DRI Officers Can Issue Show-Cause Notice Under Customs Act: SC Allows Review Petition Against 2021 Canon India Judgment
While allowing a review petition against the 2021 Canon India judgment, the Supreme Court has held that DRI officers have the power to issue show-cause notice under the Customs Act.
The decision came in response to a review petition filed by the Customs Department following the Court’s prior decision in M/s Canon India Private Ltd. v. Commissioner of Customs (2021), which had questioned whether DRI officers were “proper officers” to undertake such actions. By allowing the review petition against the said judgment, the Bench clarified that the Directorate of Revenue Intelligence (DRI) officers have the authority to issue show-cause notices under Section 28 of the Customs Act, 1962 (the Act).
The Bench comprising Chief Justice D.Y. Chandrachud, Justice J.B. Pardiwala and Justice Manoj Misra held, “In Canon India (supra), this Court erroneously concluded that an officer from the Directorate of Revenue Intelligence (DRI) was not an officer of customs and therefore cannot function as a “Proper Officer”. The finding of the Court that the power conferred by the Board under Notification No. 40/2012-Customs (N.T.) dated 02.05.2012 was ill-founded is an error apparent.”
Senior Advocates Arshad Hidayatullah, Rupesh Kumar, S. Nandakumar, Nachiketa Joshi and Purvish Jitendra Malkan represented the petitioner, while Senior Advocates Dama Sheshadri Naidu and Anil Kaushik appeared for the respondent.
In the Canon India (supra) judgment, the Court had previously held that DRI officers were not “proper officers” under Section 2(34) of the Act, which defines those empowered to issue show-cause notices under Section 28 for customs duty demands. The Court found that only officers assigned by the Board or the Commissioner of Customs, specifically designated under the Act, could exercise this authority, thereby excluding DRI officers from issuing such notices.
This decision led to numerous challenges across customs cases, where notices issued by DRI officers were contested on grounds of jurisdiction. The Customs Department challenged this interpretation in a review petition, arguing that Canon India (supra) had overlooked notifications, one which specifically designated DRI officers as “proper officers” for enforcement purposes under Sections 17 and 28 of the Act, aiming to restore DRI’s authority and clarify procedural enforcement in customs cases.
In the present review petition, the Court noted, “From a conjoint reading of Sections 2(34) and 28 of the Act, it is manifest that only such a Customs Officer who has been assigned the specific functions of assessment and reassessment… by either the Board or the Commissioner of Customs… is competent to issue notice under section 28.”
“The view that the “Proper Officer” for the purpose of Section 28 and other provisions of the Act, 1962 could only mean the person who cleared the goods or the officer who succeeds such officer and not any other officer from any other department requires reconsideration in view of the changes to the Act, 1962 vide the Finance Act, 2011 and also in the light of Section 4 and the notification issued thereunder,” the Bench remarked.
Consequently, the Court held, “The decision in Canon India (supra) failed to consider the statutory scheme of Sections 2(34) and 5 of the Act, 1962 respectively. As a result, the decision erroneously recorded the finding that since DRI officers were not entrusted with the functions of a proper officer for the purposes of Section 28 in accordance with Section 6, they did not possess the jurisdiction to issue show cause notices for the recovery of duty under Section 28 of the Act, 1962.”
Accordingly, the Supreme Court allowed the petition.
Cause Title: Commissioner Of Customs v. M/s Canon India Pvt. Ltd. (Neutral Citation: 2024 INSC 854)
Appearance:
Petitioner: Senior Advocates Arshad Hidayatullah, Rupesh Kumar, S. Nandakumar, Nachiketa Joshi and Purvish Jitendra Malkan; ASG N. Venkataraman; AOR Gurmeet Singh Makker, Deepak Agrawal, Gopal Singh, Jaikriti S. Jadeja, Sunil Kumar Verma, et al; Advocates Shivam Singh, Bahuli Sharma, S. Hariharan, Pankhuri Shrivastava, Shariq Ahmed, Tariq Ahmed, Shilp Vinod, Gokulakrisnan, Dharita Malkan, et al
Respondent: Senior Advocates Dama Sheshadri Naidu and Anil Kaushik; AOR Charanya Lakshmikumaran, Nitish Massey, Rashi Bansal, Ravi Bharuka, Rajeev Singh, K. Paari Vendhan, et al; Advocates V Lakshmikumaran, Abhishek A Rastogi, Garima Gupta, Vanita Bhargava, Ajay Bhargava, Udit Jain, Arihant Tater, et al