2017 (6) TMI 1131 - AT - Customs

Jurisdiction of Directorate of Revenue Intelligence (DRI) - power to issue SCN - Held that - sub-section 11 was inserted under section 28 of the Customs (Amendment and Validation) Act 2011 dated 16.09.2011 assigning the functions of proper officers to various DRI officers with retrospective effect - Later on i.e. for the period subsequent to the amendment the matter i.e. the DRI officers having the proper jurisdiction to issue the SCN or not had come up before the Hon ble Delhi High Court in the case of Mangali Impex vs. Union of India 2016 (5) TMI 225 - DELHI HIGH COURT and the High Court inter alia held that even the new inserted section 28(11) does not empower either the officers of DRI or the DGCEI to issue the SCN for the period prior to 8.4.11. Matter remanded to the original adjudicating authority to first decide the issue of jurisdiction after the availability of Hon ble Supreme Court decision in the case of Mangli Impex and then on merits of the case but by providing an opportunity to the assessee of being heard - appeal allowed by way of remand.

Summary

Issues:
Jurisdiction of DRI officers to issue show cause notice under Customs Act.

Analysis:
The appellants challenged an order dated 31/08/2007, arguing that the show cause notice issued by the Directorate of Revenue Intelligence (DRI) was invalid. The appellant relied on a High Court decision stating that DRI lacked the authority to issue such notices. The Department's counsel defended the DRI's notice issuance. The Tribunal examined the jurisdictional issue arising from the DRI's authority to issue show cause notices under the Customs Act. The appellant contended that DRI officers were not proper officers as per a Supreme Court decision. The Customs Act was subsequently amended to address this issue. A notification assigned the function of proper officer to the Additional Director General, DRI from 06/07/2011. A later amendment retroactively designated various DRI officers as proper officers.

The High Court held that the DRI officers lacked jurisdiction to issue show cause notices before 08/04/2011. This decision conflicted with other High Court rulings. The matter was brought before the Supreme Court, which stayed the Delhi High Court's judgment. Another High Court case addressed a similar issue, with the court granting liberty to review the challenge based on the Supreme Court's decision in the earlier case. Following the Delhi High Court's decision in the latter case, the Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority. The authority was directed to first decide on jurisdiction after the Supreme Court's decision and then proceed on the merits, providing the appellant with a hearing opportunity. The status quo was to be maintained until a final decision. Consequently, the appeals were allowed by way of remand.