DGCEI Officers Competent to Issue Duty Demands under Section 28 of Customs Act: CESTAT confirms Validity of SCN [Read Order]
The Supreme Court upheld the constitutional validity of Section 28(11) and related amendments, concluding that DGCEI officers were indeed proper officers empowered to issue SCNs and demand differential duty under Section 28.
SCN - Taxscan
SCN - Taxscan
The Chennai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has upheld the competence of Directorate General of Central Excise Intelligence (DGCEI) officers to issue show cause notices (SCNs) and raise duty demands under Section 28 of the Customs Act, 1962.
The proceedings were issued against Raja Metal Corporation, a partnership firm that had imported stainless steel coils and sheets duty-free under the Advance Licence Scheme for manufacture and export of stainless steel utensils.
Following intelligence, DGCEI unearthed diversion of the imported raw materials to the domestic market without corresponding exports. Duty demand of nearly ₹56.95 lakh was confirmed, with ₹7 lakh already paid voluntarily appropriated.
The appellant challenged the demand primarily on the ground that DGCEI officers lacked jurisdiction to issue SCNs under Section 28, contending that they were not "proper officers" for assessment and demand purposes.
The tribunal, however, rejected this argument, holding that Notification No. 27/2009-Cus. (NT) had validly vested all-India jurisdiction in DGCEI officers. It further referred to the Customs (Amendment and Validation) Act, 2011, which retrospectively validated powers of officers appointed under Section 4, and to Section 97 of the Finance Act, 2022, which clarified and reinforced the competence of such officers.
The bench of M. Ajit Kumar ( Technical member) and P. Dinesh (Judicial member) referred to the Supreme Court’s ruling in Commissioner of Customs v. Canon India Pvt. Ltd. (Review, 2024), which upheld the constitutional validity of Section 28(11) and related amendments, concluded that DGCEI officers were indeed proper officers empowered to issue SCNs and demand differential duty under Section 28.
At the same time, the bench dealt with a second issue raised in the appeal regarding the dissolution of the partnership firm due to the death of its partners and subsequent closure of business.
Accepting the appellant’s plea, CESTAT held that in the absence of machinery provisions under the Customs Act for recovery from legal heirs or dissolved firms, the appeal abated in terms of Rule 22 of the CESTAT (Procedure) Rules, 1982.
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