Court quashes show cause notice citing lack of jurisdiction, orders refund & release of bank guarantees.

The court quashed the show cause notice issued by DRI officials, citing lack of jurisdiction based on the Canon India Pvt. Ltd. ruling. The court ordered the refund of amounts and release of bank guarantees deposited during the investigation. The ruling clarified that the quashing of the notice does not prevent the respondents from initiating lawful proceedings. The writ petitions were granted, and connected miscellaneous petitions were closed.

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Issues Involved:
1. Jurisdiction of Directorate of Revenue Intelligence (DRI) officials to issue show cause notices under Section 28 of the Customs Act.
2. Application of the Supreme Court's ruling in Canon India Pvt. Ltd. case to the present matter.
3. Validity of proceedings initiated by DRI officials prior to the 2011 amendment of Section 28 of the Customs Act.
4. Entitlement of the petitioner to a refund of amounts and bank guarantees deposited during the investigation.

Issue-wise Detailed Analysis:

1. Jurisdiction of Directorate of Revenue Intelligence (DRI) Officials:
The primary issue revolves around whether the DRI officials are considered "proper officers" under Section 28 of the Customs Act, 1962. The petitioner argued that the show cause notice issued by the Additional Director General, DRI, was invalid as the DRI officials are not "proper officers" within the meaning of Section 28(1) and 28(4) of the Customs Act. This argument is supported by the Supreme Court's ruling in Canon India Pvt. Ltd. case, which clarified that only the officer who initially assessed the goods or his successor could issue such notices.

2. Application of the Supreme Court's Ruling in Canon India Pvt. Ltd. Case:
The petitioner contended that the Supreme Court's decision in Canon India Pvt. Ltd. should be applied to their case. The Supreme Court had held that DRI officials are not "proper officers" under Section 28(4) of the Customs Act, making any show cause notices issued by them invalid. The petitioner argued that this ruling should lead to the quashing of the show cause notice issued to them and the refund of amounts deposited during the investigation.

3. Validity of Proceedings Initiated by DRI Officials Prior to the 2011 Amendment:
The court noted that the 2011 amendment to Section 28 of the Customs Act, which included Sub-Section 11, allowed DRI officials to initiate adjudication proceedings. However, the Delhi High Court in Mangali Impex case held that this amendment had only a prospective effect. Therefore, any proceedings initiated by DRI officials prior to 2011 should be governed by the pre-amendment provisions. The Supreme Court's decision in Canon India further reinforced that DRI officials were not proper officers even under the amended provisions, thus invalidating proceedings initiated by them before 2011.

4. Entitlement to Refund of Amounts and Bank Guarantees:
The petitioner sought the refund of amounts and bank guarantees deposited during the investigation, arguing that the entire proceedings were vitiated due to the lack of jurisdiction of the DRI officials. The court agreed with the petitioner, noting that the Supreme Court's ruling in Canon India had been consistently followed in similar cases. The court directed the respondents to refund the amounts and release the bank guarantees deposited by the petitioner.

Conclusion:
The court quashed the impugned show cause notice dated 06.12.2012, issued by the DRI officials, on the ground of lack of jurisdiction as per the Canon India Pvt. Ltd. ruling. The court directed the respondents to refund the amounts and release the bank guarantees deposited during the investigation. The court clarified that the quashment of the show cause notice would not preclude the respondents from initiating fresh proceedings in accordance with the law. The writ petitions were allowed, and the connected miscellaneous petitions were closed.

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