Court quashes Customs Act notice for lack of jurisdiction.

The court held that the Additional Director of Directorate of Revenue Intelligence (DRI) lacked jurisdiction to invoke Section 124 of the Customs Act, 1962, as there was no valid notification authorizing such action under Section 2(34). Consequently, the show cause notices issued by the Additional Director General of DRI were quashed for lack of jurisdiction. The writ petitions were disposed of accordingly, with the court directing the parties to receive certified copies of the order upon completion of formalities.

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Issues Involved:
1. Jurisdiction of the Additional Director of Directorate of Revenue Intelligence (DRI) to invoke Section 124 of the Customs Act, 1962.

Detailed Analysis:

Jurisdiction Issue:
The petitioner challenged the notice to show cause issued by the Additional Director General, DRI, Kolkata, under Section 124 of the Customs Act, 1962, on the grounds of lack of jurisdiction. The petitioner argued that the Additional Director General of DRI is not authorized to issue such a notice as per the provisions of the Customs Act, 1962.

Petitioner's Arguments:
The petitioner’s counsel contended that only persons specified in Section 122 of the Customs Act, or their delegates under Section 152, have the authority to issue show cause notices under Section 124. They emphasized that the Additional Director General of DRI is not included in these categories. The counsel referenced several sections of the Customs Act, including Section 2(1) (adjudicating authority), Section 2(34) (proper officer), Section 4 (appointment of officers of Customs), Section 5 (powers of officers of Customs), and Section 6 (entrustment of functions to other officers). They argued that the functions of a Customs officer can be entrusted to other officers under Section 6, but the powers cannot be delegated except as permitted under Section 152. Therefore, the issuance of the show cause notice by the Additional Director General of DRI was claimed to be without jurisdiction.

Respondent's Arguments:
The counsel for the DRI argued that all officers of the DRI are treated as officers of Customs, supported by four notifications issued by the Central Government. They cited Notification No. 31/97-Cus. (N.T.) dated July 7, 1997, which included DRI officers as Customs officers. They argued that the petitioner falls within the ambit of persons who can issue a notice under the Customs Act. They also referenced Sections 112, 122, and 124 of the Customs Act, arguing that the DRI’s role in investigating revenue frauds justifies their authority to issue show cause notices. They supported their arguments with various judicial precedents, including decisions from the Madras High Court and the Gujarat High Court, which recognized the competence of DRI officers to invoke provisions of the Customs Act.

Court's Analysis:
The court examined the relevant provisions of the Customs Act and the notifications cited by the DRI. It emphasized the necessity of proper authorization under Section 2(34) of the Customs Act for any officer to discharge functions under the Act. The court noted that the notifications relied upon by the DRI, including Notification No. 31/97-Cus. (N.T.) and Notification No. 17/2002-Cus. (N.T.), were issued under Section 4 and not under Section 2(34). Therefore, these notifications did not authorize the Additional Director General of DRI to discharge functions under Section 124 of the Customs Act. The court also referenced the Supreme Court’s decision in Sayed Ali & Anr., which clarified that only officers specifically authorized under Section 2(34) can issue notices under the Customs Act.

Conclusion:
The court concluded that the Additional Director of DRI is not authorized to invoke Section 124 of the Customs Act, 1962, as there was no notification under Section 2(34) authorizing such action. Consequently, the impugned show cause notices were quashed for lack of jurisdiction.

Disposition:
The writ petitions were disposed of, and the impugned show cause notices were quashed as being without jurisdiction. The court directed that urgent certified website copies of the order be made available to the parties upon compliance with requisite formalities.

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