Court upholds customs notification, allows DRI show cause notice, grants interim relief.

The court dismissed the petition challenging the validity of a customs notification and the jurisdiction of Directorate of Revenue Intelligence (DRI) officers to issue show cause notices. The court found that DRI officers had been appointed as Commissioners of Customs with jurisdiction over the entire country. It allowed the show cause notice to proceed, stating that the petitioners could raise their arguments during the adjudication process. The interim arrangement was continued for six weeks from the judgment date.

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Issues Involved:
1. Validity of Notification No. 44/2011-Cus (N.T.) dated 6th July 2011.
2. Jurisdiction of the Directorate of Revenue Intelligence (DRI) officers to issue show cause notices under Section 28 of the Customs Act, 1962.
3. Territorial limits of jurisdiction for officers designated as "proper officers" under the Customs Act.

Detailed Analysis:

1. Validity of Notification No. 44/2011-Cus (N.T.) dated 6th July 2011:
The petitioners challenged the notification on the grounds that it did not specify the territorial limits of jurisdiction for the officers designated as "proper officers" for the purposes of Sections 17, 28, and 28AAA of the Customs Act. They argued that a notification conferring powers must specify the territorial jurisdiction, and the lack of such specification renders the notification arbitrary, unreasonable, and unconstitutional. The petitioners contended that the powers under Sections 17 and 28 involve adjudicatory functions that must be subject to territorial limits to avoid chaos and multiplicity of litigation.

2. Jurisdiction of DRI Officers to Issue Show Cause Notices Under Section 28 of the Customs Act:
The petitioners argued that Section 28 (11) of the Customs Act, introduced by the Customs (Amendment and Validation) Act, 2011, does not validate show cause notices issued by DRI officers for periods prior to 8th April 2011. They contended that the officers of DRI were not "proper officers" as defined under Section 2(34) of the Act during that period, and therefore, lacked the jurisdiction to issue such notices. The petitioners also highlighted that the show cause notice dated 7th November 2014 was issued without jurisdiction as it pertained to imports made between 2009 and 2013.

3. Territorial Limits of Jurisdiction for Officers Designated as "Proper Officers":
The petitioners emphasized that the notification dated 6th July 2011 did not provide for territorial limits of jurisdiction, which led to overbroad and untrammeled powers being conferred upon the officers. They argued that this could result in any officer exercising powers under Sections 17 and 28 in respect of any import anywhere in the country, leading to a chaotic situation and multiplicity of litigations.

Respondent's Counter-Affidavit:
The respondents argued that the notification dated 7th March 2002 appointed Additional Director Generals of DRI as Commissioners of Customs with jurisdiction over the whole of India. They contended that the notification dated 6th July 2011 assigned the functions of "proper officers" to DRI officers for the purposes of Sections 17 and 28, and there was no requirement to specify territorial jurisdiction under Section 2(34) of the Customs Act. The respondents also cited judgments from the Gujarat High Court and Mumbai High Court upholding the power of DRI officers to issue show cause notices.

Court's Observations and Judgment:
The court noted that the petitioners' challenge was based on the lack of specific territorial limits in the notification and the jurisdiction of DRI officers. However, the court found that the affidavit-in-reply by the respondents, which remained uncontroverted, clarified that the DRI officers had been appointed as Commissioners of Customs with jurisdiction over the whole of India. The court observed that the show cause notice, being a preliminary step, should be allowed to proceed, and the petitioners could raise all their submissions during the adjudication process.

Conclusion:
The court dismissed the petition, allowing the show cause notice to proceed. The court emphasized that its observations were limited to the examination of the controversy and did not affect the petitioners' right to challenge the jurisdiction and other aspects during the adjudication process. The interim arrangement was continued for six weeks from the date of the judgment.

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