DRI Officers Not Competent Authority To Issue Show Cause Notice U/S 28, 124 Of Customs Act: Rajasthan High Court

A division bench of Chief Justice Akil Kureshi and Justice Sameer Jain, rued,

"DRI officer is not Competent Authority to issue show cause notice and adjudicate the same as "proper officer". The Act, the notification relied upon do not define and bring the DRI officers within four corners of "proper officers" having functions and powers to act under Section 28 of the Act of 1962 "

The court observed that the entire proceedings in the present case, initiated by officers of DRI in as much as by issuance of show cause notice under Section 28/124 of the Customs Act lacks jurisdiction and are without any authority of law because the present show cause notice is not issued by custom officer but by DRI officer who has not been assigned specific function/power under Section 6 to issue show cause notice U/S 28 of the Act of 1962.

Background

Essentially, the petitioner is a Customs House Agent and the co-petitioners were importers engaged in the import of Glass Chatons at Customs ports at Jaipur. Additional Director, DRI (Zonal) Unit Ahmedabad conducted investigation and demanded custom duty under Section 28 of the Act. DRI proposed confiscation of the seized goods and imposition of penalty under Section 124, 112, 114A of the Act, 1962. The show cause notice was issued as back as dated 06.08.2014 and in connected matter in 2019. The petitioner that the said show cause notice was adjudicated vide order dated 15.03.2021 in violation of principles of natural justice without grant of right to cross-examination.

The counsel for the petitioner that the said show cause notice was adjudicated without consideration of Apex Court judgment in Commissioner of Customs v. Sayed Ali (2011) 3 SCC 537 and Cannon India Private Ltd, wherein it has been held that DRI Officers are not proper officers and show cause notice issued by them are ab initio void, illegal and lacks jurisdiction and non- consideration of the above judgments is in violation of Article 141 of the Constitution of India.

In contrast, the counsel for the respondents submitted that the present petitions are not maintainable as order in original is passed and appeal has been filed by the petitioners. As per him, it is a settled position of law that where an alternative remedy is available, the writ petition is not maintainable. He argued that subsequent to the judgment of Apex Court in the case of M/s Canon India Private Ltd, a number of writ petitions were filed before various High Courts for quashing of show cause notices issued by DRI Officers in which directions have been given to first approach Adjudicating Authority to decide the issue of jurisdiction.

Findings

The court observed that in the present case a show cause notice was issued, order in original was passed, appeal was preferred but the issue whether DRI Officers are proper officers under the Act of 1962 and have power to issue a show cause notice was not analyzed and ignored though the said controversy was no more res integra.

Relying on Cannon India (supra), provisions of Section 2(34) which defines "proper officer", Section 6 which defines "functions and powers of custom officer" and Section 28 which refers to "procedure of demand and recovery by the proper officer" having jurisdiction to issue show cause notice and to carry out adjudication, the Court held,

"the entire proceedings initiated by officers of DRI in as much as by issuance of show cause notice under Section 28/124 of the Customs Act lacks jurisdiction and are without any authority of law because the present show cause notice is not issued by custom officer but by DRI officer who has not been assigned specific function/power under Section 6 to issue show cause notice U/S 28 of the Act of 1962. DRI officer is not Competent Authority to issue show cause notice and adjudicate the same as "proper officer". The Act, the notification relied upon do not define and bring the DRI officers within four corners of "proper officers" having functions and powers to act under Section 28 of the Act of 1962."

The court, while overruling the argument on petitioner not availing alternative remedy, observed that it is fit to entertain the present writ petition when the entire proceedings were initiated by way of show cause notice which was issued by DRI Officers who lacked jurisdiction to issue show cause notices as held by Apex Court.

Further, the court relied on and observed that entertaining writ petition under Article 226 is a self imposed restriction, if the petitioner is aggrieved and is not having efficacious and effective remedy. The court added that the constitutional courts have a bounden duty to entertain the writ petition when it is invoked in the circumstance, when there is violation of fundamental rights or the action of the respondent is without jurisdiction and there is violation of principles of natural justice.

Adv. Arun Goyal and Adv. Kinushk Jain appeared for the petitioners and respondents respectively.

Case Title: M/S Fairdeal Shipping Agency Pvt Ltd. v.. The Joint Commissioner of Customs (Preventive)

Citation: 2022 LiveLaw (Raj) 72