New Delhi, Nov 7 (PTI) In a significant decision impacting customs enforcement across the country, the Supreme Court held on Thursday that officers of the Directorate of Revenue Intelligence (DRI) have the authority to seek recovery of duties on goods already cleared for import by the customs department.
Allowing a review plea of the customs department, a bench comprising Chief Justice D Y Chandrachud and Justices J B Pardiwala and Manoj Misra overturned the apex court’s 2021 ruling, penned by the then CJI S A Bobde, that DRI officers are not “proper officers” for issuing notices under section 28 of the Customs Act, 1962.
Writing a 162-page judgment for the bench, Justice Pardiwala upheld the authority of DRI officers to issue show-cause notices and recover duties under the Act.
The verdict came as a boost to the customs department, which has several proceedings related to duty dues pending.
“Subject to the observations made in this judgment, the officers of the DRI, 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 notices thereunder,” the bench held.
“The petition seeking a review of (the) Canon India (judgment) is allowed for the following reasons…. In other words, the judgment in Canon India was rendered without looking into the circular and notification, therefore seriously affecting the correctness of the same. The decision in Canon India failed to look into the statutory scheme,” it said.
The court also issued specific instructions to streamline the handling of the pending cases challenging show-cause notices issued by DRI officers.
“Where the show-cause notices issued under section 28 of the Act have been challenged before the high courts directly by way of a writ petition, the respective high courts shall dispose of such writ petitions in accordance with the observations made in this judgment and restore such notices for adjudication by a proper officer under section 28,” it said.
Where the petitions have been disposed of by the high courts and appeals preferred against such orders, which are pending before the apex court, they shall be disposed of in accordance with this decision, the bench said, adding that the show-cause notices shall be restored for adjudication by a proper officer under section 28.
“We clarify that the observations made by this court in Canon India … on the aspect of limitation have neither been considered nor reviewed by way of this decision,” it said.
Where the orders-in-original passed by the adjudicating authority have been challenged before the high courts on the ground of maintainability due to a lack of jurisdiction of a proper officer to issue show-cause notices, the respective high courts shall grant eight weeks to the respective assessees to prefer an appropriate appeal before the Customs Excise and Service Tax Appellate Tribunal (CESTAT), it added.
“Where appeals against the orders-in-original involving issues pertaining to the jurisdiction of the proper officer to issue show-cause notices under section 28 are pending before the CESTAT, they shall now be decided in accordance with the observations made in this decision,” the top court said.
The court had reserved its verdict on September 19 on the customs department’s plea seeking a review of its 2021 judgment.
On March 9, 2021, a three-judge bench headed by the then CJI Bobde held that a DRI officer is not “the proper officer” under the Customs Act, 1962 and lacks the authority to seek recovery of duties on goods already cleared for import by the customs department.
The court had quashed the DRI’s show-cause notices issued to private firms, including Canon India Private Limited, seeking payment of duty and the consequential confiscation of goods, demand of interest and imposition of penalty under the Customs Act.
The matter, which has seen many ups and downs, was first decided by a three-judge bench headed by the then Chief Justice Bobde in 2021.
Later, a bench headed by his successor, CJI N V Ramana, on May 19, 2022, agreed to hear the customs department’s review plea against the 2021 verdict in an open court.
The 2021 verdict had come on a batch of cases filed by Canon India Private Limited and other private firms against the Commissioner of Customs, challenging the 2017 judgment of the CESTAT.
The CESTAT had upheld the DRI’s show-cause notices sent to private firms.
It was the case of Canon India Private Limited that imported cameras were exempted from the basic customs duty according to a 2012 notification.
The exemption from import duty to “Digital Still Image Video Cameras” was issued on March 1, 2005 and the notification was amended in 2012. PTI SJK PKS RC
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