2022 (6) TMI 723 - HC - Customs

Court validates DRI officers' jurisdiction under Customs Act, 1962

M/s. N.C. Alexender Versus The Commissioner of Customs, Chennai II Commissionerate, Chennai

M/s. N.C. Alexender Versus The Commissioner of Customs, Chennai II Commissionerate, Chennai - 2022 (381) E.L.T. 148 (Mad.) Issues Involved:1. Jurisdiction of Directorate of Revenue Intelligence (DRI) officers to issue Show Cause Notices (SCNs) and Orders-in-Original (OIOs).2. Impact of Finance Act, 2022 on the Customs Act, 1962.3. Validity of SCNs and OIOs issued by DRI officers.4. Requirement of cross-examination of witnesses in adjudication proceedings.5. Applicability of Supreme Court decisions in Canon India Private Limited and Commissioner v. Sayed Ali.Issue-Wise Detailed Analysis:1. Jurisdiction of DRI Officers to Issue SCNs and OIOs:The petitioners argued that the SCNs and OIOs issued by DRI officers were without jurisdiction as they were not 'proper officers' under Section 2(34) of the Customs Act, 1962. This argument was based on the Supreme Court's decision in Canon India Private Limited Vs. Commissioner of Customs, which held that DRI officers were not proper officers for issuing SCNs under Section 28 of the Customs Act. The Court noted that the DRI officers had already been appointed as officers of customs under various notifications issued under Section 4(1) of the Customs Act, 1962. Therefore, the DRI officers were competent to issue SCNs and adjudicate them.2. Impact of Finance Act, 2022 on the Customs Act, 1962:The Finance Act, 2022 amended the Customs Act, 1962, explicitly recognizing DRI officers as officers of customs. Section 97 of the Finance Act, 2022, validated actions taken by customs officers, including DRI officers, before the commencement of the Finance Act, 2022. This validation applied to pending proceedings, which had to be completed in accordance with the amended provisions of the Customs Act, 1962. The Court held that the challenges to the SCNs and OIOs based on the jurisdiction of DRI officers failed due to the validations in Section 97 of the Finance Act, 2022.3. Validity of SCNs and OIOs Issued by DRI Officers:The Court noted that the SCNs and OIOs issued by DRI officers were valid as they were appointed as officers of customs under Section 4(1) of the Customs Act, 1962. The Court also observed that the amendments to Section 17 of the Customs Act, 1962, with effect from 08.04.2011, introduced self-assessment of Bill(s) of Entry and Shipping Bill(s) by importers and exporters. The proper officer could only verify and re-assess the self-assessment. The Court held that the proper officer at the port became functus officio after accepting the self-assessment or passing a speaking order on re-assessment. Therefore, the SCNs and OIOs issued by DRI officers were valid.4. Requirement of Cross-Examination of Witnesses in Adjudication Proceedings:The Court held that where reliance was placed on the statements of third parties who were not produced for cross-examination, the impugned OIOs were quashed and remitted back to the adjudicating authority to pass a fresh order. The adjudicating authority was directed to produce such witnesses for cross-examination or pass orders based on independent evidence if the witnesses were unavailable.5. Applicability of Supreme Court Decisions in Canon India Private Limited and Commissioner v. Sayed Ali:The Court observed that the decision in Canon India Private Limited was based on the provisions of the Customs Act, 1962, as they stood before the amendments introduced by the Finance Act, 2011. The amendments to Section 17 of the Customs Act, 1962, introduced self-assessment of Bill(s) of Entry and Shipping Bill(s) by importers and exporters, which was not considered in the Canon India Private Limited case. The Court held that the decision in Canon India Private Limited required reconsideration in light of the amendments to the Customs Act, 1962, and the validation in Section 97 of the Finance Act, 2022.Conclusion:The Court dismissed the writ petitions challenging the SCNs and OIOs issued by DRI officers, holding that the DRI officers were competent to issue SCNs and adjudicate them. The Court also quashed and remitted back the OIOs where reliance was placed on the statements of third parties who were not produced for cross-examination. The Court directed the adjudicating authority to complete the pending proceedings in light of the validations in Section 97 of the Finance Act, 2022. The Court allowed the petitioners to file statutory appeals before the appropriate appellate tribunal within 30 days.