HIGH COURT OF JUDICATURE FOR RAJASTHAN

BENCH AT JAIPUR

D.B. Civil Writ Petition No. 5928/2021

1. M/s Fairdeal Shipping Agency Pvt Ltd., G-9, Ratna Sagar,

Msb Ka Rasta, Johari Bazaar, Jaipur Through Its
Authorized Person Shri Vinod Kumar Sharma
2. Vinod Kumar Sharma, S/o Shri Prabhu Dayal Sharma,
Then Director M/s Fairdeal Shipping Agency Pvt Ltd., G-9,
Ratna Sagar, Msb Ka Rasta, Johari Bazaar, Jaipur
3. Odyssey Imports, Link Jalupura, M I Road, Jaipur Through
Its Proprietor Shri Pawan Kumar Modi
4. M/s Skyway Corporation, Link Jalupura, M I Road, Jaipur,
Through Its Proprietor Shri Pawan Kumar Modi
5. M/s Triveni International, Flat No. A-503, 210, Jessore
Road, Kolkatta - 700089 Through Its Partner Shri Pawan
Kumar Modi
6. Pawan Kumar Modi S/o Shri Prabhu Dayal Modi, Flat No.
A-503, 210, Jessore Road, Kolkatta - 700089
----Petitioners
Versus
The Joint Commissioner Of Customs (Preventive), Ncr Building,
Statue Circle, C Scheme, Jaipur.
----Respondent
Connected With
D.B. Civil Writ Petition No. 5980/2021
1. Mahender Kumar Sethia S/o Shri S K Sethia, Aged About
59 Years, 402, Sould Space, Surya Nagar, Tilak Marg,
Jaipur-4
2. Prateek Sethia S/o Mahender Kumar Sethia, Aged About
32 Years, 402, Sould Space, Surya Nagar, Tilak Marg,
Jaipur-4
3. Nishant Jain S/o Bhag Singh Jain, Aged About 27 Years,
1090, Shyam Apartment, Rani Sati Nagar, Plot No. 301,
Jaipur.
4. M/s Shri Sai Logistics, G-6 Ratna Sagar, Ground Floor,
Msb Ka Rasta, Johari Bazaar, Jaipur Through Its Proprietor
Shri Surrender Sharma
5. Vinod Kumar Sharma S/o Prabhu Dayal Sharma, Aged

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About 50 Years, G-6 Ratna Sagar, Ground Floor, Msb Ka

Rasta, Johari Bazaar, Jaipur
----Petitioners
Versus
The Additional Commissioner Of Customs (Preventive), Ncr
Building Statue Circle, C Scheme, Jaipur
----Respondent
D.B. Civil Writ Petition No. 5981/2021
1. Deepak Agarwal S/o Shri Kunj Bihari Agarwal, Aged About
47 Years, 1601 Kacholia Gali, Chuara Rasta, Jaipur
2. Amit Agarwal S/o Shri Kunj Bihari Agarwal, Aged About
44 Years, 58, Shanti Niketan Colony, Jaipur.
3. Souyab Khan S/o Jafar Khan, Aged About 27 Years, I
Makaan, Khaadi Wali Kothi, Near Shahi Masjib Chomu,
Jaipur
4. M/s Shri Sai Logistics, G-6 Ratna Sagar, Ground Floor,
Msb Ka Rasta, Johari Bazaar, Jaipur Through Its Proprietor
Shri Surrender Sharma
5. Vinod Kumar Sharma S/o Prabhu Dayal Sharma, Aged
About 50 Years, G-6 Ratna Sagar, Ground Floor, Msb Ka
Rasta, Johari Bazaar, Jaipur
----Petitioners
Versus
The Additional Commissioner Of Customs (Preventive), Ncr
Building Statue Circle, C Scheme, Jaipur
----Respondent
D.B. Civil Writ Petition No. 5984/2021
1. Deepak Agarwal S/o Shri Kunj Bihari Agarwal, Aged About
47 Years, 1601 Kacholia Gali, Chuara Rasta, Jaipur
2. Amit Agarwal S/o Shri Kunj Bihari Agarwal, Aged About
44 Years, 58, Shanti Niketan Colony, Jaipur.
3. Souyab Khan S/o Jafar Khan, Aged About 27 Years, I
Makaan, Khaadi Wali Kothi, Near Shahi Masjib Chomu,
Jaipur
4. M/s Shri Sai Logistics, G-6 Ratna Sagar, Ground Floor,
Msb Ka Rasta, Johari Bazaar, Jaipur Through Its Proprietor
Shri Surrender Sharma
5. Vinod Kumar Sharma S/o Prabhu Dayal Sharma, Aged

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About 50 Years, G-6 Ratna Sagar, Msb Ka Rasta, Johari

Bazaar, Jaipur
----Petitioners
Versus
The Additional Commissioner Of Customs (Preventive), Ncr
Building Statue Circle, C Scheme, Jaipur
----Respondent

For Petitioner(s) : Mr. Arun Goyal, through V.C.

For Respondent(s) : Mr. Kinshuk Jain, through V.C.

HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI

HON'BLE MR. JUSTICE SAMEER JAIN
Judgment

Reportable
Per Hon’ble Mr. Justice Sameer Jain.
Judgment Reserved on: 20.01.2022
Judgment Pronounced on: 9.02.2022

1. By way of present petitions, the show cause notice

(SCN) issued by officers of Directorate of Revenue Intelligence

(DRI) under Sections 28 and 124 of the Customs Act, 1962 (in

short, ‘Act’ of 1962), are challenged. In the instant matters D.B.

Civil Writ Petition No.5928/2021 is taken as lead case and

5980/2021, 5981/2021 and 5984/2021 as connected matters, as

cause and controversy in the matters are identical.

2. The contention of petitioners is that in the light of Apex

Court judgment rendered by Larger Bench titled as M/s Canon

India Private Ltd. Vs. Commissioner of Customs reported in

AIR 2021 SC 1699, it has been held that officers of DRI are not

“proper officers” to initiate proceedings by way of issuance of

show cause notice, raising demand/confiscation under Section 28

and 124 of the Act of 1962 and the subsequent proceedings

thereto are without jurisdiction and ultra vires to the Act of 1962.

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3. The case of the petitioner is that he is a Customs House

Agent and the co-petitioners were importers engaged in the

import of Glass Chatons at Customs ports at Jaipur. One

investigation was conducted by Additional Director, DRI (Zonal)

Unit Ahmedabad, in connected matter by DRI, Jaipur who after

the investigation demanded custom duty under Section 28 of the

Act of 1962 and proposed confiscation of the seized goods and

imposition of penalty under Section 124, 112, 114A of the Act,

1962. The show cause notice was issued as back as dated

06.08.2014 and in connected matter in 2019.

4. Is is contended by learned counsel for the petitioner

that the said show cause notice was adjudicated vide order dated

15.03.2021 in violation of principles of natural justice without

grant of right to cross-examination, without consideration of Apex

Court judgment in Commissioner of Customs Vs. Sayed Ali &

Anr. reported in (2011) 3 SCC 537 and Cannon India Private

Ltd (supra), wherein it has been held that DRI Officers are not

proper officers and show cause notice issued by them are ab initio

void, illegal and lacks jurisdiction and non- consideration of the

above judgments is in violation of Article 141 of the Constitution

of India. Similar controversy was raised in the bunch of writ

petition referred above that the show cause notice issued under

Section 124 of the Act of 1962, by the DRI Officers is without

jurisdiction.

5. Per contra, learned counsel Mr. Kinshuk Jain

representing the respondents has submitted that the present writ

petitions are not maintainable as order in original is passed and

appeal has been filed by the petitioners. As per him, it is a settled

position of law that where an alternative remedy is available, the

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writ petition is not maintainable. As per his submission,

subsequent to the judgment of Apex Court in the case of M/s

Canon India Private Ltd (supra), a number of writ petitions

were filed before various High Courts for quashing of show cause

notices issued by DRI Officers in which directions have been given

to first approach Adjudicating Authority to decide the issue of

jurisdiction. He further submitted that judgment of Canon India

Private Ltd (supra), is distinguishable as the present matter

pertains to Section 124 of the Act of 1962 qua the confiscation of

goods whereas the Apex Court judgment pertains to provisions of

Section 28 of the Act of 1962 for recovery of demand. In support

of his contentions he has relied upon various High Court

judgments wherein the concerned High Courts have directed the

respondents to decide the same in accordance with law

considering the judgment of Apex Court in Canon India Private

Ltd (supra). In writ petition No.2582/2021 titled as

Vaneesh Sachdeva Vs. Union of India of Bombay High

Court, Rajesh Ved Prakash Vs. ADG RWP No.19126-

28/2021 etc.

6. We have considered the submissions made by

respective counsels for the petitioners as well as for the

respondent-Department, scanned the record of writ petition and

analyzed the judgments cited at Bar.

7. Before addressing the issue on merits, the preliminary

objection raised by respondent counsel pertaining to

maintainability of writ petition has to be considered. In this regard

it is submitted that by way of celebrated judgment of Hon’ble

Apex Court titled as Whirlpool Corporation v. Registrar of Trade Marks

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Mumbai reported in (1998) 8 SCC 1 wherein the Apex Court in Para-15

held as under:-
“Under Article 226 of the Constitution, the High Court,
having regard to the facts of the case, has a discretion to
entertain or not to entertain a writ petition. But the High
Court has imposed upon itself certain restrictions one of
which is that if an effective and efficacious remedy is
available, the High Court would not normally exercise its
jurisdiction. But the alternative remedy has been
consistently held by this court not to operate as a bar in at
least three contingencies, namely, where the writ petition
has been filed for the enforcement of any of the
Fundamental Rights or where there has been a violation of
the principle of natural justice or where the order or
proceedings are wholly without jurisdiction or the vires of an
Act is challenged. There is a plethora of case-law on this
point but to cut down this circle of forensic whirpool, we
would rely on some old decisions of the evolutionary era of
the constitutional law as they still hold the field.”

8. It has been held that entertaining writ petition under

Article 226 of the Constitution of India is a self imposed restriction

if the petitioner is aggrieved and is not having efficacious and

effective remedy, the same can be invoked but in the

circumstance, when there is violation of fundamental rights or the

action of the respondent is without jurisdiction and there is

violation of principles of natural justice, the writ

courts/constitutional courts have a bounden duty to entertain the

writ petition.

9. In the case in hand, it is an admitted fact that a show

cause notice was issued, order in original was passed, appeal was

preferred but the issue whether DRI Officers are proper officers

under the Act of 1962 and have power to issue a show cause

notice was not analyzed and ignored though the said controversy

was no more res integra. The petitioner has also raised the said

issue before the learned Adjudicating Authority and placed

reliance on the judgment of Canon India (supra), Sayed Ali

(supra) & M/s Mangli Impex Vs. Union of India (2016-335 ELT 605

Del). It is also to be taken note of that the judgment of Cannon

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India Private Ltd (supra) was pronounced on 09.03.2021 and the

OIO was passed on 15.03.2021 but the same was ignored, rather

vide para-28.1 of the OIO it was held as under:

“I find that the aforesaid judgment was challenged by the
Department before the Hon’ble Supreme Court under SLP(C)
No.20453/2016 [now Civil Appeal No.6142/2019] which vide
order dated 01.08.2016 granted stay on the operation of the
judgment dated 03.05.2016 passed by the Hon’ble Delhi High
Court. In view of the fact that the Supreme Court has granted
unconditional stay on the decision of the Hon’ble Delhi High
Court in the case of M/s Mangli Impex Vs. Union of India (2016-
335 ELT 605 Del), the ratio of the decision of the aforesaid case
cannot be made applicable to the present case.”

10. In the compelling circumstances, when the entire

proceedings were initiated by way of show cause notice which was

issued by DRI Officers who lacked jurisdiction to issue show cause

notices as held by Apex Court, we deem it appropriate to entertain

the present writ petition overruling the argument on alternative

remedy as raised by respondent counsel.

11. That qua the submission made by petitioner counsel

that the show cause notice and the entire proceedings subsequent

thereto lacks jurisdiction, he drew our attention to Para-16 to 23

of Cannon India Private Ltd (supra) which is reproduced as

under:-
“16. At this stage, we must also examine whether the Additional
Director General of the DRI who issued the recovery notice
under Section 28(4) was even a proper officer. The Additional
Director General can be considered to be a proper officer only if
it is shown that he was a Customs officer under the Customs
Act. In addition, that he was entrusted with the functions of the
proper officer under Section 6of the Customs Act. The Additional
Director General of the DRI can be considered to be a Customs
officer only if he is shown to have been appointed as Customs
officer under the Customs Act.
17. Shri Sanjay Jain, learned Additional Solicitor General, relied
on a Notification No.17/2002 - Customs (NT) dated 7.3.2002 to
show all Additional Directors General of the DRI have been
appointed as Commissioners of Customs. At the relevant time,
the Central Government was the appropriate authority to issue
such a notification. This notification shows that all Additional
Directors General, mentioned in Column (2), are appointed as
Commissioners of Customs.
18. The next step is to see whether an Additional Director
General of the DRI who has been appointed as an officer of
Customs, under the notification dated 7.3.2002, has been
entrusted with the functions under Section 28 as a proper
officer under the Customs Act. In support of the contention that

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he has been so entrusted with the functions of a proper officer

under Section 28 of the Customs Act, Shri Sanjay Jain, learned
Additional Solicitor General relied on a Notification No.40/2012
dated 2.5.2012 issued by the Central Board of Excise and
Customs. The notification confers various functions referred to
in Column (3) of the notification under the Customs Act on
officers referred to in Column (2). The relevant part of the
notification reads as follows:-
“[To be published in the Gazette of India,
Extraordinary, Part II, Section 3, Sub-section (ii)]
Government of India Ministry of Finance (Department of
Revenue) Notification No.40/2012-Customs (N.T.) New
Delhi, dated the 2nd May, 2012 S.O. (E). – In exercise of
the powers conferred by sub-section (34) of section 2 of
the Customs Act, 1962 (52 of 1962), the Central Board of
Excise and Customs, hereby assigns the officers and
above the rank of officers mentioned in Column (2) of the
Table below, the functions as the proper officers in
relation to the various sections of the Customs Act, 1962,
given in the corresponding entry in Column (3) of the
said Table: -

Sl. Designation of Functions

No. the officers under Section
of the Customs
Act, 1962
(1) (2) (3)
1. Commissioner of (i) Section 33
Customs
2. Additional (i) Sub-section (5)
Commissioner or of section 46;
Joint Commissioner and
of Customs (ii) Section 149
3. Deputy (i) …..
Commissioner or (ii) …..
Assistant (iii) …..
Commissioner of (iv) …..
Customs and (v) …..
Central Excise (vi) Section 28;
19. It appears that a Deputy Commissioner or Assistant
Commissioner of Customs has been entrusted with the functions
under Section 28, vide Sl. No.3 above. By reason of the fact that
the functions are assigned to officers referred to in Column (3)
and those officers above the rank of officers mentioned in
Column (2), the Commissioner of Customs would be included as
an officer entitled to perform the function under Section 28 of
the Act conferred on a Deputy Commissioner or Assistant
Commissioner but the notification appears to be ill-founded. The
notification is purported to have been issued in exercise of
powers under sub-Section (34) of Section 2 of the Customs Act.
This section does not confer any powers on any authority to
entrust any functions to officers. The sub-Section is part of the
definitions clause of the Act, it merely defines a proper officer, it
reads as follows:-
“2. Definitions – In this Act, unless the context otherwise
requires, -

… (34) ‘proper officer’, in relation to any functions to be

performed under this Act, means the officer of customs who is
assigned those functions by the Board or the [Principal
Commissioner of Customs or Commissioner of Customs]. “

20. Section 6 is the only Section which provides for entrustment

of functions of Customs officer on other officers of the Central or
the State Government or local authority, it reads as follows:-

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“6. Entrustment of functions of Board and customs officers on

certain other officers – The Central Government may, by
notification in the Official Gazette, entrust either conditionally or
unconditionally to any officer of the Central or the State
Government or a local authority any functions of the Board or
any officer of customs under this Act.”

21. If it was intended that officers of the Directorate of Revenue

Intelligence who are officers of Central Government should be
entrusted with functions of the Customs officers, it was
imperative that the Central Government should have done so in
exercise of its power under Section 6 of the Act. The reason why
such a power is conferred on the Central Government is obvious
and that is because the Central Government is the authority
which appoints both the officers of the Directorate of Revenue
Intelligence which is set up under the Notification dated
04.12.1957 issued by the Ministry of Finance and Customs
officers who, till 11.5.2002, were appointed by the Central
Government. The notification which purports to entrust functions
as proper officer under the Customs Act has been issued by the
Central Board of Excise and Customs in exercise of non-existing
power under Section 2 (34) of the Customs Act. The notification
is obviously invalid having been issued by an authority which had
no power to do so in purported exercise of powers under a
section which does not confer any such power.
22. In the above context, it would be useful to refer to the
decision of this Court in the case of Commissioner of Customs vs.
Sayed Ali and Another5 wherein the proper officer in respect of the
jurisdictional area was considered. The consideration made is as
hereunder:-
“16. It was submitted that in the instant case, the import
manifest and the bill of entry were filed before the Additional
Collector of Customs (Imports), Mumbai; the bill of entry was
duly assessed, and the benefit of the exemption was extended,
subject to execution of a bond by the importer which was duly
executed undertaking the obligation of export. The learned
counsel argued that the function of the preventive staff is
confined to goods which are not manifested as in respect of
manifested goods, where the bills of entry are to be filed, the
entire function of assessment, clearance, etc. is carried out by
the appraising officers functioning under the Commissioner of
Customs (Imports).
17. Before adverting to the rival submissions, it would be
expedient to survey the relevant provisions of the Act. Section
28 of the Act, which is relevant for our purpose, provides for
issue of notice for payment of duty that has not been paid, or
has been short-levied or erroneously refunded, and provides
that:

“28. Notice for payment of duties, interest, etc. – (1)

When any duty has not been levied or has been short-levied or
erroneously refunded, or when any interest payable has not
been paid, part paid or erroneously refunded, the proper officer
may,-

(a) in the case of any import made by any individual for

his personal use or by Government or by any educational,
research 5 (2011) 3 SCC 537 or charitable institution or hospital,
within one year;

(b) in any other case, within six months, from the relevant date,
serve notice on the person chargeable with the duty or interest
which has not been levied or charged or which has been so
short-

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levied or part paid or to whom the refund has erroneously been

made, requiring him to show cause why he should not pay the
amount specified in the notice:

Provided that where any duty has not been levied or has been
short-levied or the interest has not been charged or has been
part paid or the duty or interest has been erroneously refunded
by reason of collusion or any wilful mis-statement or suppression
of facts by the importer or the exporter or the agent or
employee of the importer or exporter, the provisions of this sub-
section shall have effect as if for the words ‘one year’ and ‘six
months’, the words ‘five years’ were substituted.”

18. It is plain from the provision that the ‘proper officer’ being
subjectively satisfied on the basis of the material that may be
with him that customs duty has not been levied or short levied
or erroneously refunded on an import made by any individual for
his personal use or by the Government or by any educational,
research or charitable institution or hospital, within one year and
in all other cases within six months from the relevant date, may
cause service of notice on the person chargeable, requiring him
to show cause why he should not pay the amount specified in
the notice. It is evident that the notice under the said provision
has to be issued by the ‘proper officer’.
19. Section 2(34) of the Act defines a ‘proper officer’, thus:
‘2. Definitions.-
(34) ‘proper officer’, in relation to any functions to be
performed under this Act, means the officer of customs who is
assigned those functions by the Board or the Commissioner of
Customs;’ It is clear from a mere look at the provision that only
such officers of customs who have been assigned specific
functions would be ‘proper officers’ in terms of Section 2(34) the
Act. Specific entrustment of function by either the Board or the
Commissioner of Customs is therefore, the governing test to
determine whether an ‘officer of customs’ is the ‘proper officer’.

20. From a conjoint reading of Sections 2(34) and 28 of

the Act, it is manifest that only such a Customs Officer who has
been assigned the specific functions of assessment and re-
assessment of duty in the jurisdictional area where the import
concerned has been affected, by either the Board or the
Commissioner of Customs, in terms of Section 2(34) of the Act is
competent to issue notice undersection 28 of the Act. Any other
reading of Section 28 would render the provisions of Section
2(34) of the Act otiose inasmuch as the test contemplated
under Section 2(34) of the Act is that of specific conferment of
such functions.”
23. We, therefore, hold that the entire proceeding in the
present case initiated by the Additional Director General
of the DRI by issuing show cause notices in all the
matters before us are invalid without any authority of law
and liable to be set-aside and the ensuing demands are
also set- aside.

12. On perusal of judgment referred above and relying on

provisions of Section 2(34) which defines “proper officer”, Section

6 which defines “functions and powers of custom officer” and

Section 28 which refers to “procedure of demand and recovery by

the proper officer” having jurisdiction to issue show cause notice

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and to carry out adjudication, we hold that the entire proceedings

initiated by officers of DRI in as much as by issuance of show

cause notice under Section 28/124 of the Customs Act lacks

jurisdiction and are without any authority of law because the

present show cause notice is not issued by custom officer but by

DRI officer who has not been assigned specific function/power

under Section 6 to issue show cause notice U/S 28 of the Act of

1962. DRI officer is not Competent Authority to issue show cause

notice and adjudicate the same as “proper officer”. The Act, the

notification relied upon do not define and bring the DRI officers

within four corners of “proper officers” having functions and

powers to act under Section 28 of the Act of 1962

Hence, in the light of above discussion they lack

jurisdiction.

It is also noteworthy to mention that learned counsel for the

respondent has raised further argument that the present show

cause notice in the connected matters is issued U/S 124 of the

Customs Act qua the confiscation of the goods and therefore the

judgment of Canon India (supra) is not applicable.

The said contention of the respondent is also not

tenable as it is held that DRI Officers lacks jurisdiction qua the

functions to be executed under the Act of 1962, the proceedings

under Section 124 is also illegal, void ab initio and nullity. The

same view has been endorsed by Hon’ble Delhi High Court in M/s

Rani Enterprises Vs. PCC, ICD, Patparganj in WP (C)

No.11721/2021 by order dated 12.10.2021, para 8 of which is

reproduced as under:-

“8. It is rather unfortunate that despite a clear

enunciation and pronouncement of the law on the
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aspect of ‘Proper Officer’ under Section 110of the

Customs Act, the concerned officials of the
Respondents are repeatedly seizing goods without
having the authority and jurisdiction to do so. Perhaps,
the judgment in Cannon India (supra), has not been
either read by the concerned officials or has not been
understood in the correct perspective. As a result, this
court is flooded with litigation on the same issue and
we cannot held but observe that it is the action of the
Respondents in not applying the binding dicta of the
Hon’ble Supreme Court, which is breeding unnecessary
litigation.”

13. In the light of above discussions, the writ

petitions are allowed. The proceedings issued by show cause

notice and subsequent demands confirmed by OIO are set

aside, as prayed in the writ petitions. Consequential relief by

way of refund/release of seized goods, if any, is allowed.

14. No order as to costs.

15. All pending applications are also disposed of.

(SAMEER JAIN),J (AKIL KURESHI),CJ

JKP/82-85

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