The
Supreme Court on Thursday (November 7) ruled that officers from the Directorate
of Revenue Intelligence (DRI) have the authority to issue show-cause notices
and collect duties under the Customs Act, 1962.
This
ruling confirms that DRI officers qualify as “proper officers” under Section 28
of the Customs Act, enabling them to perform these functions. This decision is
expected to allow the government to proceed with a significant number of
pending tax recovery cases, collectively valued at over Rs 20,000 crore, which
had previously been on hold due to legal disputes.
A
bench led by Chief Justice DY Chandrachud, with Justices JB Pardiwala and Manoj
Misra, made this ruling in response to a review petition filed by the Customs
Department. This petition challenged a previous judgment in *Canon India
Private Ltd. v. Commissioner of Customs*, which had held that DRI officers were
not authorised to issue show-cause notices under the Customs Act.
The
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 had
issued notices to the firms seeking recovery of customs duties.
The
court offered guidance on managing ongoing legal challenges to show-cause
notices issued by DRI officers. For cases currently before High Courts, the
Supreme Court instructed that High Courts should adjudicate these in alignment
with this ruling. In cases where appeals are pending at the Supreme Court, they
should similarly follow the new guidelines.
The
Supreme Court’s 2021 ruling in Canon India found that, in the absence of
explicit assignment of duties by the Central Government, DRI officers lacked
the authority to issue show-cause notices under the Act. The current ruling
overturns this interpretation, now recognising DRI officers as authorised
personnel under the Customs Act’s Section 28.
This
decision by the Supreme Court reinstates DRI’s position as a key enforcement
body in customs-related matters, enabling it to resume pending cases that had
been paused due to jurisdictional debates.