DRI officers have valid jurisdiction to issue show cause notices and conduct investigations, petitioners' challenge rejected

The P&H HC dismissed writ petitions challenging show cause notices issued by DRI officers on jurisdictional grounds. Petitioners argued DRI officers lacked authority to issue notices and conduct investigations, claiming illegal retention of seized documents without legal sanction. The court relied on SC precedent in Canon India Pvt. Ltd. case, which established that DRI officers are properly appointed customs officers under government notifications from 1990 and 2002. The court held DRI officers have valid jurisdiction to issue notices and conduct investigations, rejecting petitioners' jurisdictional challenge and disposing of all writ petitions.

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Issues Involved:

1. Legality of the seizure of documents and articles by the Directorate of Revenue Intelligence (DRI).
2. Jurisdiction of DRI officers to issue show cause notices under Section 28 of the Customs Act, 1962.
3. Compliance with procedural requirements under the Customs Act, 1962.
4. Impact of the Supreme Court's decision in the case of M/s Canon India Pvt. Ltd. on the jurisdiction of DRI officers.

Detailed Analysis:

1. Legality of the Seizure of Documents and Articles:

The petitioner company challenged the seizure of documents, files, and computers by the DRI, asserting that the proceedings initiated were contrary to the provisions of the Customs Act, 1962. The petitioner argued that no legal sanction was obtained before commencing the investigation, rendering the retention of seized items illegal. The search was conducted on the premises of the petitioner company on 15.09.2005, and a Panchnama was prepared, documenting the recovery of files, documents, a laptop, and a CPU. The petitioner company contended that the seizure was unjustified as it complied with the summons by submitting the required records and bank drafts.

2. Jurisdiction of DRI Officers to Issue Show Cause Notices:

A central issue was whether DRI officers possessed the jurisdiction to issue show cause notices under Section 28 of the Customs Act, 1962. The petitioner companies argued that the DRI officers lacked jurisdiction, as they were not 'proper officers' for issuing such notices. The court noted that the Supreme Court's judgment in M/s Canon India Pvt. Ltd. had a significant bearing on this issue. The Supreme Court concluded that DRI officers are proper officers for the purposes of Section 28, thus validating their jurisdiction to issue show cause notices.

3. Compliance with Procedural Requirements:

The petitioner companies were issued show cause notices by the DRI, which they challenged on procedural grounds. The court observed that the petitioners had not initially sought to challenge the show cause notices in their writ petitions. However, amendments were allowed to include this challenge. The court emphasized that procedural compliance under the Customs Act was essential, but the primary issue of jurisdiction had been settled by the Supreme Court.

4. Impact of the Supreme Court's Decision in M/s Canon India Pvt. Ltd.:

The Supreme Court's decision clarified that DRI officers are empowered to issue show cause notices under Section 28, resolving the jurisdictional dispute. The court referred to the detailed findings of the Supreme Court, which validated the role of DRI officers as proper officers. The decision also addressed the retrospective validation of show cause notices under Section 97 of the Finance Act, 2022. The court held that, in light of the Supreme Court's ruling, the contention that DRI officers lacked jurisdiction was untenable. Consequently, the court directed the DRI to proceed with the investigation and issue appropriate orders, allowing the petitioners to appeal if aggrieved.

Conclusion:

The court disposed of the writ petitions, affirming the jurisdiction of DRI officers as proper officers for issuing show cause notices under Section 28 of the Customs Act, 1962, in line with the Supreme Court's judgment in M/s Canon India Pvt. Ltd. The court directed the DRI to continue its proceedings and advised the petitioners to seek appellate remedies if necessary. All pending miscellaneous applications were also disposed of.

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