2022 (7) TMI 318 - HC - Customs

Court upholds DRI's jurisdiction in show cause notice transfer case. Importance of challenging notifications highlighted.

M/s RUDRAS OVERSEAS Versus ADDITIONAL DIRECTOR GENERAL (ADJUDICATION) DRI

The High Court dismissed the petition challenging the jurisdiction of DRI to issue the show cause notice and the transfer of the notice to the call book. ... Maintainability of application - Jurisdiction - power of Pr. ADG, DRI to issue SCN - validity of notification No.4/21 – Customs dated 17.03.2021 not challenged - Case of petitioners is that Officers of DRI have no jurisdiction to conduct a raid and issue a show cause notice as they are not proper officer under Section 28 of Customs Act for reassessment - HELD THAT:- In the present case, the Board has issued instruction No.4/2021 dated 17.03.2021, to all adjudication authorities of DRI/ Customs for sending all pending adjudication of show cause notice cases to call book because Apex Court has decided to reconsider the case of Canon Pvt. Ltd [2021 (3) TMI 384 - SUPREME COURT] in review petition. The respondent has filed a copy of the order in Union of India and Godrej and Boyce Manufacturing Co. Ltd. [2022 (2) TMI 636 - SUPREME COURT] to show that the issue as to “who would be the proper officer under Custom Act in light of Section 28 (11) of the Customs Act” has been found to consider by the Apex court. Since the petitioner is seeking quashment of show cause notice relying on Canon India Pvt. which is under review before the Apex Court, therefore, the respondent authority awaiting the final outcome of the aforesaid case has rightly sent the case of the petitioner to call book in the exercise of power under Section 28 (9A) of Customs Act. Petitioner is not challenging the validity of Notification No.4/2021-Customs dated 17.08.2021 issued by Central Board of Indirect Taxes and Customs whereby the cases Shri Anil Agrawal and 11 others have been directed to be kept pending until further direction. The petitioner's case is similar to the case of Shri Anil Aggrawal, therefore, unless the petitioner challenges the validity of notification No.4/21 – Customs dated 17.03.2021, the present petition is not maintainable challenging the consequential orders issued by the respondent i.e. Annexure P/1. The writ petition is dismissed. Issues:1. Jurisdiction of DRI to issue show cause notice.2. Transfer of show cause notice to call book.3. Maintainability of the petition based on territorial jurisdiction and non-impleadment of necessary party.Jurisdiction of DRI to issue show cause notice:The petitioner sought relief from the High Court challenging the jurisdiction of the Directorate of Revenue Intelligence (DRI) to issue a show cause notice based on a raid conducted at the premises of a firm allegedly involved in undervaluation of imported goods. The petitioner argued that DRI officers are not the proper officers under Section 28 of the Customs Act for reassessment, citing a Supreme Court judgment. The show cause notice proposed rejection of goods' value and demanded differential duty under the Customs Act. The petitioner contended that the show cause notice should be quashed due to lack of jurisdiction.Transfer of show cause notice to call book:The adjudicating authority, instead of determining the duty amount within the stipulated period, transferred the show cause notice to the call book, keeping it pending indefinitely. The petitioner submitted representations requesting adjudication in accordance with the law. The respondent defended the transfer citing Section 28(9A) of the Customs Act, allowing cases to be sent to the call book under certain circumstances. The authority referred to a Board instruction directing pending adjudications to the call book due to a Supreme Court judgment review. The High Court noted the similarity of the petitioner's case with another case mentioned in the instruction, indicating that challenging the validity of the instruction was necessary for the petition to be maintainable.Maintainability of the petition:The respondent raised objections regarding the maintainability of the petition based on territorial jurisdiction and non-impleadment of a necessary party. The petitioner did not challenge the validity of a specific notification issued by the Central Board of Indirect Taxes and Customs, which directed cases to be kept pending. The High Court, considering the similarity of the petitioner's case with those mentioned in the notification, dismissed the petition as not maintainable without challenging the validity of the notification.In conclusion, the High Court dismissed the petition challenging the jurisdiction of DRI to issue the show cause notice and the transfer of the notice to the call book. The court found the petition not maintainable due to the petitioner not challenging the validity of the notification directing cases to be kept pending. The judgment provides a detailed analysis of the legal aspects surrounding the issues raised by the petitioner, emphasizing the importance of challenging relevant notifications for the maintainability of such petitions.