Supreme Court affirms DRI as ‘Proper Officers’ u/s 28 of Customs: P&H HC rejects 17-Year Challenge against Customs Duty Recovery [Read Order]

The Punjab and Haryana High Court has dismissed 17-year-old writ petitions filed by three export companies challenging the jurisdiction of Directorate of Revenue Intelligence (DRI) officers, confirming that DRI officers are "proper officers" with authority to issue show cause notices under the Customs Act, 1962.

The bench relied on a recent Supreme Court judgment in Commissioner of Customs v. M/s Canon India Pvt. Ltd., which held that "the officers of Directorate of Revenue Intelligence... are proper officers for the purposes of Section 28 and are competent to issue show cause notice thereunder."

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The petitions were filed by Messrs Gold Star Industries, Messrs Jindal Fine Industries, and Messrs Jagraon Exports challenging searches conducted on their premises in 2005 and subsequent show cause notices issued by DRI officers alleging wrong declarations regarding inputs used in their export products under the Duty Free Replenishment Certificate (DFRC) Scheme.

The core legal issue was whether DRI officers had jurisdiction to issue show cause notices under Section 28 of the Customs Act, 1962. The petitioners argued that DRI officers lacked jurisdiction as they were not "proper officers" under the Customs Act. The respondents relied on the Supreme Court's November 2024 judgment in the Canon India case, which reviewed and modified its earlier position.

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The Supreme Court had held that DRI officers were appointed as customs officers through appropriate notifications and that Circular No. 4/99-Cus and Notification No. 44/2011 empowered them to issue show cause notices. The Supreme Court also upheld the constitutional validity of Section 97 of the Finance Act, 2022, which retrospectively validated show cause notices issued under Section 28.

Consequently, finding that the Supreme Court had settled the question of DRI officers' jurisdiction, the High Court dismissed all three writ petitions, directing the DRI to proceed with the adjudication of the show cause notices. The court clarified that if the petitioners are still aggrieved, they may file an appeal before the appropriate appellate authority.

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