Court quashes seizure proceedings by DRI due to lack of proper authorization under Customs Act

The Court allowed the Writ Petition, quashing the seizure proceedings, the Panchnama, and the summons issued by the Directorate of Revenue Intelligence (DRI). It held that the actions taken by the DRI were not sustainable in law due to the absence of proper authorization under the Customs Act, 1962. The Court emphasized the need for adherence to legal provisions and authoritative judicial precedents, thereby setting aside the DRI's actions with all consequential effects.

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Issues Involved:
1. Legality of the seizure proceeding initiated by the Directorate of Revenue Intelligence (DRI).
2. Authority of the DRI under the Customs Act, 1962 to conduct search and seizure operations.
3. Validity of the summons issued to the Petitioner by the DRI.

Issue-wise Detailed Analysis:

1. Legality of the seizure proceeding initiated by the Directorate of Revenue Intelligence (DRI):

The Petitioner challenged the seizure of gold and silver from his premises by the DRI, arguing that the DRI was not authorized to initiate proceedings under the Customs Act, 1962. The Petitioner relied on the Supreme Court judgment in Cannon India Pvt. Ltd. Vs. Commissioner of Customs [AIR 2021 SC 1699], which emphasized that only officers of the Customs Department or those specifically notified by the Central Government could initiate such proceedings.

2. Authority of the DRI under the Customs Act, 1962 to conduct search and seizure operations:

The Petitioner contended that the DRI lacked the authority to conduct search and seizure operations under the Customs Act because they were not designated as "proper officers" under Section 2(34) of the Act. The Petitioner further argued that there was no notification under Section 6 of the Customs Act entrusting the DRI with the functions of the Customs officers. The Respondents, however, relied on a Notification dated 2.5.2012, which they claimed designated the DRI as "proper officers."

Upon examining the provisions of the Customs Act, particularly Sections 2(34) and 6, the Court noted that Section 6 allows the Central Government to entrust functions to officers of the Central or State Government via a notification in the Official Gazette. The Court found that the Notification dated 2.5.2012, relied upon by the Respondents, was issued under Section 2(34) and not Section 6, thereby lacking the necessary legal basis to empower the DRI.

The Court referred to the Supreme Court's judgment in Cannon India Pvt. Ltd., which clarified that the Notification under Section 2(34) did not confer the necessary authority on the DRI. The Court also cited similar judgments from the Bombay High Court and the Delhi High Court, reiterating that the DRI could not act as "proper officers" without a valid notification under Section 6.

3. Validity of the summons issued to the Petitioner by the DRI:

The Petitioner sought to quash the summons issued by the DRI, which insisted on his presence for further investigation. Given the Court's findings on the DRI's lack of authority, it concluded that the summons were also without legal basis. The Court held that the entire proceeding initiated by the DRI, including the seizure and the subsequent summons, was invalid and without authority of law.

Conclusion:

The Court allowed the Writ Petition, quashing the seizure proceedings, the Panchnama, and the summons issued by the DRI. It held that the actions taken by the DRI were not sustainable in law due to the absence of proper authorization under the Customs Act, 1962. The Court emphasized the need for adherence to legal provisions and authoritative judicial precedents, thereby setting aside the DRI's actions with all consequential effects.

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