SC restores DRI officers’ powers to issue show-cause notices under Customs Act

New Delhi: In a significant decision impacting customs enforcement across the country, the Supreme Court held on Thursday that officers of the Directorate of Revenue Intelligence (DRI) have the authority to seek recovery of duties on goods already cleared for import by the customs department.

Allowing a review plea of the customs department, a bench comprising Chief Justice DY Chandrachud and Justices JB Pardiwala and Manoj Misra overturned the apex court’s 2021 ruling, penned by the then CJI S A Bobde, that DRI officers are not “proper officers” for issuing notices under Section 28 of the Customs Act, 1962.

Writing a 162-page judgment for the bench, Justice Pardiwala upheld the authority of DRI officers to issue show-cause notices and recover duties under the Act.

The verdict came as a boost to the customs department, which has several proceedings related to duty dues pending.

“Subject to the observations made in this judgment, the officers of the DRI, 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 notices thereunder,” the bench held.

“The petition seeking a review of (the) Canon India (judgment) is allowed for the following reasons.... In other words, the judgment in Canon India was rendered without looking into the circular and notification, therefore seriously affecting the correctness of the same. The decision in Canon India failed to look into the statutory scheme,” it said.

The court also issued specific instructions to streamline the handling of the pending cases challenging show-cause notices issued by DRI officers.

“Where the show-cause notices issued under section 28 of the Act have been challenged before the high courts directly by way of a writ petition, the respective high courts shall dispose of such writ petitions in accordance with the observations made in this judgment and restore such notices for adjudication by a proper officer under section 28,” it said.

Where the petitions have been disposed of by the high courts and appeals preferred against such orders, which are pending before the apex court, they shall be disposed of in accordance with this decision, the bench said, adding that the show-cause notices shall be restored for adjudication by a proper officer under Section 28. “We clarify that the observations made by this court in Canon India ... on the aspect of limitation have neither been considered nor reviewed by way of this decision,” it said.