2018 (12) TMI 1306 - HC - Customs

Delay in issuance of SCN - appellant had effected a Project Import on 13.03.1999, installation was completed on 26.12.2002 and complied with all formalities and in 2018, the present impugned show cause notice was issued alleging under valuation of a few of the items which were imported by the appellant - Held that - Though the case may be one of investigation done by the DRI, yet final assessment should be done within a reasonable time. In the opinion of the Central Board, 6 months is reasonable time under normal circumstances. In our prima facie view, period of 15 years cannot be considered as a reasonable time - Assuming without admitting upon adjudication of the show cause notice, the proposal therein is confirmed, the entire liability may be around ₹ 11 crores and assuming the assessee files appeal, the minimum pre- deposit required to be made would be ₹ 7.5% of the disputed demand. The partial relief can be granted to the appellant so as to enable them to tide over the financial crisis, which they are stated to be undergoing at present - appeal allowed in part.

Summary

Issues:
1. Challenge to the order disposing of the writ petition
2. Delay in issuance of show cause notice
3. Allegations of under valuation of imported items
4. Applicability of circular on Bank Guarantee renewal
5. Reasonableness of time taken for provisional assessment

Analysis:

1. The appeal was filed challenging the order disposing of the writ petition, which contained specific directions for the petitioner to reply to the impugned proceedings within two weeks, followed by a personal hearing and provisional assessment by the second respondent. The court found a substantial part of the direction to be just and proper, considering the show cause notice proposing a demand of differential duty under the Customs Act, 1962.

2. The appellant raised concerns regarding the inordinate delay in issuing the show cause notice, highlighting the timeline of project import, installation completion, and compliance with formalities dating back to 1999, with the notice issued in 2018. The appellant argued that the delay would vitiate the proceedings.

3. The revenue alleged under valuation of certain imported products by comparing the declared value with the procurement price of the foreign supplier. The appellant's counsel contended that the higher procurement price of Naphtha affected power production, leading to the show cause notice being deemed untimely after 15 years of provisional assessment.

4. Reference was made to a Board circular on Bank Guarantee renewal exceptions, particularly in cases involving investigation by the DRI. The court acknowledged the investigation but emphasized the need for a reasonable time for final assessment, stating that 15 years could not be considered reasonable, although refraining from a conclusive finding on the issue.

5. Considering the financial burden on the appellant due to cash deposits and Bank Guarantee renewal charges, the court granted partial relief by modifying certain directions. The appellant was directed to remit a specific sum as cash deposit, with the Bank Guarantee not requiring renewal. The adjudication process was instructed to be completed expeditiously within three months, provided the appellant cooperated fully.

In conclusion, the court partially allowed the appeal, confirming certain directions while modifying others to alleviate the financial strain on the appellant and expedite the adjudication process, maintaining fairness and justice in the proceedings.