Writ challenge to Customs Act show cause notice fails as service proved valid and adjudication may proceed

HC, exercising writ jurisdiction, held that the show cause notice (SCN) under the Customs Act, 1962 had been duly served on the petitioner-assessee. On appraisal of the record, HC found the objection of non-service of SCN to be factually untenable, terming it a false and belated afterthought raised only to defeat adjudication. Having concluded that service was validly effected and that no breach of natural justice or procedural infirmity was established, HC declined to interfere with the ongoing proceedings. Consequently, the writ petitions challenging the SCN and related action were held to be without merit and were disposed of, leaving the adjudicatory process under the Customs Act to continue in accordance with law.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether show cause notices and orders-in-original issued by officers of the Directorate of Revenue Intelligence could be invalidated on the ground that such officers were not "proper officers" under the Customs Act, 1962, in view of the earlier decision and subsequent review in the Canon India matter.

1.2 Whether there was non-service of the impugned show cause notice on the petitioner, so as to vitiate the proceedings and orders-in-original.

1.3 Consequentially, whether the writ petitions challenging the show cause notices and orders-in-original were maintainable, and what remedies were available to the petitioner, including in relation to limitation.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Jurisdiction of DRI officers as "proper officers" under the Customs Act, 1962

Legal framework (as discussed):

2.1 The petitions were founded on the earlier view in Canon India that DRI officers were not "proper officers" under the Customs Act, 1962, and that consequently show cause notices issued by them under Section 28 were without jurisdiction.

2.2 The Court took note of the subsequent review decision in the Canon India matter, wherein the Supreme Court held that officers of the Directorate of Revenue Intelligence and other similarly situated officers are "proper officers" for the purposes of Section 28 and are competent to issue show cause notices thereunder.

2.3 The Supreme Court further laid down specific directions regarding the manner in which pending challenges to show cause notices and orders-in-original, based solely on the want of jurisdiction of such officers, are to be dealt with by High Courts, this Court and CESTAT.

Interpretation and reasoning:

2.4 The Court noted that, in light of the Supreme Court's review decision, the foundational challenge in these writ petitions - that DRI officers lacked jurisdiction as "proper officers" to issue the impugned show cause notices - no longer survived.

2.5 The Court applied the binding directions issued by the Supreme Court governing pending writ petitions and challenges concerning Section 28 notices and orders passed by such officers.

Conclusions:

2.6 The Court held that, in view of the Supreme Court's review judgment, any challenge to the impugned show cause notices and orders-in-original on the ground that DRI officers were not "proper officers" could not be sustained, and that the writ petitions, to that extent, did not survive.

Issue 2 - Alleged non-service of the show cause notice

Interpretation and reasoning:

2.7 An additional issue was raised by the petitioner contending non-service of the show cause notice. The Court observed that this plea appeared to be an afterthought.

2.8 To examine this contention, the Court called for an affidavit from the Department. The affidavit stated that:

(a) The show cause notice dated 18.09.2019 and the corrigendum dated 18.11.2019 were dispatched to all noticees at their registered/last known addresses and were also displayed on the office notice board.

(b) An email dated 23.11.2019 was received from one of the co-noticees/directors referring specifically to the show cause notice and seeking release of seized items to an authorised representative.

(c) The authorised representative appeared on 27.11.2019, signed the acknowledgment for receipt of seized items and provided relevant email IDs.

(d) Personal hearing was granted to all noticees on 29.01.2020; their advocates (Vaidat Legal Services) addressed letters dated 09.01.2020 and 17.01.2020 requesting copies of relied upon documents and additional documents "enclosed to" and "required to prepare and present reply" to the show cause notice; the relied upon documents were emailed to the said advocates on 16.01.2020.

(e) The present writ petition itself had been filed through the same advocates who had previously sought relied upon documents before the adjudicating authority on behalf of the noticees.

2.9 On perusal of these facts stated on affidavit, the Court found that the conduct of the petitioner and co-noticees, including communications acknowledging the show cause notice, seeking release of goods, appearance before the authorities, and seeking relied upon documents, unequivocally demonstrated that they had knowledge of and access to the show cause notice.

Conclusions:

2.10 The Court was fully satisfied that service of the show cause notice had been duly effected.

2.11 The plea of non-service was held to be false and an afterthought, and was rejected.

Issue 3 - Maintainability of the writ petitions and availability of alternate remedies, including limitation

Interpretation and reasoning:

2.12 In view of the Supreme Court's review decision in Canon India affirming the competence of DRI officers as "proper officers", and the Court's finding that the show cause notice was duly served, the substantive basis for the writ petitions stood extinguished.

2.13 The Court followed the framework laid down by the Supreme Court for handling pending matters involving jurisdictional challenges to show cause notices and orders-in-original under Section 28, which contemplates adjudication by the proper officer and recourse to statutory appellate remedies, including before CESTAT.

Conclusions:

2.14 The Court held that the writ petitions no longer survived and disposed of them.

2.15 All remedies in respect of the impugned orders-in-original were expressly left open to the petitioner to be pursued in accordance with law before the appropriate forum.

2.16 The Court clarified that, for the period during which the present writ petitions remained pending before it, the petitioner may seek the benefit of Section 14 of the Limitation Act, 1963, in appropriate proceedings, in accordance with law.

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