DRI officers are allowed to issue show-cause notices under the Customs Act, as the Supreme Court permits a review of the 2021 Canon India ruling.
The Supreme Court has allowed a review petition regarding the 2021 Canon India ruling, confirming that DRI officers can issue show-cause notices under the Customs Act. This decision responds to a petition from the Customs Department after the earlier ruling in M/s Canon India Private Ltd. v. Commissioner of Customs (2021), which questioned the status of DRI officers as “proper officers” for such actions. The Court clarified that DRI officers do have the authority to issue show-cause notices under Section 28 of the Customs Act, 1962. The Bench, including Chief Justice D.Y. Chandrachud, Justice J.B. Pardiwala, and Justice Manoj Misra, stated that the previous conclusion that DRI officers were not customs officers was incorrect. They noted that the earlier finding regarding the Board’s power under Notification No. 40/2012-Customs (N.T.) dated 02.05.2012 was a clear mistake.
In the earlier Canon India ruling, the Court had determined that DRI officers were not “proper officers” as defined in Section 2(34) of the Act, which outlines who can issue show-cause notices for customs duties. The Court concluded that only officers designated by the Board or the Commissioner of Customs could perform this role, thus excluding DRI officers. This ruling led to many disputes in customs cases, where the authority of DRI officers to issue notices was challenged.The Customs Department disputed this interpretation in a review petition, claiming that Canon India (supra) ignored certain notifications, including one that specifically named DRI officers as “proper officers” for enforcement under Sections 17 and 28 of the Act. This was intended to reaffirm DRI’s authority and clarify enforcement procedures in customs matters.
In the current review petition, the Court observed, “A combined reading of Sections 2(34) and 28 of the Act shows that only a Customs Officer assigned specific assessment and reassessment duties by the Board or the Commissioner of Customs can issue a notice under section 28.” The Court added, “The interpretation that the “Proper Officer” for Section 28 and other parts of the Act, 1962 refers only to the person who cleared the goods or their successor, and not to any officer from another department, needs to be re-evaluated in light of the amendments made by the Finance Act, 2011 and Section 4 along with the related notification.”
As a result, the Court concluded, “The ruling in Canon India (supra) did not take into account the statutory framework of Sections 2(34) and 5 of the Act, 1962. Consequently, it incorrectly determined that DRI officers were not given the role of a proper officer for Section 28 under Section 6, thus lacking the authority to issue show cause notices for duty recovery under Section 28 of the Act, 1962.” Therefore, the Supreme Court granted the petition.
Cause Title: Commissioner Of Customs v. M/s Canon India Pvt. Ltd. (Neutral Citation: 2024 INSC 854)
