Can DRI Officers Exercise Powers Under Customs Act? Supreme Court Reserves Judgment On Customs Dept's Review Petition

The Supreme Court today (September 19) reserved its judgement on the issue whether the powers under the Customs Act, 1962 can be conferred upon the Directorate of Revenue Intelligence.

The Court heard the review petition filed by the Customs Department against the 2021 Supreme Court Judgment in Canon India Private Ltd. versus Commissioner of Customs, which had held that officers of the Directorate of Revenue Intelligence do not have powers under the Customs Act ,1962.

A three-judge bench comprising the then CJI SA Bobde and Justices AS Bopanna and V Ramasubramanian in Canon India had held that in the absence of entrustment of functions by the Central Government under section 6 of the Customs Act, 1962, an officer of the Directorate of Revenue Intelligence (DRI) will not have the jurisdiction to exercise functions under the Act. Also, the court had held that show cause notice under section 28 of the Act can only be issued by 'the proper officer', i.e., the officer who had done the assessment in the first place and not by any other officer having concurrent jurisdiction.

The bench comprising CJI DY Chandrachud Justices JB Pardiwala and Manoj Misra heard the arguments in the review petition at length. The Commissioner of Customs was represented by Additional Solicitor General (ASG) N Venkataraman. Senior advocates Arshad Hidayatullah, Arvind Datar, S. Nandakumar, Nachiketa Joshi, Purvish Malkan made arguments for various parties.

The Respondents were represented by Advocate V. Lakshmikumaran, Senior Advocates Vikram Choudhary, . R.K. Sanghi.

The ASG argued that DRI officers can exercise the powers of Customs officers and since 1977 onwards, they have been part of the Ministry of Finance and the officers form a class of officers under the law. He argued that the judgment suffered from at least six apparent errors on record.

The Respondents argued that no case for review is made out and that a different view is not an "apparent error" which would warrant the exercise of review jurisdiction.

Following the ruling of the Supreme Court in Canon India, many High Courts and Tribunals in India had quashed proceedings undertaken by the officers of DRI as invalid on the basis of show cause notices issued under Section 28 of the Act. As a result, many appeals against the orders passed on the basis of Canon India are pending in the Supreme Court.

In a connected matter, the Union of India had filed a Special Leave Petition before the Supreme Court against the order of Punjab and Haryana High Court in M/S Godrej and Boyce Manufacturing Co. Ltd. versus Union of India (2021), where the High Court following the judgment of Supreme Court in Canon India held the proceedings initiated by the Additional Director General, Directorate of Revenue Intelligence as invalid under Section 28 of the Act.

In that case, the Attorney General had submitted that the Additional Director General (ADG), DRI, is an officer of the Customs Department and therefore the provisions of Section 6 of the Act requiring entrustment of functions by the Central Government is not relevant, since the ADG has been authorized by the Central Board of Indirect Taxes and Customs (CBIT&C) under section 2 (34) of the Act itself. He had contended that under the provisions of Section 28(11), the ADG, DRI, will be treated as a 'proper officer' irrespective of the requirement of Section 2(34) of the Act. Also, it was submitted that Section 28(11) was not under consideration in Canon India.

Case Details : COMMISSIONER OF CUSTOMS vs. M/S CANON INDIA PRIVATE LIMITED| R.P.(C) No. 000400 - / 2021