TMI 391 - SUPREME COURT (LB) wherein the adjudication of the show cause notice is to be restored to the adjudicating authority. Petition disposed off.

Summary

ISSUES PRESENTED and CONSIDERED

The primary issue in this judgment pertains to the jurisdiction of the Directorate of Revenue Intelligence (DRI) officials to issue show cause notices and conduct adjudication under Section 28 of the Customs Act, 1962. The Court considered whether the DRI officials are "proper officers" for the purposes of Section 28, in light of the Supreme Court's decision in Canon India Pvt. Ltd. v. Commissioner of Customs (Canon-I) and its subsequent review (Canon-II). Additionally, the Court needed to determine whether the petitions should be disposed of based on the Supreme Court's decision or if any other issues remained to be adjudicated.

ISSUE-WISE DETAILED ANALYSIS

Jurisdiction of DRI Officials under Section 28 of the Customs Act, 1962

Relevant Legal Framework and Precedents: The legal framework involves Section 28 of the Customs Act, 1962, which deals with the recovery of duties not levied or paid. The Supreme Court's decision in Canon-I held that DRI officials were not "proper officers" for the purpose of issuing show cause notices under this section. However, the review in Canon-II overturned this decision by recognizing DRI officials as proper officers, based on notifications and circulars that were not considered in the original judgment.

Court's Interpretation and Reasoning: The Court acknowledged the Supreme Court's review judgment in Canon-II, which clarified that DRI officers were appointed as customs officers through specific notifications and were empowered to issue show cause notices under Section 28. The review judgment highlighted that the Canon-I decision did not consider certain notifications and circulars, leading to an erroneous conclusion regarding the jurisdiction of DRI officers.

Key Evidence and Findings: The review judgment in Canon-II identified that the DRI officers were empowered by Notification No. 19/90-Cus (N.T.) and subsequent notifications, which were overlooked in Canon-I. Additionally, the circulars issued by the Central Board of Excise & Customs supported the jurisdiction of DRI officers under Section 28.

Application of Law to Facts: The Court applied the Supreme Court's findings in Canon-II to the current batch of petitions, determining that the DRI officers had the jurisdiction to issue the contested show cause notices. The Court noted that the Supreme Court's clarification on the jurisdiction of DRI officials was applicable to the cases at hand.

Treatment of Competing Arguments: The Court noted that the review judgment addressed and rectified the oversight in Canon-I by considering the relevant notifications and circulars. This effectively countered the argument that DRI officials lacked jurisdiction, as initially held in Canon-I.

Conclusions: The Court concluded that the jurisdictional challenge to the DRI officials' authority to issue show cause notices under Section 28 was no longer sustainable in light of the Supreme Court's decision in Canon-II. The petitions were disposed of accordingly, with the Court noting that any further challenges to the Order-in-Original could be pursued separately.

SIGNIFICANT HOLDINGS

Verbatim Quotes of Crucial Legal Reasoning: The Supreme Court in Canon-II stated: "The officers of Directorate of Revenue Intelligence, Commissionerates of Customs (Preventive), Directorate General of Central Excise Intelligence and Commissionerates of Central Excise and other similarly situated officers are proper officers for the purposes of Section 28 and are competent to issue show cause notice thereunder."

Core Principles Established: The review judgment in Canon-II established that DRI officers are proper officers under Section 28 of the Customs Act, 1962, based on the notifications and circulars that were not considered in Canon-I. This decision clarified the jurisdictional authority of DRI officials in issuing show cause notices.

Final Determinations on Each Issue: The Court determined that the jurisdictional challenge to the DRI officials' authority under Section 28 was resolved by the Supreme Court's decision in Canon-II. The petitions were disposed of in accordance with this judgment, and any further challenges to the adjudication orders would need to be pursued separately.