Supreme Court Clarifies DRI Officer Jurisdiction under Customs Act

The case involved the jurisdiction of DRI officers to issue show cause notices under the Customs Act. The Supreme Court clarified that DRI officers were not proper officers initially, leading to legislative amendments. Conflicting decisions by various High Courts ensued, with the Delhi High Court ruling against DRI officers' jurisdiction pre-amendment. The matter was brought before the Supreme Court, which stayed the Delhi High Court's decision pending further review. In a related case, the Delhi High Court allowed a petitioner to challenge based on another case's outcome pending in the Supreme Court. The Tribunal remanded the matter for the adjudicating authority to decide on jurisdiction post-Supreme Court's decision, granting the assessee an opportunity to be heard.

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Issues involved:
Jurisdiction of DRI officers to issue show cause notice under the Customs Act.

Analysis:
The present appeals were filed against an order dated 31/05/2006. The preliminary issue in this case is regarding the jurisdiction of the DRI Officers to issue the show cause notice under the Customs Act. The Hon'ble Apex Court decision in the case of Commissioner of Customs vs. Sayed Ali highlighted that DRI officers were not proper officers as per section 2(34) of the Customs Act, 1962. Following this, the provisions of section 28 of the Customs Act were amended with effect from 08.04.2011. To address the judgment's impact, Notification No. 44/2011-Cus (NT) was issued, appointing the Additional Director General, DRI as the 'proper officer' for the purpose of Section 28 of the Customs Act from 06/07/2011. Subsequently, sub-Section (11) was inserted under Section 28 of the Customs (Amendment and Validation) Act, 2011, assigning proper officer functions to various DRI officers with retrospective effect.

In a related development, conflicting decisions arose among High Courts regarding the jurisdiction of DRI officers to issue show cause notices. The Hon'ble Delhi High Court ruled in favor of the assessee, stating that even the new inserted Section 28(11) did not empower DRI or DGCEI officers to issue show cause notices before 08/04/2011. However, the Hon'ble Mumbai High Court and the Hon'ble High Court of Telangana and Andhra Pradesh held contrary views to the Hon'ble Delhi High Court. Due to conflicting decisions, the matter reached the Hon'ble Supreme Court, which granted a stay on the Delhi High Court's judgment, making the issue sub-judice before the Supreme Court.

Moreover, the Hon'ble High Court of Delhi, in a similar case, granted liberty to the petitioner to review the challenge based on the outcome of appeals filed by the UOI in the Supreme Court against the judgment in the case of Mangali Impex Ltd. Following the High Court's decision in a similar case, the Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority to first decide the jurisdiction issue after the Supreme Court's decision in the Mangali Impex Ltd. case and then proceed on the merits of the case, providing an opportunity for the assessee to be heard. Until the final decision, the status quo was to be maintained. As a result, the appeals filed by the assessee were allowed by way of remand.

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