Aadrikaa Law Offices (ALO)- Customs I Trade Compliance I IDT Tax I Arbitration I Litigation
Date: 04.02.2026
“Intellectual Property Laws are protected under Indian Customs Border Control Laws”
Adv Ravi Shekhar Jha
This Article has been written by Advocate Ravi Shekhar Jha- BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.comor on his Mobile +91-9999005379.
Summary: Customs and Intellectual Property Rights (IPRs)
This short Article provides an overview of the Indian Customs’ measures for protecting Intellectual Property Rights (IPRs) at the border. It outlines the procedures, laws, and rules for IPR registration, enforcement, interdiction, determination, and disposal of infringing goods.
Key Points
Types of IPRs Protected by Customs
Trademarks Act, 1999
Patents Act, 1970
Geographical Indications of Goods (Registration and Protection) Act, 1999
Copyright Act, 1957
Designs Act, 2000
Customs Interdiction of Infringing Goods
Legal Basis: Section 11 of the Customs Act empowers the Central Government to prohibit import/export of goods violating IPRs.
Notification: Notification No. 51/2010-Cus. (NT) prohibits the import of goods infringing IPRs.
Conditions: Prohibition is subject to the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 enforced through M.F. (D.R.) Notification No. 47/2007-Cus. (N.T.) dated 8th May, 2007 as amended.
Rule 2. Definitions.
(a) “goods infringing intellectual property rights” means any goods which are made, reproduced, put into circulation or otherwise used in breach of the intellectual property laws in India or outside India and without the consent of the right holder or a person duly authorized to do so by the right holder;
(b) “intellectual property” means a copyright as defined in the Copyright Act, 1957, trade mark as defined in the Trade Marks Act,1999, 1 [* * * *] design as defined in the Designs Act, 2000 and geographical indications as defined in the Geographical Indications of Goods (Registration and Protection) Act, 1999;
(c) “Intellectual property law” means the Copyright Act, 1957, the Trade Marks Act,1999, 1 [* * * *] the Designs Act, 2000 or the Geographical Indications of Goods (Registration and Protection) Act, 1999;
(d) “right holder” means a natural person or a legal entity, which according to the laws in force is to be regarded as the owner of protected intellectual property right, its successors in title, or its duly authorized exclusive licensee as well as an individual, a corporation or an association authorized by any of the aforesaid persons to protect its rights.
Demand draft details/Online Payment through ICEGATE Portal/Payment Proof of INR 2000.00 only
Power of Attorney in the name of the Right Holder or the Authorized representative.
Statement of exclusivity.
Digital images of genuine and infringing goods.
IEC code.
Description of geographical indications (if applicable).
Indemnity Bond
Protects Customs authorities from liability for detaining goods suspected of infringement.
General Bond vs. Centralized Bond
General Bond: Requires consignment-specific bonds for each interdiction.
Centralized Bond: A running bond applicable across India, with a single Bond Registration Number (BRN) for all rights registered by the rights holder.
Detention of Suspected Infringing Goods
Notification: Customs informs the importer and rights holder of the detention.
Action by Rights Holder:
Join proceedings within 5 days.
Inspect goods and take action within 10 working days (extendable by 10 more days).
Provide necessary bonds and evidence of infringement.
Maximum Detention Period for deciding the matter: 10 working days for regular goods; 3 working days for perishable goods. (Rule 7)
Rule 11. Disposal of infringing goods:
(1) Where upon determination by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, it is found that the goods detained or seized have infringed intellectual property rights, and have been confiscated under section 111(d) of the Customs Act, 1962 and no legal proceedings are pending in relation to such determination, the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, shall, destroy the goods under official supervision or dispose them outside the normal channels of commerce after obtaining ‘no objection’ or concurrence of the right holder or his authorized representative :
Provided that if the right holder or his authorized representative does not oppose or react to the mode of disposal as proposed by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, within twenty working days after having been informed, or within such extended period as may have been granted by the Commissioner at the request of the right holder, not exceeding another twenty working days, he shall be deemed to have concurred with the mode of disposal as proposed by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be :
Provided further that the costs toward destruction, demurrage and detention charges incurred till the time of destruction or disposal, as the case may be, shall be borne by the right holder.
(2) There shall not be allowed the re-exportation of the goods infringing intellectual property rights in an unaltered state.
(3) The Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, may on his own, or at the request of the right holder, retain samples of goods infringing intellectual property rights prior to their destruction or disposal and provide the same to the right holder or importer if such samples are needed as evidence in pending or future litigation.
Rule 12. Exclusion of baggage and De-minimis Imports:
Goods of a non-commercial nature contained in personal baggage or sent in small consignments intended for personal use of the importer are not subject to the above Rules.
Ex Officio Action
Customs can suspend clearance of goods on its own initiative if there is prima facie evidence of infringement. Or at the written request of the Rights holder, as the case maybe.
Rights holder must comply with recordable requirements within 5 days.
Post-Detention Procedure
Show Cause Notice: Issued to the importer and shared with the rights holder.
Adjudication: Includes importer’s reply and personal hearing.
Confiscation: If goods are found infringing, they are confiscated.
Disposal/Destruction of Infringing Goods
Process: Confiscated goods are destroyed or disposed of outside normal commerce channels.
Rights Holder’s Consent: Required for destruction/disposal.
Samples: Provided to the rights holder upon request.
Informing Customs of Infringing Consignments
Rights holders can notify Customs via email, fax, or post at the relevant Customs Station or Risk Management Division.
This Short Article serves as a comprehensive guide for rights holders, Customs officers, importers, and other stakeholders involved in IPR enforcement at Indian borders.
Aadrikaa Law Offices (ALO)- IDT Tax I Arbitration I Litigation
Dated: 30.01.2026
CAAR Mumbai Rules “Carbon Pultruded Plates under HSN 68151900” eligible for Concessional Duty as WOEG Blade Parts
Adv Ravi Shekhar Jha
This Article has been written by Advocate Ravi Shekhar Jha- BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.comor on his Mobile +91-9999005379.
Summary of the Case
Applicant: Suzlon Energy Limited
Subject Goods: Carbon Pultruded Plates
Issue: Determination of the applicable Basic Customs Duty (BCD) rate for the import of Carbon Pultruded Plates under Notification No. 50/2017-Customs (as amended by Notification No. 05/2025-Customs).
Suzlon Energy Limited sought an advance ruling on whether Carbon Pultruded Plates, used as spar caps in rotor blades of Wind Operated Electricity Generators (WOEG), qualify for concessional BCD under Sr. No. 405(4) or Sr. No. 405(5) of the exemption notification.
The applicant argued that the plates, made from carbon fibers, are integral to the manufacturing of rotor blades and should qualify for concessional BCD either as “raw materials” under Sr. No. 405(5) or as “parts” under Sr. No. 405(4).
The Customs Authority for Advance Rulings (CAAR) examined the classification of the goods under Customs Tariff Heading (CTH) 68151900 and the scope of the exemption notification.
Legal and Statutory Provisions Referred to
Customs Act, 1962
Section 28H(1): Application for advance ruling.
Section 28-I(2): Matters related to classification of goods and applicability of exemption notifications.
Customs Tariff Act, 1975
Chapter Heading 68151900: Classification of Carbon Pultruded Plates as “Other articles of carbon fibers.”
Sr. No. 405(5): Concessional BCD for “Balsa Wood, Carbon Fibre for the wind operated electricity generator blades.”
Sr. No. 405(4): Concessional BCD for “Parts for the manufacture or the maintenance of blades for rotor of wind operated electricity generators.”
Case Citations Referred to
Collector of Central Excise v. Mahendra Engineering Works [1993 (67) ELT 134 (Tribunal)]
Established the principle that “a part of a part is a part of the whole,” meaning sub-components of a machine are categorized as components of the machine.
Collector of Central Excise v. MP Oil Ltd [1990 (46) ELT 68 (Tribunal)]
Reaffirmed the principle that sub-components are integral parts of the whole machine.
CCE v. Insulation Electrical [2008 (224) ELT 512 (SC)]
Defined “parts” as essential components of the whole without which the whole cannot function.
Star Paper Mills Ltd. v. CCE [1989 (43) ELT 178 (SC)]
Distinguished machine-specific components as “parts” rather than generic raw materials.
Order Passed by the Advance Ruling Authority
Classification: Carbon Pultruded Plates are classified under CTH 68151900 as “Other articles of carbon fibers” with a standard BCD rate of 10%.
Eligibility under Sr. No. 405(5): The plates are not eligible for concessional BCD under Sr. No. 405(5) as this entry covers only raw carbon fibers or balsa wood, not articles of carbon fibers.
Eligibility under Sr. No. 405(4): The plates qualify as “parts for the manufacture or maintenance of blades for rotor of wind operated electricity generators” and are eligible for concessional BCD at 5%.
Final Ruling: Carbon Pultruded Plates are eligible for concessional BCD under Sr. No. 405(4) of Notification No. 50/2017-Customs (as amended).
1. Statutory Framework Governing Classification in India
The primary legal framework for the classification of goods is derived from the First Schedule to the Customs Tariff Act, 1975, read with the General Rules for Interpretation (GRI).
Classification is the process of identifying the correct tariff heading or sub-heading for goods, which determines duty liability and eligibility for exemptions.
The GRI provides that classification shall be determined according to the terms of the headings and any relevant Section or Chapter Notes.
Key Indian Statutes Applicable:
Customs Tariff Act, 1975 – Provides tariff structure and GRI.
Customs Act, 1962 – Governs levy, valuation, and import compliance once classification is determined.
India follows the internationally harmonized system designed by the World Customs Organization, used by over 200 countries for uniform classification.
2. Binding Legal Principles for Classification
(A) Primacy of Headings and Notes
The Supreme Court-recognized rule is that classification must be based on:
Terms of the heading
Relevant Section Notes
Chapter Notes
These notes are binding and can override headings when necessary.
(B) Sequential Application of GRI
Titles of sections or chapters are only for reference.
Legal determination flows from headings and notes first.
(C) Essential Character Rule
Incomplete or unassembled goods are classified as finished goods if they possess the “essential character.”
(D) Competing Headings → Rule 3
Where goods are prima facie classifiable under multiple headings, GRI Rule 3 determines the correct classification.
(E) “Most Akin” Test
The Supreme Court has clarified that classification should identify the category most akin to the imported goods, not merely rely on probability.
3. Judicial Recognition of the Framework
In Collector of Central Excise v. Wood Craft Products Ltd., 1995 (77) ELT 23 (SC), the Court emphasized that tariff interpretation rules govern classification and that Section/Chapter Notes carry statutory force.
Further, the Supreme Court reiterated that classification is crucial because it determines the legal and financial treatment of goods, including duty implications.
4. Special Context: HSN 68151900
Tariff Description:
HSN 6815 covers “articles of stone or other mineral substances (including carbon fibres)… not elsewhere specified.”
Sub-heading 68151900 specifically refers to other non-electrical articles of graphite or carbon.
Interpretative Impact:
Because Heading 6815 is a residuary-style entry (“not elsewhere specified or included”), courts and authorities typically apply the following logic:
Examine whether the product fits a more specific heading first (GRI Rule 1 & 3).
If not, classification may fall under the residual category.
Apply the most akin test where technical similarity is disputed.
5. Applied Legal Test for Goods under 68151900
When deciding whether goods belong under 68151900, authorities generally evaluate:
Material composition (graphite/carbon vs. other minerals)
Functional use (non-electrical vs. electrical components)
Manufacturing characteristics
Trade understanding / commercial identity
Only after excluding competing headings should the residuary entry be invoked — a well-settled interpretative approach under tariff law.
6. Consolidated Legal Position
The governing doctrine may be summarized as follows:
Classification under Indian customs law is determined primarily by the statutory language of headings read with Section and Chapter Notes, applied through the General Rules for Interpretation; where ambiguity persists, courts adopt the essential character and “most akin” tests before resorting to residuary entries such as HSN 68151900.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 31.08.2025
The Canon India Saga- The Judgement & the journey going forward
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
Introduction
The jurisprudence surrounding the powers of the Directorate of Revenue Intelligence (DRI) under the Customs Act, 1962 has undergone dramatic shifts in recent years. The Supreme Court’s ruling in Canon India Pvt. Ltd. v. Commissioner of Customs (2021) appeared to decisively curtail DRI’s jurisdiction to issue show cause notices (SCNs) under Section 28. Yet, in Commissioner of Customs v. Canon India Pvt. Ltd. (2024 Review), the Court reversed course, validating DRI’s authority subject to statutory assignment. This oscillation, coupled with legislative intervention in 2022, has produced a recalibrated enforcement regime with profound implications for importers, exporters, and the State’s investigative machinery.
Canon India (Customs) — 2021 vs 2024
Item
2021 decision
2024 review decision
Case & date
M/s Canon India Pvt. Ltd. v. Commissioner of Customs, Civil Appeal No. 1827/2018 and batch (decided 9-Mar-2021)
Commissioner of Customs v. M/s Canon India Pvt. Ltd., Review Petition No. 400/2021 (judgment dated 7-Nov-2024)
Core question
Whether DRI officers are “the proper officer” competent to issue SCNs under S28(4) after clearance by jurisdictional customs officers.
Whether Canon-2021 erred; whether DRI and certain other officers are “proper officers” for S28; validity/effect of later statutory changes/validations.
Holding (short)
DRI not “the proper officer” to issue S28(4) notices; SCNs by ADG-DRI set aside.
Review allowed; DRI are proper officers for S28 (subject to assignment via notifications). Canon-2021’s reasoning corrected; validation of past SCNs upheld.
Key statutory provisions discussed
S2(34) (definition of “proper officer”); S6 (entrustment to other govt officers); S28(4) (extended-period SCN); linkage emphasized to S17 (assessment). Court read S28 power as confined to the officer who handled assessment/re-assessment.
S2(34) (incl. post-2022 text linking assignment to S5); SS3–5 (classes/appointment/powers of customs officers); S6 (distinct from S2(34)/S5 assignment); S17 & S28 (no mandatory inter-dependence for jurisdiction under S28); S110AA (inserted 2022; prospective scheme); S28(11) (Validation Act 2011); S97, Finance Act 2022 (validation of past actions).
Notifications & Circulars considered / reproduced
• Notif. 17/2002-Cus (N.T.), 07-03-2002 (appointing ADG-DRI as Commissioner of Customs). • Notif. 40/2012-Cus (N.T.), 02-05-2012 (assignment table incl. S28 to DC/AC and above). • Context: exemption Notif. 2005 + amending 15/2012 for DSICs (background facts).
Appointments / assignment • Notif. 19/90-Cus (N.T.), 26-04-1990 (DRI appointed as customs officers; later superseded). • Notif. 17/2002-Cus (N.T.), 07-03-2002 (superseding earlier; DRI appointments). • Notif. 44/2011-Cus (N.T.), 06-07-2011 (assigning “proper officer” functions incl. SS17 & 28 to DRI); amendments: 53/2012, 43/2019; rescinded/superseded by 25/2022-Cus (N.T.) aligned with Finance Act 2022. • Notif. 40/2012-Cus (N.T.), 02-05-2012 (assignment table). • Notif. 60/2015-Cus (N.T.), 04-06-2015 (common adjudicating authority—delegation to Principal DG, DRI). Circulars • Circular 4/99-Cus, 15-02-1999 (DRI may issue SCNs in cases they investigate; adjudication by jurisdictional officers). • Circular 18/2015-Cus, 09-06-2015 (guidelines on common adjudicator after Notif. 60/2015). • Circular 44/2011-Cus, 23-11-2011 (referred to alongside 4/99).
Treatment of earlier case-law
Relied heavily on Sayed Ali (2011) to insist that the S28 “proper officer” must be the officer vested with S17 assessment; read S6 as the only entrustment route.
Explains Sayed Ali did not involve DRI with proper assignments; treats its S17–S28 “linkage” as erroneous/obiter; sets aside Delhi HC’s Mangali Impex; affirms Bombay HC’s Sunil Gupta on S28(11) validation.
Reasoning snapshot
• Notif. 40/2012 issued under S2(34) was held ultra vires (since S2(34) only defines; entrustment must be under S6). • Thus ADG-DRI lacked authority to issue S28(4) SCN.
• Distinguishes assignment of “proper officer” functions (S2(34) read with S5) from entrustment under S6 (for non-customs officers). • Confirms multiple proper officers can exist if functions are properly assigned by notification; no statutory need that the S28 officer must be the S17 assessor (pre-S110AA). • Notes post-2022 amendments (to SS2,3,5 and S110AA) and Section 97 validating earlier SCNs; upholds constitutionality of S97.
Outcome / effect
SCNs by DRI quashed; ripple effect invalidated many DRI SCNs.
Review allows department’s plea; DRI recognized as proper officers for S28 where assigned; S97 Finance Act 2022 validation upheld; Mangali Impex overruled; Sunil Gupta approved.
A. Legal provisions canvassed
2021 (Canon-I): S2(34); S6; S28(4); linkages to S17 (assessment); reliance on Sayed Ali (2011).
Exemption notifications (factual background): 2005 exemption notification (the judgment text references No. 20/2005/25/2005) as amended by 15/2012 for digital still image video cameras. (India Budget)
2024 review judgment
Notif. 19/90-Cus (N.T.), 26-04-1990; superseded by Notif. 17/2002-Cus (N.T.), 07-03-2002 (appointment of DRI as officers of customs).
Notif. 44/2011-Cus (N.T.), 06-07-2011 (assigns “proper officer” functions incl. SS17 & 28 to DRI); amended by 53/2012 & 43/2019; superseded by 25/2022-Cus (N.T.).
Notif. 40/2012-Cus (N.T.), 02-05-2012 (assignment table; to be read with SS4/5).
Notif. 60/2015-Cus (N.T.), 04-06-2015 (common adjudicating authority—delegation to Principal DG, DRI).
Circular 4/99-Cus, 15-02-1999 (DRI to issue SCNs they investigate; adjudication by field formations).
Who can issue S28 SCNs? • 2021: Only the officer who did (re)assessment under S17 (or was otherwise assigned) could issue S28 SCN—DRI’s SCNs were invalid. • 2024: The Act does not require the S28 SCN issuer to be the same person who did S17 assessment (pre-S110AA). What matters is a valid assignment of S28 functions to that officer via proper notifications (read S2(34) with S5; S6 is for non-customs officers). DRI officers were validly appointed/assigned.
Effect of later legislation • S110AA (2022) prospectively ties issuance of S28 SCN to the proper officer assigned to conduct S17 assessments; it doesn’t retrospectively invalidate earlier practice. • S97, Finance Act 2022 validated past SCNs; SC upheld its constitutionality and clarified scope vis-à-vis S28(11) & Explanation-2.
Companion High Court rulings • Delhi HC (Mangali Impex) set aside; Bombay HC (Sunil Gupta) approved.
Practical takeaways for customs disputes (post-2024)
Jurisdictional objections to DRI SCNs (pre-2022) now generally fail if the Department shows valid appointment & assignment via the above notifications.
For SCNs issued after 31-Mar-2022, consider S110AA: the issuing officer must be the assigned S17 officer; challenges should scrutinize post-2022 assignment orders.
Validation under S97 Finance Act 2022 covers past SCNs; constitutional challenges were rejected in the review.
1. Scope of the Review
The Supreme Court in 2024 was deciding a review petition against its earlier 2021 ruling. Its focus was:
Whether the 2021 reasoning (that DRI officers were not “proper officers”) was legally sustainable, and
Whether the post-2011 Validation Act (S28(11)) and Finance Act 2022 (S97) covered past SCNs.
Because of this limited scope, the Court concentrated on notifications and circulars that existed at the time of the disputed SCNs (2005–2015 era), and the validating provisions enacted later, not on fresh notifications meant to operate prospectively.
2. Temporal Relevance
Notifications 25/2022 and 26/2022 (N.T.) were issued after 31-03-2022, expressly to align officer-assignments with the newly inserted S110AA (Finance Act 2022).
Circular 07/2022-Cus (N.T.) clarified field implementation under the new law.
Since the SCNs in dispute in Canon India dated back years earlier, the Court treated these 2022 instruments as not directly applicable to the lis (dispute) before it. Instead, the Court examined:
older appointment/assignment notifications (17/2002, 40/2012, 44/2011, 60/2015, etc.), and
The 2024 judgment did consider S110AA and S97 of Finance Act 2022 in detail. Those provisions themselves were the statutory foundation upon which Notifications 25/2022 & 26/2022 and Circular 07/2022 were based. Thus, by upholding S97 and clarifying S110AA’s prospective effect, the Court implicitly accepted the validity of the 2022 notification/circular regime, without needing to cite each by number.
4. Judicial Practice
The Supreme Court often:
Cites only those notifications/circulars that form the crux of the dispute or which were argued before it.
Leaves out subsequent administrative instruments if their effect is prospective or merely implementational.
The 2024 bench emphasized that post-31.03.2022 SCNs would fall under S110AA and fresh notifications, but it was not ruling on those—so it found no need to reproduce or analyze 25/2022, 26/2022, or Circular 07/2022.
In short: The 2024 Supreme Court judgment did not consider those specific 31-03-2022 notifications and circular because they were prospective instruments implementing S110AA, while the Court’s task was to decide the validity of pre-2022 SCNs and the scope of validation under S97. Their effect was implicitly acknowledged, but not directly adjudicated.
That’s a very important concern. After the Canon India litigation saga and the March 2022 amendments, the powers of DRI officers have indeed been regularized, but they are not “unlimited” or unchecked. Let me explain in detail:
1. What changed in 2022?
Finance Act, 2022 inserted Section 110AA into the Customs Act, 1962. → It mandates that the same “proper officer” who is assigned functions of assessment under Section 17 will also have jurisdiction to issue show cause notices under Section 28.
To operationalize this:
Notification 25/2022-Cus (N.T.) and 26/2022-Cus (N.T.) (31-03-2022) were issued. They re-assigned functions clearly to DRI, Audit, Preventive, and Commissionerates, ensuring statutory backing.
Circular 07/2022-Cus (31-03-2022) gave field-level guidance, clarifying how officers should exercise powers under the new framework.
This effectively plugged the “jurisdictional defect” highlighted in Canon India (2021).
2. Checks on DRI powers post-2022
Even with these notifications, DRI officers are not beyond scrutiny:
(a) Statutory Limitation
Section 110AA ties issuance of SCNs to proper assignment; DRI can only act if lawfully assigned by notification.
Their jurisdiction flows strictly from Sections 2(34), 3, 5, 6, and 110AA read with the assignment notifications.
(b) Validation but Prospective Guardrails
The Supreme Court in 2024 (Canon India Review) upheld the validity of past SCNs via Section 97 of Finance Act 2022, but also emphasized that going forward, the post-2022 assignment regime applies.
This means future SCNs can be challenged if issued contrary to Section 110AA or without proper assignment.
(c) Procedural Safeguards
DRI must comply with natural justice (notice, reply, hearing).
SCNs are adjudicated by jurisdictional Commissioners/Principal Commissioners, not by DRI itself, preventing them from being “judge in their own cause.”
Circular 07/2022 reinforces this segregation of roles.
(d) Judicial Oversight
Courts and CESTAT remain open to review whether DRI officers exceeded statutory assignment, acted mala fide, or violated procedural safeguards.
Writ petitions under Article 226/227 and appeals under Section 129A (CESTAT) and Section 130 (High Court) continue to act as a check.
3. Practical Position Going Forward
Yes, DRI has regained legal authority (as “proper officers”), but their powers are not unfettered.
The 2022 notifications and circulars give them jurisdiction, but also bind them within the statutory scheme of Sections 17, 28, and 110AA.
Any SCN post-2022 must be tested for:
Correct assignment in the relevant notification;
Compliance with limitation under Section 28;
Observance of natural justice.
Conclusion: DRI officers’ powers will not go unchecked under Notifications 25/2022, 26/2022, and Circular 07/2022. These instruments regularize and define their jurisdiction, but checks still exist through Section 110AA, adjudication by separate authorities, and judicial review.
The Canon India Saga: Judicial U-Turn, Legislative Response, and the Recalibration of DRI Powers under the Customs Act, 1962
I. The 2021 Decision: Curtailing DRI Jurisdiction
In its 9 March 2021 judgment, the Supreme Court held that officers of DRI were not “proper officers” under Section 28 of the Act.
The Court relied on Section 2(34) (defining “proper officer”) and Section 6 (entrustment of functions to other government officers) to conclude that only the officer who originally assessed goods under Section 17 could subsequently reopen or reassess liability under Section 28.
Notifications such as Notification No. 40/2012-Cus (N.T.), issued to empower DRI, were held ultra vires, since Section 2(34) was merely definitional and could not serve as a source of power.
In effect, all SCNs issued by DRI under Section 28(4) were rendered invalid.
The judgment’s reasoning was strongly influenced by Union of India v. Sayed Ali (2011), which had emphasized a close nexus between the assessing officer and the officer reopening the assessment.
II. Legislative Response: Finance Act, 2022
The 2021 ruling created widespread disruption in anti-evasion enforcement. Parliament responded promptly through the Finance Act, 2022, which introduced two pivotal reforms:
Section 110AA (prospective): mandated that the “proper officer” assigned the functions of assessment under Section 17 would also have jurisdiction to issue notices under Section 28. This tied jurisdiction to statutory assignment rather than to the original assessing officer.
Section 97, Finance Act 2022 (retrospective): validated all past actions of DRI and similar officers, curing the jurisdictional defect identified in Canon 2021.
To operationalize these amendments, the Government issued:
Notification No. 25/2022-Cus (N.T.) and 26/2022-Cus (N.T.) (both dated 31-03-2022), re-assigning assessment and demand functions across Customs Commissionerates, DRI, Audit, and Preventive formations.
Circular No. 07/2022-Cus (31-03-2022), clarifying procedural aspects of SCN issuance and adjudication under the new regime.
III. The 2024 Review Decision: A Judicial Recalibration
In its 7 November 2024 judgment, the Supreme Court allowed the Department’s review petitions, effectively reversing the 2021 ruling.
Assignment vs. Entrustment: The Court distinguished between assignment of functions (Sections 2(34) read with 3, 4, and 5) and entrustment of functions (Section 6). Since DRI officers were duly appointed and their functions assigned through statutory notifications (17/2002, 44/2011, 40/2012, 60/2015), they qualified as “proper officers.”
Rejection of Section 17–28 Nexus: The earlier insistence that the officer under Section 28 must be the same officer who assessed under Section 17 was held erroneous, save for the prospective effect of Section 110AA.
Validation: The Court upheld the constitutionality of Section 97, Finance Act 2022, thereby retrospectively validating past SCNs.
Precedents Revisited:Mangali Impex (Delhi High Court), which had invalidated DRI notices, was expressly overruled, while Sunil Gupta (Bombay High Court) was approved.
Thus, the Court restored DRI’s jurisdiction while acknowledging the legislative guardrails introduced in 2022.
IV. The Status of Notifications and Circulars
It is noteworthy that Notifications 25/2022, 26/2022 and Circular 07/2022 were not expressly discussed in the 2024 judgment. This was deliberate:
The Court’s task in review was confined to pre-2022 SCNs and the effect of retrospective validation.
Since the 2022 instruments were prospective, their role was implicitly recognized but not adjudicated upon.
Accordingly, future SCNs will be governed by Section 110AA and these notifications, while past SCNs stand validated by Section 97 of Finance Act, 2022.
V. Will DRI Powers Go Unchecked?
Concerns about unchecked investigative powers must be balanced against statutory safeguards:
Statutory Assignment – DRI’s jurisdiction flows strictly from notifications issued under Sections 3, 5, and 110AA; it cannot act beyond assigned functions.
Separation of Roles – While DRI investigates and issues SCNs, adjudication lies with jurisdictional Commissioners, ensuring impartiality.
Natural Justice and Limitation – Section 28 prescribes limitation periods and procedural fairness, binding on DRI.
Judicial Oversight – Writ jurisdiction under Article 226 and appeals under Sections 129A and 130 act as systemic checks on arbitrary exercise.
Thus, the new framework strengthens enforcement while embedding institutional and judicial safeguards.
VI. Conclusion
The Canon India saga exemplifies the dynamic interplay between judicial pronouncement, legislative correction, and administrative implementation.
The 2021 judgment underscored the dangers of empowering investigative agencies without statutory clarity.
The 2022 amendments created a prospective framework under Section 110AA and retrospectively validated past SCNs under Section 97.
The 2024 review judgment restored balance by recognizing DRI’s jurisdiction but within the bounds of statutory assignment.
Going forward, litigation will likely shift from jurisdictional challenges to questions of procedural compliance, limitation, and fairness in adjudication. For taxpayers and counsel, the message is clear: the battle has moved from “whether” DRI can issue SCNs, to “how” those SCNs are exercised under law.
Editorial Note: The Canon India trajectory—from invalidation, to legislative intervention, to judicial recalibration—is a striking illustration of how revenue enforcement, judicial oversight, and legislative sovereignty co-evolve. For customs law in India, it marks the end of jurisdictional uncertainty and the beginning of a new era of substantive procedural scrutiny.
Source: Canon-2021 judgment (9-Mar-2021) — Supreme Court of India (Reportable) & Canon-2024 review judgment (7-Nov-2024) — Supreme Court of India (Reportable)
