2019 (7) TMI 1307 - HC - Customs

Jurisdiction - power of DRI to issue SCN - non adjudication of SCN - scope of amended Sub-section (9) and newly inserted (9A) of Section 28 w.e.f. 28.03.2018 - retrospective or retroactive - HELD THAT - From the bare perusal of amended Sub-section (9) and newly inserted (9A) of Section 28 w.e.f. 28.03.2018, it is evident that authorities are bound to pass order within one year from the date of Show Cause Notice in cases of Custom Duty not paid/short levied and said period may be extended for a further period of one year by any officer senior in rank to the proper officer having regard to the circumstances under which proper officer was prevented from passing an order before the expiry/lapse of the initial stipulated one year. Still further in case any circumstance as noticed in Sub-section (9A) exists, the extended period of one year provided in Sub Section 9 shall commence from the date when such reason ceases to exist provided the proper officer informs the person concerned of the reason for such non determination of amount of duty or interest under Sub Section 8. The only outcome of non adjudication by the proper officer within one year without invoking of Sub-section (9A) or within the extended period of one year, if any, by a senior officer in terms of the first proviso to Sub Section (9) would be lapsing of notice, as provided in the second proviso to the Sub Section (9) of the amended Section 28 of the 1962 Act. The contention of the counsel for the respondents that amended Section 28 is not applicable in the case of Petitioners deserves to be rejected because amendment is not retrospective but it is certainly retroactive. Mandatory limitation would be applicable treating pending show cause notice as if issued on 29/03/2018. In the present writ petitions, the Respondent-DRI issued Show Cause Notice on 20.02.2009 ( P-6 ) 19.03.2009 ( P-9 ) for short levied custom duty and interest due to mis-declaration of description and value of goods relating to the two partnership firms/petitioners and at that point of time the proper officer was required to pass an order within one year i.e. By 2010 where it was possible to do so. However after the Amendment w.e.f. 29.03.2018, the Respondent was bound either to pass an order within one year i.e. by 28.03.2019 in terms of clause (b) of Sub Section (9) of amended Section 28 or within the extended time of one year in terms of first proviso , which is concededly not the case at hand or the extended period in terms of requirement of Sub Section (9A) which also is not the case at hand - the inevitable conclusion is that the show cause notices ( P-6 ) and ( P-9 ) in respective writ petitions will have to be accepted as lapsed. Petition allowed.

Summary

Issues Involved:
1. Jurisdiction of the Directorate of Revenue Intelligence (DRI) to issue Show Cause Notices.
2. Limitation and delayed adjudication of the Show Cause Notices.

Detailed Analysis:

1. Jurisdiction of the Directorate of Revenue Intelligence (DRI) to issue Show Cause Notices:
The petitioners, partnership firms importing non-edible oil, challenged the Show Cause Notices issued by the DRI on the grounds that the DRI officials were not "proper officers" as per Section 2(34) of the Customs Act, 1962. The respondent DRI justified the issuance of the notices, stating that the functions of a proper officer had been assigned to DRI officials through the Customs (Amendment and Validation) Act, 2011. Despite this, the court found that the DRI's jurisdiction to issue these notices was under question, especially since the Supreme Court had issued notices in related cases, indicating ongoing legal uncertainty.

2. Limitation and delayed adjudication of the Show Cause Notices:
The petitioners also argued that the Show Cause Notices were not adjudicated within a reasonable period, citing the amended Section 28(9) of the Customs Act, 1962, which mandates adjudication within one year from the date of notice, extendable by one more year under specific conditions. The court referenced its previous judgment in GPI Textiles Ltd. v. UOI, which quashed a Show Cause Notice under similar circumstances due to unreasonable delay. In the present case, the Show Cause Notices issued in 2009 remained unadjudicated for over ten years, far exceeding any reasonable period. The court emphasized that, as per the amended Section 28, the proper officer was bound to pass an order within one year from the date of the Show Cause Notice, or within an extended period if justified, which was not done here.

Retroactive Application of Amended Section 28:
The court applied the principle of retroactive amendment, treating the pending Show Cause Notices as if issued on 29/03/2018, the date when the amendment came into force. This meant that the respondents were required to adjudicate the notices by 28/03/2019, which they failed to do. The court cited previous judgments, including Ballarpur Industries Ltd. v. State of Punjab, to support the retroactive application of procedural amendments, concluding that the notices had lapsed due to non-compliance with the amended provisions.

Conclusion:
The court allowed the petitions, quashing the Show Cause Notices dated 19/03/2009 and 20/02/2009, on both counts: the application of the GPI Textiles judgment and the retroactive application of the amended Section 28 of the Customs Act, 1962. The decision underscores the necessity for timely adjudication of Show Cause Notices and clarifies the jurisdictional authority of the DRI under the amended legal framework.