DRI officers assigned proper-officer functions are competent to issue Section 28(4) Customs Act notices.

The Directorate of Revenue Intelligence investigated two containers imported under Bills of Entry dated 18 June 2012 in the names of M/s Mahadev Trading House and M/s Avtar International.

Examination revealed that, besides the declared consumer goods, the containers concealed cylinders containing Refrigerant R-22, an ozone-depleting and prohibited substance.

The CEFEES, DRDO, confirmed the contents as R-22 gas.

The investigation alleged that Shri Avtar Singh Bedi and the CHA, Shri Tapasvi Singh, had participated in a conspiracy with the actual financiers/import facilitators to import and clear the prohibited goods for monetary consideration.

The goods were seized, valued, and proceedings were initiated through a show-cause notice dated 19 December 2012.

The adjudicating authority ordered absolute confiscation of the R-22 cylinders, confiscation with redemption of the other goods after revaluation, and imposed penalties on the importers and other alleged participants, including the appellant.

The appellant’s challenge was remanded by the Delhi High Court after the Supreme Court’s decision in the Canon matter, and the appeal was restored before the Tribunal for fresh consideration.

Whether the penalty imposed on Shri Avtar Singh Bedi under Section 114AA of the Customs Act, 1962, in addition to the penalty under Section 112(a), was legally sustainable?

Whether the appellant could avoid penal liability on the ground that he had not himself made, signed, or used the allegedly false declarations or documents filed before Customs?

Whether the show-cause notice issued by the Directorate of Revenue Intelligence was without jurisdiction and liable to be set aside?

The Tribunal applied Section 112(a) of the Customs Act, 1962, concerning penalties for acts or omissions rendering imported goods liable to confiscation, and Section 114AA, concerning penalties for knowingly making, signing, using, or causing to be made or used false or incorrect declarations, statements, or documents in a transaction relating to the business of Customs.

The Tribunal also considered Section 28(4) and the statutory notifications assigning functions of “proper officer” to DRI officers, particularly Notification No. 44/2011, which was treated as authorising competent DRI officers to issue demands and show-cause notices in appropriate cases.

It relied on the Supreme Court’s subsequent review decision in the Canon matter, which clarified that DRI officers appointed and assigned relevant Customs functions could issue notices under Section 28.

The Tribunal also relied on its earlier Final Order No. 57542–57547/2017 concerning the co-noticees, which had found that the appellant and the CHA had conspired with the actual facilitators to smuggle the prohibited R-22 gas.

The appellant’s reliance on Achiever International v. CCE, concerning the alleged lack of justification for separate penalties under Sections 112(a) and 114AA, was not accepted on the facts of the present case.

The Tribunal found that the appellant’s role was not limited to the passive transmission of documents.

The statements and investigation material showed that he had acted in concert with the CHA and the principal facilitators, had participated in the planned misdeclaration and concealment of R-22 cylinders, and had agreed to facilitate clearance in return for monetary consideration of ₹10 lakh.

This established active involvement in the smuggling operation and justified the penalty imposed under the Customs Act.

The appellant’s contention that he had neither signed nor filed the declarations did not exonerate him because the material findings attributed to him participation in causing the false import documentation and clearance process to be undertaken.

The Tribunal further rejected the jurisdictional objection, holding that the Supreme Court’s review judgment in the Canon litigation recognised the competence of DRI officers where relevant functions had been assigned through the applicable statutory notifications, including Notification No. 44/2011.

Accordingly, the show-cause notice was not invalid for want of jurisdiction.

It rejected both the challenge to the penalty under Section 114AA and the objection to the jurisdiction of the DRI.

The impugned order-in-original dated 30 April 2015 was upheld, and Customs Appeal No. 52204 of 2015 was dismissed.