Tribunal Invalidates SCN by DRI Officers, Emphasizes Proper Authority for Demands

The Tribunal allowed the appeal, setting aside the impugned order and granting relief to the appellant. It held that the Show Cause Notice (SCN) issued by Directorate of Revenue Intelligence (DRI) officers was invalid as they were not considered "the proper officers" under Section 28 of the Customs Act. The Tribunal emphasized that only officers who initially assessed the goods or their successors could issue demands under Section 28. Additionally, it highlighted the potential impact of proposed amendments in the Finance Bill 2022 on the authority of DRI officers in future cases.

---

---

Issues Involved:
1. Authority of DRI officers to issue Show Cause Notices (SCNs) under Section 28 of the Customs Act.
2. Validity of the impugned order based on SCN issued by DRI officers.
3. Interpretation of "the proper officer" under Section 28.
4. Retrospective application and legislative intent of Section 28(11) of the Customs Act.

Issue-Wise Analysis:

1. Authority of DRI Officers to Issue SCNs:
The appellant contested the validity of the SCN issued by DRI officers, arguing that they were not "proper officers" under Section 28 of the Customs Act, as held by the Supreme Court in Canon India. The Departmental Representative countered by citing Section 28(11), which deems all Customs officers appointed before 6th July 2011 as proper officers for assessment and issuing demands. However, the Tribunal noted that DRI officers, although appointed as Customs officers under Section 4(1), were not specifically entrusted with the functions under the Customs Act by the Government under Section 6. Thus, the SCN issued by DRI was deemed invalid.

2. Validity of the Impugned Order:
The Tribunal examined the impugned order, which was based on an SCN issued by DRI officers. Following the precedent set in Canon India, the Tribunal concluded that the SCN issued by DRI officers lacked jurisdiction, making the impugned order unsustainable. The Tribunal also referenced several other cases where similar SCNs issued by DRI were set aside due to lack of jurisdiction.

3. Interpretation of "The Proper Officer":
The Tribunal emphasized the significance of the definite article "the" in the term "the proper officer" under Section 28. It clarified that only the officer who initially assessed the goods or his successor could issue a demand under Section 28. This interpretation was consistent with the Supreme Court's ruling in Canon India, which stated that the power to recover duties not levied or short-paid is conferred specifically on "the proper officer" who assessed the goods initially.

4. Retrospective Application and Legislative Intent of Section 28(11):
The Tribunal discussed the legislative intent behind the insertion of Section 28(11), which aimed to validate actions taken by Customs officers, including those from DRI, before 6th July 2011. However, the Tribunal noted that the constitutional validity of Section 28(11) was upheld by the Delhi High Court but its retrospective application was stayed by the Supreme Court. The Tribunal concluded that Section 28(11) did not override the requirement that only "the proper officer" could issue demands under Section 28.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned order and granting consequential relief to the appellant. It held that the SCN issued by DRI officers was invalid as they were not "the proper officers" under Section 28, and their actions were not entrusted by the Government under Section 6. The Tribunal also noted the potential impact of proposed amendments in the Finance Bill 2022, which, if enacted, could affect the authority of DRI officers in future cases.

---