2025 (4) TMI 709 - HC - Customs

Jurisdiction to issue SCN - DRI officials were proper officers or not - Section 28 of the Customs Act 1962 - HELD THAT - Reliance was primarily placed upon the Supreme Court decision in Canon India Pvt. Ltd. v. Commissioner of Customs 2021 (3) TMI 384 - SUPREME COURT which had held that DRI Officials are not proper officers . In view thereof the proceedings in the SCN have to continue. Ld. Counsel for the Petitioner submits that he had already filed the reply to the SCN. If any further submissions are to be filed let them be filed within four weeks before the Adjudicating Authority. Petition disposed off.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal question considered was whether the Show Cause Notice (SCN) issued by the Directorate of Revenue Intelligence (DRI) was valid, given the contention that DRI officials were not "proper officers" under Section 28 of the Customs Act, 1962, as per the Supreme Court's decision in Canon India Pvt. Ltd. v. Commissioner of Customs ('Canon-I'). The issue also involved whether the proceedings under the SCN should continue following the Supreme Court's subsequent decision in 'Canon-II'. Additionally, the petition raised the issue of whether the proceedings were barred by limitation.

ISSUE-WISE DETAILED ANALYSIS

1. Validity of SCN Issued by DRI Officials

Relevant Legal Framework and Precedents: The legal framework primarily involves Section 28 of the Customs Act, 1962, which empowers "proper officers" to issue SCNs. The precedent in Canon-I held that DRI officials were not proper officers for this purpose. However, this was revisited in Canon-II, where the Supreme Court clarified the status of DRI officials.

Court's Interpretation and Reasoning: The Court noted that the Supreme Court in Canon-II had settled the issue by holding that DRI officers are indeed proper officers under Section 28. Therefore, the challenge to the SCN on the ground of lack of jurisdiction was no longer tenable.

Key Evidence and Findings: The Court relied on the Supreme Court's findings in Canon-II, which provided a comprehensive framework for dealing with pending challenges to SCNs issued by DRI and similar authorities.

Application of Law to Facts: Given the Supreme Court's decision in Canon-II, the Court determined that the SCN issued to the Petitioner by the DRI was valid, and the proceedings should continue.

Treatment of Competing Arguments: The Petitioner argued based on Canon-I that the DRI lacked jurisdiction. However, the Court found that Canon-II had conclusively addressed and resolved this argument by affirming the jurisdiction of DRI officials.

Conclusions: The Court concluded that the SCN was valid and the proceedings should continue in accordance with the law, as clarified by Canon-II.

2. Proceedings Barred by Limitation

Relevant Legal Framework: The Customs Act, 1962, includes provisions regarding the time limits for issuing SCNs and completing adjudication.

Court's Interpretation and Reasoning: The Court did not make a specific ruling on the limitation issue but allowed the Petitioner to raise this argument before the Adjudicating Authority.

Application of Law to Facts: The Court directed that the Petitioner could submit further arguments regarding limitation to the Adjudicating Authority, which would then consider them.

Conclusions: The Court left the issue of limitation to be decided by the Adjudicating Authority, allowing the Petitioner to present their case on this point.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: The Court relied on the Supreme Court's holding in Canon-II: "Subject to the observations made in this judgment, 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 DRI officers are proper officers under Section 28, as clarified by the Supreme Court in Canon-II.

Final Determinations on Each Issue: The Court determined that the SCN issued by the DRI was valid and that the proceedings should continue. The issue of limitation was left open for consideration by the Adjudicating Authority.