2019 (1) TMI 1731 - HC - Customs

Principles of natural justice - revival of adjudication proceedings after 14 years - no document relevant for the show cause notice was given - HELD THAT - The respondents after keeping the impugned show cause notice in the call book, have not chosen to follow up it for unduly long period. It is very evident from the affidavit in reply filed by the respondents that on 29-12-2003, the show cause notice was issued and thereafter, nothing has been done by the respondent though petitioners filed detailed reply/written submissions in respect of the said show cause notice. Thereafter, on 10-4-2018, after a period of 14 years, the respondent passed the order by confirming the demand against the petitioners without considering the replies made by the petitioner from time to time. The action on the part of the authorities to keep the show cause notice for long period and thereafter, reviving it to confirm the order of demand as has been held in various decisions resulted in infraction of the principles of natural justice rendering the show cause notice as well as consequent order vitiated - Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Validity of the revival of adjudication proceedings after a prolonged delay.
2. Compliance with principles of natural justice.
3. Applicability of statutory time limits under Section 11A of the Customs Act.
4. Legitimacy of placing the case in the call book and subsequent revival.

Detailed Analysis:

1. Validity of the Revival of Adjudication Proceedings After a Prolonged Delay:
The petitioner challenged the revival of adjudication proceedings after a 14-year delay, arguing it violated principles of natural justice. The court noted that the Directorate of Revenue Intelligence (DRI) issued a show cause notice on 29-12-2003, but no subsequent action was taken until 27-10-2017. The petitioner contended that such a delay was unreasonable and cited previous judgments (M/s. Siddhi Vinayak Syntex Pvt. Ltd., M/s. Parimal Textiles, and Alidhara Textile Engineers Ltd.) to support the claim that prolonged delays invalidate proceedings. The court agreed, emphasizing that the delay was arbitrary and vitiated the entire proceedings.

2. Compliance with Principles of Natural Justice:
The petitioner argued that the long delay in adjudication violated the principles of natural justice. The court concurred, stating that the delay deprived the petitioner of a fair opportunity to respond and defend against the show cause notice. It was highlighted that the petitioner had discontinued the business in 2002 and had no access to relevant documents, further exacerbating the unfairness.

3. Applicability of Statutory Time Limits Under Section 11A of the Customs Act:
The court examined Section 11A of the Customs Act, which mandates a time limit for adjudication proceedings. The section stipulates that the Central Excise Officer should determine the amount of duty within six months or one year from the date of the notice, depending on the case. The court referenced the legislative intent behind these time limits, emphasizing that delays beyond these periods, without valid reasons, are impermissible. The court found that the respondent's failure to act within the prescribed time frame rendered the proceedings invalid.

4. Legitimacy of Placing the Case in the Call Book and Subsequent Revival:
The respondents argued that the case was placed in the call book, a practice where cases are set aside pending certain conditions. The court, however, found this practice contrary to the statutory mandate. It was noted that the call book concept, as utilized by the Central Board of Excise and Customs (C.B.E. & C.), does not align with the legislative intent of timely adjudication. The court ruled that transferring matters to the call book without valid reasons and reviving them after a prolonged period violated legal principles and was beyond the C.B.E. & C.'s authority.

Conclusion:
The court concluded that the revival of the show cause notice after 14 years was arbitrary and violated the principles of natural justice. The prolonged delay, lack of valid reasons for placing the case in the call book, and non-compliance with statutory time limits under Section 11A of the Customs Act rendered the proceedings invalid. Consequently, the court quashed the show cause notice dated 29-12-2003 and the order dated 10-4-2018, making the rule absolute and leaving the parties to bear their own costs.

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