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In a significant legal development, the Supreme Court of India has reversed a 2021 judgment that had restricted the power of the Directorate of Revenue Intelligence (DRI) officers to issue show-cause notices under the Customs Act, 1962. The court's decision in the case of Commissioner of Customs vs. M/S Canon India Private Limited has far-reaching implications for customs enforcement and the adjudication of customs-related disputes in India.
The 2021 judgment in Canon India had held that DRI officers lacked the authority to issue show-cause notices under Section 28 of the Customs Act, as they were not deemed 'proper officers' under the Act. This ruling had led to a significant number of pending legal challenges to show-cause notices issued by DRI officers, with many High Courts and Tribunals quashing such proceedings.
However, the Supreme Court, in its recent review judgment, has now clarified that DRI officers, including Commissioners of Customs-Preventive, Directorate General of Central Excise Intelligence, and other similar officers, are indeed 'proper officers' under the Customs Act. The court's rationale for this reversal rests on the fact that relevant circulars and notifications empowering DRI officers to issue show-cause notices were not brought to the court's attention during the Canon India proceedings.
To address the backlog of cases impacted by the Canon India judgment, the Supreme Court has provided specific guidelines for the disposal of pending challenges to show-cause notices. These guidelines outline how High Courts and tribunals should proceed with cases depending on their stage and whether they involve direct challenges or appeals.
The court's decision to overturn the Canon India judgment is a significant development for customs enforcement in India. It reaffirms the authority of DRI officers to issue show-cause notices under the Customs Act, ensuring the smooth functioning of customs procedures. Additionally, the court's clear directives for the handling of pending cases will help expedite the resolution of these legal disputes.