Case Law Details
Commissioner of Customs (Import) Vs Ashok Singhla (Delhi High Court)
New Delhi: The Delhi High Court has set aside an order passed by the Customs Excise and Service Tax Appellate Tribunal (CESTAT) that had quashed an original demand order, citing a recent review judgment by the Supreme Court. The High Court has sent the case back to CESTAT for a fresh decision on the merits, in line with the updated legal position from the Supreme Court.
The appeal was filed by the Commissioner of Customs (Import) challenging a final order issued by CESTAT on April 5, 2022. The CESTAT order had set aside an earlier order-in-original dated May 12, 2016.
The primary reason behind the CESTAT’s decision was its reliance on the Supreme Court’s judgment in Canon India Pvt. Ltd. v. Commissioner of Customs, 2021 (18) SCC 563, often referred to as ‘Canon-I’. In Canon-I, the Supreme Court had ruled that officers belonging to the Directorate of Revenue Intelligence (DRI) were not the ‘proper officers’ authorized to issue show cause notices under Section 28 of the Customs Act, 1962. Consequently, any adjudication orders stemming from such notices issued by DRI officers were held to be invalid.
However, the Delhi High Court noted that the legal landscape regarding the jurisdiction of DRI officers has since been altered by the Supreme Court itself. The High Court highlighted that the Supreme Court had reviewed its Canon-I judgment in Review Petition (Civil) No. 400/2021, titled ‘Commissioner of Customs v. M/s Canon India Private Limited’, now referred to as ‘Canon-II’.
The High Court’s order prominently features findings from the Canon-II review judgment. In Canon-II, the Supreme Court reversed its previous stance and clarified that officers of DRI, Commissionerates of Customs (Preventive), Directorate General of Central Excise Intelligence, and similar authorities are indeed ‘proper officers’ competent under the law to issue show cause notices under Section 28 of the Customs Act, 1962.
Furthermore, the Canon-II judgment provided comprehensive directives on how pending cases across various forums, where the jurisdiction of officers to issue Section 28 notices had been challenged based on the Canon-I ruling, should be handled. The Delhi High Court specifically referenced paragraph 168(vi)(e) of Canon-II, which deals with situations where orders of CESTAT have been challenged before High Courts or the Supreme Court on the ground of lack of jurisdiction of the proper officer. This directive mandates that such appeals or writ petitions shall be disposed of in accordance with the Canon-II ruling, and the impugned show cause notices are to be restored to the CESTAT for hearing the matter on its merits.
The Delhi High Court concluded that the present appeal filed by the Commissioner of Customs (Import) was squarely covered by the directions issued by the Supreme Court in paragraph 168(vi)(e) of Canon-II.
In light of the superseding judgment in Canon-II, which validated the authority of DRI officers (and others similarly placed) to issue Section 28 notices, the Delhi High Court found that the very foundation of the CESTAT’s order (which relied on the now-reviewed Canon-I) had been removed.
Accordingly, the Delhi High Court allowed the appeal filed by the Commissioner of Customs (Import) and set aside the Final Order dated April 5, 2022, passed by CESTAT. The matter, identified as Customs Appeal No. 52362 of 2016 before CESTAT, has been restored to its original position. The High Court directed CESTAT to adjudicate the appeal afresh, specifically on the merits of the case, rather than dismissing it on the preliminary ground of jurisdiction based on the invalidated premise of Canon-I.
The case has been listed before CESTAT for further proceedings on July 22, 2025. The High Court’s decision ensures that cases previously dismissed by tribunals or courts solely based on the Canon-I ruling regarding the ‘proper officer’ issue will now be heard and decided on their substantive merits as directed by the Supreme Court in its review judgment. The ruling underscores the impact of a Supreme Court review decision on related pending litigation across the country.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. This hearing has been done through hybrid mode.
2. In the present appeal, the Appellant has sought the setting aside of the following Final Order C/A/50313-50315/2022-CU[DB] dated 05th April, 2022 in Customs Appeal No. 52362 of 2016 passed by the Customs Excise and Service Tax Appellate Tribunal (‘CESTAT’), quashing the Order-in- Original dated 12th May, 2016.
3. While passing the Final Order, reliance was primarily placed by CESTAT upon the Supreme Court decision in Canon India Pvt. Ltd. v. Commissioner of Customs, 2021 (18) SCC 563 (hereinafter ‘Canon-I’), which had held that DRI Officials were not ‘proper officers’ for the purpose of adjudication under Section 28 of the Customs Act, 1962.
4. However, the Canon-I decision has been reviewed in Review Petition (Civil) No. 400/2021 titled ‘Commissioner of Customs v. M/s Canon India Private Limited’, (hereinafter, ‘Canon-II’).
5. In Canon-II, the following findings have been rendered by the Supreme Court:
“168.In view of the aforesaid discussion, we conclude that: […]
(vi) Subject to the observations made in this judgment, the officers of Directorate of Revenue Intelligence, Commissionerates of Customs (Preventive), Directorate General of Central Excise Intelligence and 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 Therefore, any challenge made to the maintainability of such show cause notices issued by this particular class of officers, on the ground of want of jurisdiction for not being the proper officer, which remain pending before various forums, shall now be dealt with in the following manner:
a. Where the show cause notices issued under Section 28 of the Act, 1962 have been challenged before the High Courts directly by way of a writ petition, the respective High Court shall dispose of such writ petitions in accordance with the observations made in this judgment and restore such notices for adjudication by the proper officer under Section 28.
b. Where the writ petitions have been disposed of by the respective High Court and appeals have been preferred against such orders which are pending before this Court, they shall be disposed of in accordance with this decision and the show cause notices impugned therein shall be restored for adjudication by the proper officer under Section 28.
c. Where the orders-in-original passed by the adjudicating authority under Section 28 have been challenged before the High Courts on the ground of maintainability due to lack of jurisdiction of the proper officer to issue show cause notices, the respective High Court shall grant eight weeks’ time to the respective assessee to prefer appropriate appeal before the Customs Excise and Service Tax Appellate Tribunal (CESTAT).
d. Where the writ petitions have been disposed of by the High Court and appeals have been preferred against them which are pending before this Court, they shall be disposed of in accordance with this decision and this Court shall grant eight weeks’ time to the respective assessee to prefer appropriate appeals before the CESTAT.
e. Where the orders of CESTAT have been challenged before this Court or the respective High Court on the ground of maintainability due to lack of jurisdiction of the proper officer to issue show cause notices, this Court or the respective High Court shall dispose of such appeals or writ petitions in accordance with the ruling in this judgment and restore such notices to the CESTAT for hearing the matter on merits.
f. Where appeals against the orders-in-original involving issues pertaining to the jurisdiction of the proper officer to issue show cause notices under Section 28 are pending before the CESTAT, they shall now be decided in accordance with the observations made in this decision. ”
6. In view of the decision of the Supreme Court in Canon-II, the present appeal is allowed and the Final Order passed by CESTAT is set aside. Accordingly, the matter is remanded to CESTAT in terms of para 168(vi)(e) of Canon-II.
7. Customs Appeal No.52362 of 2016 is restored to its original position before CESTAT and the same shall be adjudicated, on merits, in accordance with law.
8. Accordingly, list before the CESTAT on 22nd July, 2025.
9. A copy of this order be communicated to the Registrar, CESTAT.
10. The present appeal is disposed of in the above Pending applications, if any, are also disposed of.
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