2014 (12) TMI 151 - HC - Customs

Jurisdiction of officer issuing show cause notice validated for DRI officers after retrospective notification; prior cases follow pre-amendment law

Jurisdiction to issue show cause notices turns on whether investigative officers were validly assigned customs functions; notifications dated 26 April ... Jurisdiction of the officer issuing Show Cause Notice - Proper Officer or not - Seizure of goods - Goods imported in name of dummy firms - misdeclaration of goods in terms of description, quantity and value - Jurisdiction of custom officer - Proper officer - Held that:- If the show cause notice has been issued by the Director of Intelligence, then, we have to find as to whether he was competent to do so. In that regard, we have on record the Notification dated 26th April, 1990 Exhibit-I at page 369 of the paper book - when section 17 and 28 are specifically referred to in the Notification, then, we do not see any force in the argument of the Petitioner that the DRI was not competent to issue the subject show cause notice. The Notifications clearly indicate that the officers of this directorate have been entrusted or assigned the functions of the Customs Officers for the purpose of these sections. They could have therefore set the law in motion. Section 28(11) was inserted by Act 14 of 2011 w.e.f. 16th September, 2011. That alters the basis of the Judgments, which have been delivered by any Court of law, Tribunal or other authority. Once this section says that all persons appointed as officers of Customs under section 1(4) before 6th July, 2011 shall be deemed to have been and always to be the proper officers for the purpose of this section, then, the Notifications, which are referred by us above at page 369 and 373 of the paper book are specifically saved and validated. They have been given a retrospective effect. These Notifications were holding the field and were not quashed or set aside. In the teeth of such Notifications, the legislature stepped in to clarify the position that if the functions of the Customs officer can be entrusted or assigned by the Central Government or the Board in terms of section 6 of the Customs Act, 1962, then, all such Notifications, have been validly issued and enforced. They enable the parliament to clarify that the officers mentioned therein shall be deemed to be the proper officers for the purposes of section 17 and 28 of the Act. Precisely, that has been done in the instant case. The assignment of functions to these officers, who were earlier carrying on preventive work came w.e.f. 6th July, 2011. That Notification was not, at the relevant time, given retrospective effect. It is in such circumstances that the Hon'ble Supreme Court held that in terms of the Notifications, which were issued and holding the field, not designating the Collector of Customs (Preventive) as a proper officer for the purpose of section 28 as it then stood, he was not competent to issue show cause notice (see para 24 of Sayed Ali's [2011 (2) TMI 5 - SUPREME COURT]. This position has now undergone a change and from 6th July, 2011, admittedly, they have been assigned these functions and of the Custom officers. They are therefore competent and the Notification in that behalf at page 373 of the paper book has been given a retrospective effect. - Even those cases which are governed by section 28 and whether initiated prior to the Finance Bill 2011 receiving the assent of the President shall continue to be governed by section 28, as it stood immediately before the date on which such assent is received. The reference to Finance Bill therein denotes the bill by the section itself was substituted by Act 8 of 2011 w.e.f. 8th April, 2011. Prior to this Bill by which the section was substituted receiving the assent of the President of India, some cases were initiated and section 28 was resorted to by the authorities. - Decided against assessee. Issues: Whether subsection (11) of Section 28 of the Customs Act, 1962 and the Government/Board notifications validate and render officers of the Directorate of Revenue Intelligence (DRI) competent as 'proper officers' with power of assessment under Section 17 to issue show-cause notices under Section 28, and whether the challenge to the impugned show-cause notice on grounds of lack of competence is maintainable.Analysis: Section 28(11) was inserted by Act 14 of 2011 w.e.f. 16.9.2011 providing that persons appointed as officers of Customs under subsection (1) of section 4 before 6.7.2011 shall be deemed to have and always had assessment powers under Section 17 and to have been proper officers for purposes of Section 28. Notifications issued under Section 4(1) and related Board/Central Government notifications (including Notification No. 19/89-Cus.(NT) dated 26.4.1990 and the notification dated 6.7.2011) appoint and assign DRI officers as Customs officers and specify functions including assessment and reassessment. Explanation 2 to Section 28 deals with which pre-assent cases continue under the earlier provision and is distinct from the competence conferred by subsection (11). The statutory amendment and existing notifications operate to validate the appointment/assignment of DRI officers as proper officers and to confer retrospective competence to issue notices under Section 28.Conclusion: The challenge to Section 28(11) and to the impugned show-cause notice for lack of competence fails; subsection (11) together with the Notifications validate and render DRI officers competent to issue the show-cause notice. The writ petition is dismissed.