What Is a DRI Customs Investigation and How to Respond?

The Directorate of Revenue Intelligence (DRI) is India’s principal agency for investigating customs fraud, smuggling, and violations of customs law. A DRI customs investigation is more serious than a routine assessment query and may begin with a search, seizure, summons, or interception. It can ultimately lead to a customs duty demand, confiscation, penalty, or prosecution.

For businesses facing a DRI investigation for the first time, it is important to understand DRI’s powers, the customs investigation process, and the legal position on DRI show cause notices. The Supreme Court’s 2024 decision in Canon India also changed the position on DRI’s authority to issue notices, making it important to rely on the current law rather than outdated guidance.

The Jurisdiction Question: What Changed?

This matters enough to state first.

In Canon India Private Ltd. v. Commissioner of Customs, decided on 9 March 2021, the Supreme Court held that officers of the DRI were not “proper officers” for the purposes of Section 28 of the Customs Act, 1962, reasoning that only officers who had exercised assessment functions under Section 17 could initiate recovery proceedings. On that basis a very large number of DRI show cause notices were treated as without jurisdiction.

That is no longer the law. In Commissioner of Customs v. M/s Canon India Private Limited, 2024 INSC 854, decided on 7 November 2024 in Review Petition No. 400 of 2021 and connected matters, the Supreme Court allowed the review and held that the finding in the 2021 judgment — that a DRI officer was not an officer of customs and could not function as a proper officer — was erroneous. The Court held that DRI officers, where functions have been validly allocated to them, are competent to issue notices under Section 28.

The Court also upheld the legislative responses. It held Section 28(11) of the Customs Act, introduced by the Customs (Amendment and Validation) Act, 2011, to be constitutionally valid, and not confined in its application to a narrow window; it set aside the Delhi High Court’s contrary reading in Mangali Impex Ltd. v. Union of India; and it rejected the challenge to Section 97 of the Finance Act, 2022, which retrospectively validated notices.

The practical consequence is direct. A defence resting on the 2021 Canon India decision is no longer available, and matters that had been kept alive on that footing have had to be re-examined on their merits.

Powers of DRI Officers in Customs Investigations

DRI officers exercise powers under the Customs Act, 1962 in the same way as other officers of customs to whom functions have been assigned. The ones encountered in practice are these.

Search of premises, conveyances and persons, on the conditions the relevant provisions impose — including, where the Act requires it, a recorded reason to believe.

Seizure under Section 110, where the proper officer has reason to believe that goods are liable to confiscation. Documents and things may also be seized under Section 110(3).

Summons under Section 108, requiring attendance to give evidence or to produce documents. Proceedings under this section are deemed to be judicial proceedings for the purposes the section specifies, and a person summoned is bound to state the truth and to produce the documents required.

Recording of statements, the evidentiary treatment of which is governed by Section 138B — including the circumstances in which a statement made before a gazetted officer is relevant, and the requirement that the maker be examined as a witness in the manner that section provides.

Arrest, in respect of the offences and on the conditions the Act specifies.

Issue of a show cause notice under Section 28 for recovery of duty, and under Section 124 for confiscation and penalty.

How a DRI Customs Investigation Works

A search or an interception, often at a port, warehouse or office; seizure of goods, records and electronic devices, recorded in a panchnama; summons to directors, employees and customs brokers; recording of statements; requisition of records from banks, suppliers, transporters and overseas correspondents; provisional release proceedings if the importer applies; and finally a show cause notice combining a duty demand, a confiscation proposal and penalties on the company and on individuals.

The gap between seizure and notice is where most of the commercial damage occurs, and where the timelines in Section 110(2) become important.

Responding to a DRI Summons

Attend, or seek a date in writing. Non-appearance without explanation is unwise and can itself become an allegation. Where the person is genuinely unavailable, a written request for an alternative date, with reasons, should be sent.

Take documents seriously. Where documents are called for, produce what is available and explain in writing what is not, and why.

Statements are the pivot of most investigations. A statement recorded during investigation frequently becomes the department’s principal evidence. It should be read before signing, corrections should be insisted upon, and a copy should be sought. Where a statement is later said to have been given under compulsion, the retraction must be prompt, in writing, addressed to the appropriate authority, and reasoned — a belated retraction carries little weight. Where the department relies on a statement at adjudication, cross-examination of the maker should be sought expressly, with Section 138B in mind.

Legal representation. A person summoned may take legal advice, and the practice of counsel being permitted to be present within visual range during recording has been recognised in various High Court orders; the specific arrangement should be sought from the officer.

How Businesses Should Handle a DRI Investigation

Preserve, do not clean. Records, emails and devices should be preserved. Any destruction or alteration after an investigation begins converts a valuation or classification dispute into an allegation of suppression, which is precisely what the department needs to invoke the extended period and higher penalties.

Reconstruct the commercial file. Contracts, purchase orders, price negotiation correspondence, supplier invoices, remittance records, transport documents, test reports and product literature are what answer allegations of undervaluation or misclassification.

Deal with the goods separately from the merits. Where goods are seized, the Section 110(2) timeline and the option of provisional release under Section 110A are immediate questions, distinct from the eventual adjudication.

Assess the closure options. Where duty liability is not seriously contested, the provisions permitting payment of duty with interest and reduced penalty at defined stages are worth evaluating early, as is the settlement machinery where it is available.

Take each noticee separately. Directors, employees and customs brokers are frequently proposed for penalty in their individual capacity, and their positions do not always align with the company’s.

The Point At Which the Law Helps

An investigation is not an adjudication. The department must still issue a notice that discloses the grounds and the material, supply the relied-upon documents, grant a hearing, and prove what it alleges — particularly where the extended period and intent-based penalties are invoked. Those requirements are the substance of the defence, and the record on which they are tested is built during the investigation, not after it.

Legal Information Disclaimer

This article is published for general legal information and educational purposes only. It reflects the position of Indian law as researched up to 10 August 2026 and may not account for subsequent amendments, notifications, circulars or judicial developments. It is not legal advice, does not take into account any individual’s particular facts or circumstances, and no advocate-client relationship arises from reading it. Readers dealing with an actual investigation should obtain independent professional advice from a qualified advocate of their own choosing before acting on any information contained here. Statutory provisions, notified figures, rules and case citations referred to in this article have been compiled from published legal materials and may contain errors or omissions, and may have changed since the date stated; no representation or warranty, express or implied, is given as to their accuracy, completeness or currency, and each should be independently verified against the official text or the official record before being relied upon. No liability is accepted for any loss arising from reliance on this article.

Sources / Authorities

• Customs Act, 1962 — Sections 2(34), 17, 28 (including sub-section (11)), 105, 108, 110, 110A, 111, 112, 124 and 138B — India Code, https://www.indiacode.nic.in
• Commissioner of Customs v. M/s Canon India Private Limited, 2024 INSC 854, Supreme Court of India, Review Petition (Civil) No. 400 of 2021 and connected matters, decided 7 November 2024 — review allowed; DRI officers competent to issue notices under Section 28; Section 28(11) held constitutionally valid; Mangali Impex set aside; challenge to Section 97 of the Finance Act, 2022 rejected
• Canon India Private Ltd. v. Commissioner of Customs, judgment dated 9 March 2021 — the earlier view, held erroneous on review
• Commissioner of Customs v. Sayed Ali, (2011) 3 SCC 537
• Mangali Impex Ltd. v. Union of India, 2016 SCC OnLine Del 2597 — set aside
• Customs (Amendment and Validation) Act, 2011 — insertion of Section 28(11)
• Finance Act, 2022 — Sections 86, 87, 88, 94 and 97