Proper Officer Key: Invalid Show Cause Notice Jurisdiction

The Supreme Court held that the Additional Director General, DRI lacked jurisdiction to issue a show cause notice under section 28 of the Customs Act. Relying on previous decisions, the Court determined that the proper officer for duty recovery post-import clearance is the officer who initially assessed and cleared the goods. Show cause notices issued by the Directorate of Revenue Intelligence were deemed invalid, rendering proceedings initiated based on such notices without jurisdiction and set aside. The importance of the proper officer issuing notices was emphasized, leading to the setting aside of the order due to lack of jurisdiction.

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Issues involved:
1. Jurisdiction of the Additional Director General, DRI to issue the show cause notice under section 28 of the Customs Act.
2. Validity of the proceedings initiated based on the show cause notice.
3. Impact of Supreme Court judgments on cases where show cause notices were issued by the Directorate of Revenue Intelligence.
4. Consideration of review petition filed by the Department in Canon India case.

Issue 1 - Jurisdiction of Additional Director General, DRI:
The appeal questioned the jurisdiction of the Additional Director General, DRI to issue a show cause notice under section 28 of the Customs Act. The appellant contended that the Additional Director General, DRI was not the proper officer to issue the notice, citing Supreme Court decisions in Canon India and Agarwal Metals and Alloys. The Supreme Court held that the power to recover duty after goods have been cleared for import is conferred on the proper officer who initially assessed and cleared the goods. The Additional Director General, DRI was not considered the proper officer, leading to the invalidity of the proceedings initiated based on the notice.

Issue 2 - Validity of proceedings based on the notice:
The Supreme Court decisions in Canon India and Agarwal Metals and Alloys, along with similar rulings by High Courts, emphasized that show cause notices issued by the Directorate of Revenue Intelligence were invalid as the officers lacked the authority to act as the proper officer under the Customs Act. Consequently, proceedings initiated based on such notices were deemed without jurisdiction and liable to be set aside.

Issue 3 - Impact of Supreme Court judgments:
The judgments in Canon India and subsequent cases influenced various High Courts and Tribunal Benches to set aside proceedings where show cause notices were issued by the Directorate of Revenue Intelligence. The decisions highlighted the importance of the proper officer issuing such notices to ensure the validity of subsequent actions taken by the Department.

Issue 4 - Review petition in Canon India case:
The Department's submission to defer the appeal hearing until the review petition in Canon India was decided was rejected by the Karnataka High Court in a similar case. The Court emphasized that the show cause notice must be issued by the proper officer, as established in the Supreme Court rulings, leading to the setting aside of the order passed by the Principal Commissioner of Customs ICD (Import), Tughlakabad. Consequently, the appeal was allowed, and the order dated 30.08.2019 was set aside due to lack of jurisdiction in the proceedings initiated based on the show cause notice.

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