2015 (7) TMI 417 - HC - Customs

Court affirms Customs officer's authority to issue show cause notice under Customs Act.

The court upheld the jurisdiction of the respondent, an Additional Director of the Directorate of Revenue Intelligence, to issue the show cause notice ... Issue of show cause notice before confiscation - confiscation of smuggled goods - appointment of Directorate of Revenue Intelligence officers as officers of Customs - prior approval requirement under Section 124 - separation of investigation and adjudication - pre-judged / pre-determined show cause noticeAppointment of Directorate of Revenue Intelligence officers as officers of Customs - prior approval requirement under Section 124 - separation of investigation and adjudication - Validity of show cause notice issued by Additional Director General, DRI - whether respondent had jurisdiction to issue the notice and whether statutory pre-conditions under Section 124 were satisfied - HELD THAT: - The Court examined notifications and circulars appointing DRI officers as officers of Customs and the effect of insertion of sub-section (11) to Section 28 by the 2011 amendments. The statutory scheme distinguishes Chapter V (levy of duty) and Chapter XIV (confiscation and penalties), but the power to investigate and issue show cause notices is exercisable by officers of DRI who have been validly appointed as officers of Customs under Section 4(1) by the notifications and C.B.E.&C. circulars. The Court found no challenge to those notifications/circulars and held that the impugned notice did not suffer for want of jurisdiction. The Court further observed that issuance of a show cause notice under Section 124 requires prior approval by an officer of Customs not below the prescribed rank and that the procedural safeguards of Section 124 remain available; read with the notifications and circulars, DRI officers are empowered to investigate and issue show cause notices while adjudication will be conducted by the appropriate, independent adjudicating authority. [Paras 15, 16]The show cause notice was held to be intra vires and not vitiated for want of jurisdiction; the notifications and circulars appointing DRI officers as officers of Customs and empowering them to investigate and issue notices are operative, and the adjudication will be by the jurisdictional Commissionerate.Pre-judged / pre-determined show cause notice - issue of show cause notice before confiscation - Whether the show cause notice was pre-judged or pre-meditated so as to deny the petitioner a meaningful opportunity of defence - HELD THAT: - The Court reviewed the content and language of the 41-page show cause notice, noting recital of events, summaries of statements of multiple noticees and recovered material. Although expressions such as 'admittedly', 'wilfully' appear in places, the Court held that the mere use of such words does not convert the notice into a foregone conclusion. The notice was considered an attempt to place the investigation material on record and, because adjudication is to be conducted by an independent officer (not the investigating officer who issued the notice), there was no fatal prejudice to the petitioner's right to be heard. The Court found the cited authorities on pre-judgment distinguishable on facts. [Paras 18, 19]The show cause notice was not held to be pre-judged or pre-meditated and did not deny the petitioner a reasonable opportunity to make representations.Final Conclusion: Writ petition dismissed. The impugned show cause notice was held to be within jurisdiction and not pre-judged; petitioner directed to file reply within thirty days for adjudication by the appropriate authority. Issues Involved:1. Jurisdiction of the respondent to issue the show cause notice.2. Allegation of pre-judgment and pre-determination in the show cause notice.Detailed Analysis:1. Jurisdiction of the Respondent to Issue the Show Cause Notice:The petitioner challenged the show cause notice on the grounds of jurisdiction, arguing that the respondent, being an Additional Director of the Directorate of Revenue Intelligence (DRI), is not an 'officer of Customs' as per Section 2(34) of the Customs Act, 1962. The petitioner contended that the notice lacked prior approval from an officer of Customs not below the rank of Assistant Commissioner, as mandated by Section 124 of the Act.The respondent countered by citing various notifications and circulars, including Notification No. 38/F.No.4/1/6-CAR and Customs Notification No. 19/1990 (N.T.), which appoint DRI officers as Customs officers. The respondent argued that these notifications empower DRI officers to issue show cause notices and undertake investigations. The court referenced the amendments to Section 28 of the Act, particularly sub-section (11), which clarifies that DRI officers are proper officers for issuing show cause notices.The court concluded that the impugned show cause notice does not suffer from a lack of jurisdiction, as the DRI officers have been appointed as Customs officers through valid statutory notifications and circulars. The court emphasized that the petitioner did not challenge these notifications or circulars, and thus, the jurisdictional challenge fails.2. Allegation of Pre-Judgment and Pre-Determination in the Show Cause Notice:The petitioner argued that the show cause notice pre-judged the issue and was pre-meditated, thereby denying the petitioner a fair opportunity to defend himself. The petitioner relied on specific phrases used in the notice, such as 'admittedly,' 'invariably,' and 'wilfully,' to support this contention.The court examined the show cause notice in detail and found that it primarily narrated the sequence of events, statements recorded from the petitioner and other noticees, and the results of the investigation. The court noted that the notice elaborately set out all the facts and provided the petitioner with a full and effective opportunity to respond. The court emphasized that the adjudication would be conducted by an independent officer, not the respondent who issued the notice, thereby safeguarding the petitioner's rights.The court distinguished the present case from the decisions in Oryx Fisheries Private Limited and Siemens Ltd., where the show cause notices were found to be pre-judged. The court held that the use of certain expressions in the notice did not render it pre-conceived or pre-meditated, as the overall content of the notice aimed to present all recorded statements and investigation findings.Conclusion:The court dismissed the writ petition, directing the petitioner to submit a reply to the show cause notice within thirty days. The court found that the show cause notice was issued with proper jurisdiction and did not pre-judge the issue, ensuring the petitioner's right to a fair adjudication process.