Can Probe Smuggling, but can’t Seize: DRI Finds Wings Clipped with HC Ruling

· Government Files Review Petition in Canon India Case

· Past Cases have No Evidentiary Value

· Court give no Relief in DRI Cases grounds of Review Petition in Supreme Court

A recent Delhi High Court order has stated that the Directorate of Revenue Intelligence, which probes cross-border smuggling and duty evasion cases, has no power of seizure — a ruling, officials say, significantly limits its functioning and weakens several cases.

The October 12 order, in a case pertaining to one Rani Enterprises, stated that DRI officials cannot seize goods and documents under Section 110 of the Customs Act, 1962.

This order, passed by Delhi High Court Chief Justice D N Patel and Justice Jyoti Singh, follows a Supreme Court ruling of March 9 against DRI in the case of Canon India.

The top court order, passed by former Chief Justice of India S A Bobde, not only set aside the duty demand raised against Canon India but also said the DRI has no power to issue show cause notices as DRI officers are not Customs officers. This order invalidated a government notification authorising DRI’s powers under the Customs Act.

This means that show cause notices issued by the agency in the past are not valid. Similarly, with the Delhi High Court ruling, past seizures by the agency cannot be used as evidence — this will weaken some cases while others will no longer stand.

According to DRI officials, the rulings have rendered it toothless and will affect investigations in a number of cases pertaining to smuggling, duty evasion and trade-based money laundering.

While the government has filed a review petition against the Canon India order, the case is yet to be listed for a hearing even after six months.

Meanwhile, the Central Board of Indirect Taxes and Customs (CBIC) has issued an instruction that pending decision on review petition, all the cases that are being investigated by DRI will now be signed by respective jurisdictional customs commissioners. This instruction, however, will not work for cases where notices or seizures have been executed, said sources.

For cases that are at various legal fora, CBIC has advised DRI to get adjournments citing the pendency of the review petition in the Supreme Court. However, tribunals and courts have dismissed such requests by the agency in a number of cases, said sources.

“Unless the Supreme Court order is rectified, smugglers and customs law offenders booked by DRI will be let off the hook. The government also stands to lose a lot of revenue through the agency of DRI,” said a DRI official.

DRI has recently seized around 2,990 kg of heroin that landed at the Mundra Port in September in two containers declared as containing talc powder or “semi-processed talc stones”. These containers originated in Afghanistan and were loaded at Iran’s Bandar Abbas port. The agency has arrested about a dozen people in connection with the case that is still under investigation.

Apart from this, the DRI has, since 2014, been investigating a number of entities related to prominent corporate groups for allegedly inflating the declared value of imported power equipment and Indonesian coal and routing money to offshore entities linked to them. Most of these cases are currently being heard by tribunals and courts.