DRI to celebrate 67 yrs of service: Fortifying India's economic frontlines

On December 4, the Directorate of Revenue Intelligence (DRI), India’s premier investigative agency tasked with safeguarding the nation’s economic interests, celebrates its 67th year of establishment. Although the genesis of DRI can be traced to 1953 with the formation of the Central Revenue Intelligence Board, DRI was carved out as a specialised agency in 1957, with the primary objective of curbing the smuggling of goods, particularly contraband like gold, drugs, and other prohibited items.

 

Operating under the Department of Revenue (DoR) until June 1970, DRI was placed under the Ministry of Home Affairs for a brief period before being assigned to the Cabinet Secretariat. In 1977, it was once again brought under the Ministry of Finance (DoR), where it continues to function today.

 

 

The Directorate General of GST Intelligence (formerly the Directorate General of Anti-Evasion/Directorate General of Central Excise Intelligence), which oversees goods and services tax-related intelligence work, and the Narcotics Control Bureau, before being established as specialised agencies, were also carved out from DRI.

 

Over the decades, its mandate has expanded to include a wide array of economic offences, such as commercial fraud, money laundering, and trafficking in counterfeit currencies.

 

DRI has an impressive record over the years, with seizures of drugs, narcotics, gold, and other contraband valued at around Rs 3,573 crore and Customs duty evasion of around Rs 6,000 crore in 2023-24.

 

DRI, over time, has acted as a sentinel against global economic crime and works in close coordination with other national and international agencies. This coordination is crucial in a world where goods, money, and people travel seamlessly across borders.

 

On behalf of Indian Customs, DRI participates in several cross-border operations dealing with small arms and light weapons, countering money laundering and terrorism financing, and addressing illegal wildlife and timber trade.

 

One of the DRI’s key initiatives in fostering international cooperation is the annual regional Customs enforcement meeting. Held in conjunction with DRI’s Foundation Day celebrations since 2013, this meeting serves as a platform for Customs enforcement heads from neighbouring countries and representatives from regional and global organisations, including those from the Asia-Pacific region, West Asia, the World Customs Organization, the United Nations Office on Drugs and Crime, and Interpol, to collaborate, share best practices, and strategise ways to address emerging challenges in Customs enforcement, reinforcing the DRI’s central role in global economic security. 

 

The Canon judgment conundrum for DRI 

 

With such a distinguished legacy, one could not have anticipated the challenges that would arise from a seemingly small linguistic issue.

 

On March 9, 2021, the Supreme Court (SC) in Canon India vs Commissioner of Customs delivered a judgment that would shake the foundation of the DRI’s operational framework. The court held that the definite article “the” in the phrase “the proper officer” under Section 28 of the Customs Act could only refer to the officer assessing the bill of entry under Section 17, thus excluding DRI officers from the authority to issue showcause notices under Section 28. This judgment had the potential to cost the exchequer a staggering Rs 25,000 crore.

 

The department filed a review petition challenging the ruling. The Finance Act, 2022, also made amendments to validate past actions and adopt a different approach to issuing demand notices in cases investigated by the DRI. These actions were also challenged. The SC, after tagging the review petition in Canon India with Mangali Impex, Sunil Gupta (both challenging Section 28(11) of the Customs Act), Daikin Airconditioning India (challenging Section 97 of the Finance Act, 2022), and other related cases, heard these together in open court, and the review petition was decided by order dated November 7, 2024.

 

This was a sort of redemption order for DRI officers, wherein the court, inter alia, upheld the DRI’s jurisdiction to issue notices under Section 28, the validity of Section 28(11) of the Customs Act, and Section 97 of the Finance Act, 2022, and clarified several points of law, including that Sections 17 (assessment) and 28 (recovery of duty) serve distinct functions and are not inherently linked. This order, perhaps, has now settled once and for all the 16 years of litigation (2006-2022) involving the jurisdiction of the DRI to issue showcause notices. Further, the decision affirms that the legislature has the power to rectify jurisdictional gaps, including with retrospective effect, and that the merits of a matter take precedence over jurisdictional arguments.

 

While DRI has made remarkable strides in securing India’s economic interests, the road ahead presents several challenges that require adaptive strategies and continued innovation in intelligence gathering and the use of technology. The illicit trade and smuggling networks have become more sophisticated, using complex routes and multiple modes of financial transactions, including digital currencies.

 

DRI must continuously adapt to these evolving trends, inter alia, utilising international collaboration and advanced intelligence-gathering techniques. As the world faces increasing challenges related to smuggling, money laundering, and fraud, institutions like the DRI are more important than ever. 

 

At a glance

 

The Directorate of Revenue Intelligence (DRI) is a specialised agency under the Ministry of Finance, responsible for investigating and enforcing laws related to Customs and other indirect taxes.  

DRI is tasked with preventing and detecting economic offences, including smuggling, tax evasion, and violations related to customs duties. 

Main functions  

DRI is tasked to prevent smuggling, particularly contrabands such as narcotics, gold, and counterfeit currency. The agency also investigates cases involving customs duty evasion, misdeclaration, undervaluation, and other violations of customs regulations.  

The agency also investigates cases of money laundering, fraud, and financial crimes linked to import-export activities. 

Leveraging tech 

DRI employs a combination of techniques to detect and prevent illegal activities through a wide network of informants, surveillance, and liaison with other domestic and international enforcement agencies.  

DRI uses advanced data analytics to track trade patterns, identify anomalies, and spot potential illegal activities.  

The agency also conducts physical checks to inspect consignments, goods, and documents at ports, airports, and border areas. It also uses technology, including scanners, to identify contraband hidden in legitimate shipments.    - Harsh Kumar

   

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Vijay Mohan Jain is the Additional Director-General and Amaresh Kumar is the Additional Director in DRI. The views expressed are personal.