Calcutta HC restricts DRI’s seizure powers
Confiscation of goods only by officers ‘identified’ through prior order

In a landmark judgment that may have implications on the functioning of enforcement officials, the Calcutta High Court has said the directorate of revenue intelligence (DRI) is not empowered to carry confiscation of goods unless “identified officers” are specifically empowered to do so through a prior order.

In a bunch of pleas, petitioners claimed that an additional director general of DRI has no powers to invoke provisions of section 124 of the Customs Act, 1962, which empowers the agency to act as customs officers and carry out confiscation of mis-declared goods, if required. One of the petitioners had assailed a notice to show cause dated December 2, 2017 issued by the DRI additional director general, Kolkata, invoking section 124 on the ground of lack of jurisdiction to do so.

The court noted that a notification issued by the CBIC on May 2, 2012 entrusts discharge of functions under provisions of the Act of 1962 to various DRI officers. This allows DRI officers to carry out search and inspection of contrabands and mis-declared goods in exercise of powers given under section 2(34) of the Act.

“Therefore, the designated officers are proper officers. Such officers, in course of discharge of functions entrusted under section 2(34) may come across materials requiring initiation of proceedings under section 124 of the Act.

“Unless such officer is entrusted to invoke section 124 by an appropriate order under section 2(34), he cannot do so by saying that in discharge of functions entrusted to him under section 2(34) he has come across materials requiring a proceeding under section 124. Any other interpretation would render under section 2(34) otiose,” the high court bench said in its order.

The court further noticed the decision in Swati Menthol and Allied Chemicals wherein it was held that DRI officers have powers for the purpose of sections 17 and 28 of the Customs Act.

“Existence of a right of hearing by an authority after a response is filed to a show-cause notice is not a cure to an inherent lack of jurisdiction. A court exercising jurisdiction under Article 226 of the Constitution would be well within its parameters should it require to intervene and quash a proceeding, initiated at the instance of an authority who is not vested with the jurisdiction to do so,” the court added.

What appears from the impugned show cause notice, dated December 2, 2017, is that, the DRI, Kolkata zonal unit, received specific information with regard to merit of different contraband and high value items. An investigation was carried out by the agency with regard thereto.

“On investigation, DRI found that 12 importers were involved in mis-declaration of consignment. On completion of the investigation, DRI initiated proceedings under section 124 of the Customs Act against the persons involved,” the order said. The writ petitioner, according to DRI, is one of the persons involved in such transactions and is required to be proceeded against, under section 124 of the Act. DRI had issued separate show cause notices to 12 importers involved, apart from the petitioner. As noted above, the DRI additional director issued the impugned notice.