Companies facing DRI notices include Vedanta, Vodafone Idea, Adani Enterprises, TVS Motor Company, Samsung India, Godrej and Boyce Manufacturing, BSNL, Daikin, Sony India, Canon, Nikon India, Sennheiser and Yakult Danone. The DRI has issued notices to companies seeking to recover duties.
“Officials of the DRI, Department of Customs (Preventive), Central Directorate of Excise Intelligence and Central Excise Department and other officers in similar positions are the appropriate officers under Section 28 and are empowered to issue show-cause notices under that section,” the bench held.
V. Lakshmikumaran, founder and managing partner of Lakshmikumaran and Sridharan, said the SC held that officials of the DRI were empowered to issue “show cause notices” under Section 28 of the Customs Act, 1962, around 2011. Adjudication is conducted in various forums and a specific timetable is provided for appeal by the assessee. File a lawsuit on the matter.
The customs department and the Union government have filed a review petition against the 2021 judgment which stated that DRI officials shall not issue show cause notices to importers or demand collection of duties unless they have been entrusted with the function by the central government. The court also subsequently held that the “appropriate officer” who issued the show-cause notice was the officer who initially assessed the imported product or his successor. The review petition seeks to revalidate the show-cause notices estimated to be worth over Rs 22,000 crore. A show-cause notice was issued and the functions of an “appropriate officer” were assigned to them for the purposes of Sections 17 and 28 of the Act, but no notification was filed before the Supreme Court in 2021. The judgment was passed without examining the circulars and notifications… thereby seriously affecting the correctness of the circulars and notifications,” the bench also comprised of Justices JB Pardiwala and Manoj Misra.
The judgment in the Indian Canon case failed to investigate the statutory scheme and wrongly recorded the finding that since the DRI officers were not vested with the functions of appropriate officers under Section 28 under Section 6, they did not have jurisdiction: According to the judgment, Issue a show-cause notice of reinstatement obligations under section 28 of the Act.
The issue dates back to the 2006 amendment to the Customs Act, which gave wide powers to customs officials, including officers of the DRI. Prior to the amendment, there had been ambiguity over the power of DRI officers to issue show-cause notices. However, in 2021, Canon ruled to the contrary, affecting thousands of cases filed by DRI officials against such display notices.
While the government said in its review petition that the Canon decision ignored key statutory interpretations, importers argued that the 2021 decision limited the role of the DRI, jeopardized their operations and created uncertainty in pending cases sex.
Additional Solicitor General N. Venkataraman, appearing for the customs department, said, “We need to resolve the fate of the 18-year-old show cause notice. The risk is difficult to quantify and is estimated to be worth between Rs 20,000 crore to Rs 23,000 crore.” He explain.
The bench also upheld the constitutional validity of Section 97 of the Finance Act, 2022, which, inter alia, retrospectively validates all show-cause notices issued under Section 28 of the 1962 Act. It is also not manifestly arbitrary, disproportionate and overbroad as pointed out in Canon India (supra)… We clarify that the findings regarding the powers of the Finance Act, 2022 are limited to petitions seeking review of the Finance Act Questions raised. The judgment stated that if there are any other grounds to challenge the Finance Act, 2022, the trial will continue.
