- Home
- News
- Articles+
- Aerospace
- Agriculture
- Alternate Dispute Resolution
- Banking and Finance
- Bankruptcy
- Book Review
- Bribery & Corruption
- Commercial Litigation
- Competition Law
- Conference Reports
- Consumer Products
- Contract
- Corporate Governance
- Corporate Law
- Covid-19
- Cryptocurrency
- Cybersecurity
- Data Protection
- Defence
- Digital Economy
- E-commerce
- Employment Law
- Energy and Natural Resources
- Entertainment and Sports Law
- Environmental Law
- FDI
- Food and Beverage
- Health Care
- IBC Diaries
- Insurance Law
- Intellectual Property
- International Law
- Know the Law
- Labour Laws
- Litigation
- Litigation Funding
- Manufacturing
- Mergers & Acquisitions
- NFTs
- Privacy
- Private Equity
- Project Finance
- Real Estate
- Risk and Compliance
- Technology Media and Telecom
- Tributes
- Zoom In
- Take On Board
- In Focus
- Law & Policy and Regulation
- IP & Tech Era
- Viewpoint
- Arbitration & Mediation
- Tax
- Student Corner
- AI
- ESG
- Gaming
- Inclusion & Diversity
- Law Firms
- In-House
- Rankings
- E-Magazine
- Legal Era TV
- Events
- News
- Articles
- Aerospace
- Agriculture
- Alternate Dispute Resolution
- Banking and Finance
- Bankruptcy
- Book Review
- Bribery & Corruption
- Commercial Litigation
- Competition Law
- Conference Reports
- Consumer Products
- Contract
- Corporate Governance
- Corporate Law
- Covid-19
- Cryptocurrency
- Cybersecurity
- Data Protection
- Defence
- Digital Economy
- E-commerce
- Employment Law
- Energy and Natural Resources
- Entertainment and Sports Law
- Environmental Law
- FDI
- Food and Beverage
- Health Care
- IBC Diaries
- Insurance Law
- Intellectual Property
- International Law
- Know the Law
- Labour Laws
- Litigation
- Litigation Funding
- Manufacturing
- Mergers & Acquisitions
- NFTs
- Privacy
- Private Equity
- Project Finance
- Real Estate
- Risk and Compliance
- Technology Media and Telecom
- Tributes
- Zoom In
- Take On Board
- In Focus
- Law & Policy and Regulation
- IP & Tech Era
- Viewpoint
- Arbitration & Mediation
- Tax
- Student Corner
- AI
- ESG
- Gaming
- Inclusion & Diversity
- Law Firms
- In-House
- Rankings
- E-Magazine
- Legal Era TV
- Events

Re-Evaluating Jurisdictional Authority Of The Officers Of The Directorate Of Revenue Intelligence: The Impact Of Review Of The Cannon Judgment By The Hon’ble Supreme Court Of India
Re-Evaluating Jurisdictional Authority Of The Officers Of The Directorate Of Revenue Intelligence: The Impact Of Review Of The Cannon Judgment By The Hon’ble Supreme Court Of India

Re-Evaluating Jurisdictional Authority Of The Officers Of The Directorate Of Revenue Intelligence: The Impact Of Review Of The Cannon Judgment By The Hon’ble Supreme Court Of India
The Cannon 2024 Judgment, while pragmatic for enforcement agencies, highlights the challenges of balancing regulatory efficiency with fairness
Introduction
In Cannon India Private Limited v. Commissioner of Customs and ors. (2021 (376) E.L.T. 3 (S.C.)) (“Cannon Judgment”), the Hon’ble Supreme Court held that the officers of the Directorate of Revenue Intelligence (“DRI”) do not have the jurisdiction to issue Show Cause Notice (“SCN”) under Section 28 of the Customs Act, 1962 (“Customs Act”). Consequent to the Cannon Judgment, the Customs Department filed a review petition vide Review Petition No. 400/2021 (“Review Petition”) before the Hon’ble Supreme Court. A three-judge bench of the Supreme Court vide its judgment dated November 7, 2024 (“Cannon 2024 Judgment”), reversed the Cannon Judgment and affirmed the jurisdiction of the officers of DRI to issue SCNs under Section 28 of the Customs Act.
The Cannon 2024 Judgment passed by the Hon’ble Supreme Court has far- reaching impact on businesses and importers. To discuss the impact of the Cannon 2024 Judgment, it is necessary to examine the legal background leading up to it.
Historical Context and Legislative Responses
The origin of this dispute arose from the case of Commissioner of Customs v. Sayed Ali (2011 (265) E.L.T. 17 (S.C.)) (“Sayed Ali Judgment”), wherein the Hon’ble Supreme Court examined whether the Commissioner of Customs (Preventive) could issue SCNs under Section 28 of the Customs Act. Analyzing Sections 2(34), 17, and 28 of the Customs Act, the Hon’ble Supreme Court held that only officers explicitly assigned with the power of assessment under Section 17 of the Customs Act, could issue SCNs under Section 28 of the Customs Act.
This interpretation was aimed at eliminating jurisdictional overlaps and streamlining enforcement processes. The Hon’ble Apex Court also observed that permitting multiple customs officers within the same jurisdiction to issue SCNs could lead to utter chaos and confusion, as it would have multiple officers of customs claiming to be ‘proper officer’.
Thereafter, the Parliament enacted the Customs (Amendment and Validation) Act, 2011, which introduced Section 28(11) of the Customs Act. This provision retrospectively validated the jurisdiction of all persons appointed as officers of customs under the Customs Act and stated that they shall deem to have and always had the power of assessment under Section 17 of the Customs Act and deemed to be proper officers for the purpose of Section 17 of the Customs Act. The constitutional validity of Section 28(11) of the Customs Act was challenged before the Hon’ble High Court of Bombay in Sunil Gupta v. Union of India (2015 (315) E.L.T 167 (Bom.)) (“Sunil Gupta”), wherein the constitutional validity of the Section 28(11) of Customs Act was upheld.
However, the Hon’ble Delhi High Court in Mangali Impex Ltd v. Union of India. (2016 (335) E.L.T. 605 (Del.)) (“Mangali Impex”), declared Section 28(11) of the Customs Act, unconstitutional, stating that it was overly broad and enabled multiple officers to claim jurisdiction. Consequently, appeals against both the decisions were filed before the Hon’ble Supreme Court and were eventually considered along with the Review Petition filed by the Customs Department.
In the Cannon Judgment, the Hon’ble Supreme Court confined the term ‘proper officer’ to those officers of customs who are directly involved in assessments of duty under Section 17 of the Customs Act. Consequently, the Hon’ble Supreme Court held that the SCNs issued by the DRI were invalid and without authority of law. This decision offered a temporary relief to the businesses and traders by restricting actions taken by the officers of DRI.
The Cannon Judgment received significant backlash from the enforcement agencies, which argued that it impeded their ability to recover revenue and combat duty evasion. The Government of India introduced amendments through the Finance Act, 2022, to address the jurisdictional defects. Key changes in the Finance Act, 2022, included amendments to Sections 2(34) and Section 5 of the Customs Act, to empower the Central Board of Indirect Taxes and Customs (“Board”) to assign functions to officers, and Section 3 of the Customs Act was substituted to include officers of DRI as well. Further, Section 110AA was inserted in the Customs Act, mandating the transfer of cases post-investigation to the proper officer exercising powers under Section 28, Section 28AAA or Chapter X of the Customs Act.
Findings of the Hon’ble Supreme Court in the Cannon 2024 Judgment
Some key observations of the Hon’ble Supreme Court in the Cannon 2024 Judgment are as follows:
1. Distinct Function of Section 17 and 28 of the Customs Act: Nature of review under Section 28 of the Customs Act is significantly different from the nature of assessment and re-assessment under Section 17 of the Customs Act. The Hon’ble Supreme Court held that the scheme of Section 17 and Section 28 of the Customs Act indicates that there cannot be a mandatory condition linking the two provisions and the interpretation as per Sayed Ali Judgment and Cannon Judgment is patently erroneous.
2. Interpretation of the term “the Proper Officer”: The Hon’ble Supreme Court upheld the DRI’s authority under Section 2(34) and Section 5 of the Customs Act, empowering them to issue SCNs. It clarified that Section 6 of the Customs Act applies to the officers outside the Customs Department and does not affect the jurisdiction of the DRI officers.
3. Validation of Section 28(11) of the Customs Act: The constitutional validity of Section 28(11) of Customs Act, introduced by the Customs (Amendment and Validation) Act, 2011, was upheld. The Hon’ble Supreme Court affirmed its validity in light of the decision of the Hon’ble Bombay High Court in Sunil Gupta (supra) and overruled the contrary findings of the Hon’ble Delhi High Court in Mangali Impex (supra).
4. Impact of Self-Assessment Regime: The Hon’ble Supreme Court noted that the self-assessment regime introduced by the Finance Act, 2011, significantly altered the scope of Section 17 of the Customs Act. Under this regime, importers conduct initial assessments, and customs officers are limited to reassessments in specific situations. This rendered reliance on pre-2011 interpretations of Section 17 of the Customs Act, inapplicable to post-2011 cases.
The Cannon Judgment received significant backlash from the enforcement agencies, which argued that it impeded their ability to recover revenue and combat duty evasion
Impact of the Cannon 2024 Judgment:
While the review of Cannon Judgment, resolves jurisdictional ambiguities for the enforcement agencies, it may severely impact the business and trading community at large. The probable impact of Cannon 2024 Judgment on businesses are as under:
1. Prolonged Litigation: Although, the Hon’ble Supreme Court has provided guidelines for handling pending cases before various forums, it will not be wrong to say that re-opening of cases/SCNs/Appeals will lead to prolonged litigation.
2. Legal Uncertainty: The retrospective validation of DRI actions under Section 28(11) of the Customs Act, undermine legal predictability. Companies that relied on prior judgments for compliance, now face uncertainty regarding the finality of past transactions.
3. Erosion of Trust: The retrospective amendments and judicial reversals weaken trust in the legal system. Businesses expect consistency in regulatory interpretations, and sudden shifts in the law undermine the confidence in India as a stable destination for trade and investment.
Why this review of the Cannon 2024 Judgment is Problematic for Businesses?
The Cannon 2024 Judgment burdens the businesses and international traders by prioritizing revenue collection over procedural fairness and legal certainty. The retrospective application of amendment creates an environment of mistrust and uncertainty.
Furthermore, the self-assessment regime introduced in 2011 was designed to streamline customs processes and reduce bureaucratic intervention. By re-expanding enforcement powers to agencies like the DRI, the judgment negates the benefits of this regime, increasing the likelihood of arbitrary actions and disputes.
The emphasis on substantive adjudication over procedural safeguards sets a troubling precedent. Businesses thrive on clear, predictable rules, and the Cannon 2024 Judgment creates an environment of ambiguity and uncertainty insofar as past and pending SCNs/Appeals are concerned. In view of the above background, the stakeholders should ensure the following to avoid litigation or enforcement action:
1. Strengthen Compliance: Given the enforcement powers of the DRI and other agencies, companies must adopt rigorous compliance practices, including real time monitoring of customs operations and frequent legal audits. Companies must also make sure that their imports/exports are duly recorded and complied with the Customs Act and allied rules and regulations.
2. Advocate for Clarity: The Policymakers and Industry bodies/Associations should represent the interest of importers/exporters before the Government of India, for clear legislative provisions that prioritize fairness and transparency in the customs process and they should further advocate to avoid creating jurisdictional ambiguities in taxation matters.
3. Foster Certainty in Trade: India’s push for foreign investments depends on creating a stable regulatory environment. Policymakers should balance revenue collection with the need for procedural fairness. This will help with fostering an environment of trust and friendly business environment.
Conclusion
The Cannon 2024 Judgment marks a pivotal shift in India’s customs enforcement framework. While it resolves jurisdictional uncertainties for agencies, it places disproportionate burden on businesses and international traders. The Cannon 2024 Judgment, while pragmatic for enforcement agencies, highlights the challenges of balancing regulatory efficiency with fairness. For businesses, the way forward lies in proactive compliance and engaging constructively with authorities.
Disclaimer – The views and opinions expressed in this article are solely those of the authors and do not necessarily reflect the official stance, position, or policies of any organization, entity, or individual with whom the authors are affiliated. This article is for informational purposes only and should not be construed as legal, professional, or financial advice. Readers are encouraged to seek appropriate guidance based on their specific circumstances.