The Central Board of Indirect Taxes and Customs (CBIC) has barred the Department of Revenue Intelligence (DRI) from issuing show cause notice (SCN) in respect of all customs related cases being investigated by them. The power to issue SCN has been vested with jurisdictional commissionerates from where imports have taken place.
The move is expected to limit the unlimited jurisdiction of intelligence units and would bring respite to importers struggling with multiple agencies for assessment of customs duties chargeable on the imports of goods.
As per instruction issued by the CBIC, adjudication of all SCNs issued by DRI will be kept pending while fresh SCNs under Section 28 of the Customs Act, 1962 will only be issued by jurisdictional commissionerates having authority for taking such action.
The new order follows the Supreme Court judgment in Canon India Pvt Ltd case, vide order dated March 9 where the apex court held that officers of the DRI are not empowered to issue show cause notices when the custom officer (of the appraisal group) allows exemption from custom duties at the time of clearance.
The court observed that only an officer that undertakes assessment can re-assess the issue and the term “the proper officer” under section 28(4) of the Customs Act has to be understood as the same officer (designation) that had assessed the goods at the time of clearance.
It also held that the entrustment of the functions of customs officers to the DRI vide notification issued under section 2(34) of the Customs Act is not proper.
“Limiting the jurisdiction of intelligence units and would bring respite to importers who have to deal with multiple authorities for assessment of duty chargeable on imports. However, it is believed that CBIC is working towards formally re-extending or re-validating the all India jurisdiction of the tax officers from intelligence units. Thereby this relief would be short-lived,” said Rajat Mohan, senior partner AMRG & Associates.
In the Canon case, the appellants had claimed exemption on the import of cameras. Based on this request for ‘first check’, the Deputy Commissioner, Appraisal Group, Delhi Air Cargo (customs officer) checked the goods and cleared them as exempt. Subsequently, the Additional Director General, DRI (DRI officer) issued an SCN under section 28(4) of the Customs Act, seeking to deny the exemption.
An order was issued alleging that the customs officer had been induced to clear the cameras by willful misstatement and suppression of facts about the features of the cameras, leading to confiscation of goods, demand of interest and imposition of penalty.
The Customs Excise and Service Tax Appellate Tribunal (CESTAT) upheld this order and the taxpayer appealed to the Supreme Court against the CESTAT’s order. The apex order cleared that DRI officials had no jurisdiction to issue SCNs on matters where related to clearance of import and exports.
(Subhash Narayan can be contacted at firstname.lastname@example.org)