Rani Enterprises Vs Principal Commissioner of Customs (Delhi High Court)
The Delhi High Court addressed a writ petition filed by Rani Enterprises under Article 226 of the Constitution of India, primarily seeking the release of the petitioner’s goods. The goods were seized by the Directorate of Revenue Intelligence (DRI), Lucknow Zonal Unit, on June 25th and 26th, 2021. A Seizure Memo dated June 26, 2021, and an investigation report dated August 9, 2021, were issued by the DRI, followed by a Show Cause Notice dated October 25, 2021.
The primary contention raised by the petitioner was regarding the jurisdiction of DRI Officials as ‘proper officers’ to conduct proceedings, specifically those under Section 110 of the Customs Act, 1962. The petitioner relied on the Supreme Court’s earlier decision in Canon India Pvt. Ltd. v. Commissioner of Customs (Canon-I), which had held that DRI Officials were not ‘proper officers’ for the purposes of the Customs Act, 1962.
Impact of Supreme Court’s Review Decision
The Delhi High Court noted that the Canon-I decision had since been reviewed by the Supreme Court in Review Petition (Civil) No. 400/2021 titled ‘Commissioner of Customs v. M/s Canon India Private Limited’ (Canon-II).
In the Canon-II judgment, the Supreme Court rendered a conclusive finding, stating that:
- Officers of the Directorate of Revenue Intelligence (DRI), Commissionerates of Customs (Preventive), Directorate General of Central Excise Intelligence, Commissionerates of Central Excise, and other similarly situated officers “are proper officers for the purposes of Section 28 and are competent to issue show cause notice thereunder.”
The Supreme Court provided comprehensive directions on how pending challenges regarding the maintainability of show cause notices (SCNs) issued by this class of officers should be dealt with by various forums:
- Writ Petitions challenging SCNs directly: High Courts shall dispose of the petitions in accordance with the judgment’s observations and restore such notices for adjudication by the proper officer under Section 28.
- Appeals pending before the Supreme Court against High Court orders: They shall be disposed of in accordance with the decision, and the SCNs challenged shall be restored for adjudication by the proper officer under Section 28.
- Orders-in-original challenged before High Courts on jurisdiction grounds: The respective High Courts shall grant eight weeks’ time to the assessee to prefer an appropriate appeal before the Customs Excise and Service Tax Appellate Tribunal (CESTAT).
- Appeals against High Court orders pending before the Supreme Court regarding Orders-in-original: The Supreme Court shall grant eight weeks’ time to the assessee to prefer appropriate appeals before the CESTAT.
- CESTAT orders challenged before the Supreme Court or High Courts on jurisdiction grounds: They shall be disposed of in accordance with the ruling, and the notices shall be restored to the CESTAT for hearing the matter on merits.
- Appeals pending before the CESTAT on the jurisdiction issue: They shall now be decided in accordance with the observations made in the Canon-II decision.
High Court’s Conclusion
