DIRECTORATE OF REVENUE INTELLIGENCE (DRI) - POLITY

Directorate of Revenue Intelligence (DRI) - POLITY

NEWS: 67th Foundation Day of the Directorate of Revenue Intelligence.

 

WHAT’S IN THE NEWS?

Establishment and Evolution

  • The Directorate of Revenue Intelligence (DRI), India’s leading agency for combating economic crimes, was formally established in 1957.
  • However, its origins date back to 1953, when the Central Revenue Intelligence Board was set up to enhance India’s revenue intelligence framework.
  • Initially, DRI focused on preventing smuggling of contraband items, particularly gold, narcotics, and other prohibited goods. Over time, its mandate has expanded significantly.

Shifts in Administrative Control

  • From its inception, DRI operated under the Department of Revenue (DoR) until June 1970, when it was moved temporarily to the Ministry of Home Affairs and later to the Cabinet Secretariat.
  • In 1977, it was brought back under the Ministry of Finance (DoR), where it continues to operate, reinforcing its critical role in protecting the nation’s economic interests.

Expanded Mandate and Creation of Sister Agencies

Expanding Jurisdiction

  • Over the decades, DRI has evolved to address a broader array of economic offences, including:
    • Commercial fraud
    • Money laundering
    • Trafficking in counterfeit currencies
    • Illegal trade in wildlife and timber

Creation of Specialized Agencies from DRI

  • Directorate General of GST Intelligence (DGGI):
    Initially known as the Directorate General of Anti-Evasion and later as the Directorate General of Central Excise Intelligence, this agency was carved out to specialize in detecting and investigating GST-related frauds.
  • Narcotics Control Bureau (NCB):
    Before becoming an independent entity, the NCB’s anti-narcotics operations were part of DRI’s functions. It now focuses exclusively on combating drug trafficking.

International Operations and Collaborations

  • DRI actively participates in several cross-border operations to combat:
    • Trafficking in small arms and light weapons
    • Money laundering linked to terrorist financing
    • Illegal wildlife and timber trade
  • DRI’s Annual Regional Customs Enforcement Meeting, held since 2013 alongside its Foundation Day celebrations, has become a pivotal platform for collaboration between:
    • Customs enforcement heads from neighboring countries
    • Global organizations, including the World Customs Organization (WCO), Interpol, and the United Nations Office on Drugs and Crime (UNODC)

DRI’s Achievements in 2023-24

Record Seizures and Financial Recoveries

  • In the financial year 2023-24, DRI made significant strides, seizing contraband worth ₹3,573 crore.
  • The agency also uncovered Customs duty evasion amounting to approximately ₹6,000 crore, highlighting its efficiency in detecting and preventing large-scale revenue fraud.

Role as a Sentinel Against Global Economic Crime

  • DRI’s operations have successfully disrupted sophisticated smuggling networks and economic fraud schemes.
  • The agency’s collaboration with national and international counterparts enhances its ability to counter threats that transcend geographical boundaries.

Legal Challenges: The Canon Judgment and Its Ramifications

Canon Judgment (March 2021)

  • In Canon India vs Commissioner of Customs, the Supreme Court ruled that the term “the proper officer” under Section 28 of the Customs Act refers solely to the officer who assessed the bill of entry under Section 17.
  • This interpretation effectively barred DRI officers from issuing show-cause notices under Section 28, creating a significant operational roadblock.
  • Financial Impact:
    The judgment put approximately ₹25,000 crore of potential revenue recovery at risk, threatening the exchequer’s fiscal stability.

Government’s Response

  • To address this, the government:
    • Filed a review petition challenging the Supreme Court’s interpretation.
    • Introduced amendments through the Finance Act, 2022, to validate past actions by DRI and redefine its powers regarding the issuance of show-cause notices.

 

Legal Redemption: Supreme Court Ruling in November 2024

Consolidated Review

  • In November 2024, the Supreme Court delivered a consolidated ruling on several related cases, including:
    • Mangali Impex
    • Sunil Gupta
    • Daikin Airconditioning India
  • This judgment provided much-needed clarity on DRI’s jurisdiction and authority.

Key Outcomes of the Judgment

  • The Court upheld DRI’s jurisdiction to issue show-cause notices under Section 28 of the Customs Act.
  • Validated the retrospective amendments made under the Finance Act, 2022.
  • Clarified the distinct functions of Sections 17 (assessment) and 28 (duty recovery), affirming that these provisions operate independently of one another.

Broader Legal Implications

  • The judgment reaffirmed the legislature’s authority to rectify jurisdictional gaps retrospectively.
  • Emphasized that legal disputes should focus on the substantive merits of a case rather than relying solely on jurisdictional technicalities.

Future Challenges and Strategic Priorities

Emerging Threats in Economic Crime

  • Sophistication of Criminal Networks:
    Smuggling and economic crime networks are employing increasingly complex methods, including:
    • Layered trade routes
    • Use of digital currencies and blockchain technology for illicit financial transactions.
  • DRI must continuously adapt its operational strategies to counter these evolving threats.

Investment in Technology and Intelligence

  • Leveraging advanced intelligence-gathering tools and adopting cutting-edge data analytics technologies will be crucial in enhancing DRI’s operational effectiveness.
  • Investments in AI-powered monitoring systems could help track and predict smuggling activities in real-time.

Strengthening International Cooperation

  • Collaborations with global enforcement agencies will remain critical in countering transnational crimes.
  • DRI’s leadership in regional forums like the Annual Customs Enforcement Meeting ensures it remains at the forefront of global efforts against economic crimes.

Conclusion

The Directorate of Revenue Intelligence has consistently played a crucial role in safeguarding India’s economic sovereignty. Despite facing significant legal challenges, such as the Canon judgment, DRI has emerged stronger, backed by judicial validation and legislative support. Moving forward, the agency must adopt adaptive strategies, enhance its technological capabilities, and foster global partnerships to effectively combat the ever-evolving landscape of economic crimes and illicit trade.

Source: https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2080783