2025 (4) TMI 1201 - HC - Customs

DRI officers have jurisdiction to issue show cause notices under Section 28 of Customs Act following Canon II decision

M/s. Microsoft Licensing GP Versus Commissioner Of Customs Import New Delhi.

Delhi HC disposed of customs appeals regarding DRI officers' jurisdiction to issue show cause notices under Section 28 of Customs Act, 1962. Following ... Jurisdiction - proper officers or not - officers of DRI - jurisdiction of Directorate of Revenue Intelligence (DRI) to issue SCN under Section 28 of the Customs Act, 1962 - HELD THAT:- The question as to jurisdiction of DRI officials now stands resolved in the Canon II [2022 (2) TMI 1480 - SC ORDER] decision of the Supreme Court where it was held that 'Applications seeking exemption from filing affidavits are allowed'. Since the said issue now no longer remains res integra, CESTAT would have to decide the appeals of the Customs Department on merits, in terms of the orders passed in similar matters. Accordingly, Customs Appeal No. C/52942/2015 in CUSAA 62/2025 and Customs Appeal No. C/52578/2015 in CUSAA 63/2025 respectively, are restored before the CESTAT. Appeal disposed off. 1. ISSUES PRESENTED and CONSIDEREDThe primary legal issues considered in this judgment are:- Whether the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) was justified in remanding the matter to the original adjudicating authority to first decide the issue of jurisdiction, particularly in light of the decision by the Supreme Court in the case of Canon India Pvt. Ltd.- Whether the Directorate of Revenue Intelligence (DRI) officers have the jurisdiction to issue show cause notices under Section 28 of the Customs Act, 1962.- Whether the appeals filed by the Customs Department, which were set aside by CESTAT, should be restored for comprehensive adjudication.2. ISSUE-WISE DETAILED ANALYSISRelevant legal framework and precedents:The legal framework primarily revolves around Section 28 of the Customs Act, 1962, which pertains to the issuance of show cause notices for customs duty evasion. The precedents include the decisions in Mangli Impex Limited v. Union of India and the Supreme Court's judgment in Canon India Pvt. Ltd.Court's interpretation and reasoning:The Court noted that the issue of whether DRI officers are proper officers under Section 28 had been contentious, with conflicting opinions in previous judgments. The decision in Mangli Impex Limited held that DRI officers were not proper officers, which was later challenged and stayed by the Supreme Court. The Supreme Court's decision in Canon India clarified that DRI officers are competent to issue show cause notices under Section 28, resolving the jurisdictional issue.Key evidence and findings:The Court relied on the Supreme Court's judgment in Canon India, which set aside the decision in Mangli Impex Limited and validated the jurisdiction of DRI officers. Additionally, the Court considered previous orders where similar appeals were restored for adjudication without being influenced by the Mangli Impex decision.Application of law to facts:Given the Supreme Court's clarification in Canon India, the Court determined that the jurisdictional issue was no longer an impediment to proceeding with the appeals on merits. Consequently, the Court found it appropriate to restore the appeals filed by the Customs Department for comprehensive adjudication by CESTAT.Treatment of competing arguments:The Appellant argued that the appeals should be restored as the Customs Department had not taken steps to do so, despite previous court orders indicating such a course of action. The Respondent contended that the jurisdictional issue had been resolved by the Supreme Court, thus allowing the appeals to be adjudicated on merits.Conclusions:The Court concluded that the appeals filed by the Customs Department should be restored before CESTAT, as the jurisdictional issue had been clarified by the Supreme Court, and the merits of the case could now be adjudicated comprehensively.3. SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning:'Accordingly, Customs Appeal No. C/52942/2015 in CUSAA 62/2025 and Customs Appeal No. C/52578/2015 in CUSAA 63/2025 respectively, are restored before the CESTAT.'Core principles established:The Court reaffirmed the principle that DRI officers are proper officers under Section 28 of the Customs Act, 1962, as clarified by the Supreme Court in Canon India. This decision effectively nullifies the previous conflicting judgments and provides a clear legal framework for the jurisdiction of DRI officers.Final determinations on each issue:The appeals are restored before CESTAT for comprehensive adjudication on merits, including the jurisdictional aspect, in light of the Supreme Court's decision in Canon India. The Court directed CESTAT to proceed with the adjudication of these and connected appeals without being influenced by the earlier decision in Mangli Impex Limited.