2019 (6) TMI 796 - HC - Customs

Warehousing of goods - grant of license to operate as a private bonded warehouse - HELD THAT - Similar issue decided in the case of SIDDHI VINAYAK SYNTEX PVT LTD. VERSUS VERSUS UNION OF INDIA 2 2017 (3) TMI 1534 - GUJARAT HIGH COURT where it was held that the revival of proceedings after a long gap of ten to fifteen years without disclosing any reason for the delay, would be unlawful and arbitrary and would vitiate the entire proceedings It is manifestly clear that the authorities kept the show cause notice in call book for 14 years and thereafter, resurrected and the impugned orders dated 28.07.2017 and 24.01.2018 confirmed the demand came to be passed without considering the written submissions of the petitioners - 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 show cause notice issued on 30.09.2003.
2. Delay in adjudication of the show cause notice.
3. Violation of the principles of natural justice.
4. Applicability of Section 11A(11) of the Customs Act.
5. Legitimacy of the orders passed on 28.07.2017 and 24.01.2018.

Issue-wise Detailed Analysis:

1. Validity of the Show Cause Notice Issued on 30.09.2003:
The petitioners challenged the show cause notice dated 30.09.2003, arguing that it was in gross violation of the statutory mandate of Section 11A(11) of the Customs Act. They contended that the notice and subsequent orders were issued after an unreasonable delay of 14 years, which is contrary to the principles of natural justice. The court noted that the respondents had issued the show cause notice and then kept it in the call book without any follow-up for an unduly long period. This delay was found to be arbitrary and in violation of Section 11A of the Customs Act, thus vitiating the entire proceedings.

2. Delay in Adjudication of the Show Cause Notice:
The petitioners argued that the adjudication proceedings were not conducted within a reasonable period. The show cause notice was issued on 30.09.2003, but the adjudication only commenced between 04.05.2017 and 26.07.2017, after a gap of 14 years. The court observed that the delay was not justified by any cogent reasons and was in violation of the statutory provisions. The court cited previous judgments, including those in the cases of M/s. Siddhi Vinayak Syntex Pvt. Ltd., M/s. Parimal Textiles, and Alidhara Textile Engineers Ltd., which established that such delays are unlawful and arbitrary.

3. Violation of the Principles of Natural Justice:
The petitioners claimed that they were not given a fair opportunity to be heard, as they did not receive any communications for a personal hearing from the Joint Commissioner's office. The court found that the respondents had not provided any valid reasons for the delay and had failed to follow due process. The court emphasized that the delay and lack of communication constituted a violation of the principles of natural justice, rendering the proceedings invalid.

4. Applicability of Section 11A(11) of the Customs Act:
Section 11A(11) of the Customs Act mandates that adjudication should be completed within a specific timeframe. The court highlighted that the legislature intended for the duty to be determined within six months to one year from the date of the notice, depending on the case. The court noted that the Central Board of Excise & Customs (CBEC) does not have the authority to extend this timeframe indefinitely by placing cases in the call book. The court ruled that the CBEC's practice of keeping cases in the call book for extended periods was contrary to the statutory mandate.

5. Legitimacy of the Orders Passed on 28.07.2017 and 24.01.2018:
The court found that the orders passed on 28.07.2017 and 24.01.2018, which confirmed the duty demands, interest, and penalties, were issued without considering the petitioners' written submissions. The court ruled that these orders were invalid due to the arbitrary delay and violation of natural justice principles. Consequently, the court quashed and set aside the impugned show cause notice and the subsequent orders.

Conclusion:
The court concluded that the show cause notice dated 30.09.2003 and the orders dated 28.07.2017 and 24.01.2018 were invalid due to the undue delay and violation of the principles of natural justice. The court quashed and set aside these notices and orders, emphasizing the need for adherence to statutory time limits and fair adjudication processes. The rule was made absolute, and each party was ordered to bear its own costs.

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