Policeman, Prosecutor and Judge - all rolled into one - DRI to Adjudicate?
THE story of a huge litigation generally starts with a Show Cause Notice in Customs/Excise/Service Tax. Usually the Show Cause Notice is the result of an audit or investigation by the preventive unit. The Audit objection or the preventive intelligence is often approved by the Commissioner and the Commissioner himself issues the Show Cause Notice under his signature. And then he sits in judgement over the initial findings approved by him and the notice issued by him - as the adjudicator. So, un-understandably by any normal citizen, the Commissioner is the policeman, prosecutor and the judge. But that is the accepted adjudication system in the Department - but the two premier investigating agencies of the Department, DRI and DGCEI do not adjudicate - they leave that job to the jurisdictional Commissioners, almost always ensuring hundred percent success.
In DDT 444 - 07 09 2006, we raised a question as to whether DRI can adjudicate and if they can, why they don't? Of course later it was realised that DRI does not have even the power to issue Show Cause Notices for demanding Customs duty. The Supreme Court in the case of Sayed Ali - held,
"it is only the officers of customs, who are assigned the functions of assessment , which of course, would include re-assessment, working under the jurisdictional Collectorate within whose jurisdiction the bills of entry or baggage declarations had been filed and the consignments had been cleared for home consumption, will have the jurisdiction to issue notice under Section 28 of the Act".
Lo and behold! All the Show Cause Notices issued by DRI, suddenly became illegal. A panicked Board by Notification No. 44/2011-Cus(NT) dated 06.07.2011 notified DRI and DGCEI officers as Customs Officers for the purpose of Section 17 and 28 of the Customs Act. That gave them powers from 06.07.2011, but what happened to all the Show Cause Notices issued earlier? They remained illegal and void. We reported this in DDT 1647-08.07.2011 and commented that this will be one of the retrospective amendments in the next budget.
But the Government did not wait till the next budget. By the Customs (Amendment and Validation) Act, 2011, enacted on 16.09.2011 the Section 28 of the Customs Act was retrospectively amended to insert a new clause,
"(11) Notwithstanding anything to the contrary contained in any judgement, decree or order of any court of law, tribunal or other authority, all persons appointed as officers of Customs under sub-section (1) of section 4 before the sixth day of July, 2011 shall be deemed to have and always had the power of assessment under section 17 and shall be deemed to have been and always had been the proper officers for the purposes of this section."
So, all the invalid Show Cause Notices issued by the most powerful investigating agency were retrospectively made valid.
But the DRI and DGCEI still hesitated to adjudicate - they continued to leave that job to the jurisdictional Commissioners and very few Commissioners had the guts to drop a Show Cause Notice issued by DRI, not that they dropped other Show Cause Notices.
Now, perhaps all this is going to change. In the recent allocation of cadre strength as reported by DDT yesterday, the Board has allocated two Commissioners (Adjudication) each for DRI and DGCEI. So, perhaps there will be two Commissioners exclusively for adjudicating DRI cases - it is not known where they will be sitting - Perhaps they will go on excursions all over the country. And maybe now even lower level officers of DRI like Additional Commissioner and Assistant Commissioner will also adjudicate cases. This makes the policeman, prosecutor judge combination perfect and complete. Anyway the assessees have nothing to lose as all the notices (especially the DRI ones) are routinely confirmed.
Please also see DDT 444 - 07 09 2006 ; 28.04.2011 , 08.07.2011 and 22.07.2011 and -27.09.2011for more on this.