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2022 (12) TMI 323 - HC - CustomsViolation of principles of natural justice - delay in adjudication of show cause notice - whether the Respondent Nos. 1 and 2 were justified in law by keeping the adjudication of the show cause notice pending for a period of 9 years and that whether they were justified in reviving the show cause notice? HELD THAT - Perusal of the show cause notice shows that the breach alleged for initiating action for demanding the forgone import duty was on the ground of irregular exports by the exporters and breach of the provisions committed by the exporters. It is not in dispute that the Petitioner had promptly replied the show cause notice well within time in the year 2014 itself. It is further not in dispute that the Petitioner was never intimated in respect of any adjudication of the show cause notice and/or any decision of keeping the adjudication pending. Thus, the Petitioner is justified in submitting that the Petitioner was under bonafide belief that the Respondents were not interested in adjudicating the show cause notice and that the same was dropped. There are sufficient merit in the submissions made on behalf of the Petitioner that delay in adjudication of the show cause notice constitutes breach of principle of natural justice. In the present case, show cause notice issued in the year 2013 was replied by the Petitioner well within time in the year 2014 itself. The Petitioner has specifically pleaded that the previous Director of the Petitioner, who was looking after the day to day management including the import of goods expired on 19th May 2019 and that no other person was aware about the proceedings of the show cause notice. There is no dispute that the Petitioner was never intimated with respect to adjudication on the show cause notice or the same being kept in the call book - Petitioner is also right in contending that even otherwise pendency of proceedings was not in respect of the Petitioner. Hence it is obvious that revival of show cause notice will seriously prejudice the Petitioner. In the present case, reasons given by the Respondents for the delay caused in seeking to revive the show cause notice do not constitute any reasonable ground and the delay caused is not sustainable, as the same is in breach of the principles of natural justice. Though in Affidavit-In-Reply it is sought to be contented that the period of limitation prescribed by the amending Act, 2018 is not applicable to the present show cause notice of the year 2013, nothing was argued before us in support of this contention - even otherwise the powers of such nature of adjudicating the show cause notice are required to be exercised within reasonable time. There are no justification for the inaction on the part of the Respondents for keeping the adjudication of the show cause notice pending and for seeking revival of the same after a period of 9 years - the show cause notice impugned in the Petition is required to be quashed - petition allowed.
Issues Involved:
1. Validity of the show cause notice issued by the Additional Director General, Directorate of Revenue Intelligence. 2. Delay in adjudication of the show cause notice. 3. Principles of natural justice in the context of delayed adjudication. 4. Legal precedents regarding delay in adjudication of show cause notices. 5. Justification provided by Respondents for the delay. 6. Applicability of Section 28(9) of the Customs Act, 1962. Detailed Analysis: 1. Validity of the Show Cause Notice: The Petitioner challenged the Show Cause cum Demand Notice No. DRI F.No.VIII/DRI/LZU/26/17/EASTERN AGENCIES/2012/724 dated 26th September 2013, issued by the Additional Director General, Directorate of Revenue Intelligence. The notice demanded import duty foregone amounting to Rs. 1,66,03,427/- under Section 28 of the Customs Act, 1962, along with interest under Section 28AA/28AB of the Customs Act, 1962. The notice was based on information that several exporters had made irregular exports and obtained DFIA licenses to get undue benefits of import duty exemption. 2. Delay in Adjudication of the Show Cause Notice: The adjudication of the show cause notice was pending for almost 9 years. The Petitioner responded to the notice in January 2014, stating that they had acquired the DFIA licenses by way of transfer for valuable consideration and were entitled to import the goods specified in the licenses. The Petitioner was called for a personal hearing only in August 2022, leading to the filing of the present Petition. 3. Principles of Natural Justice in the Context of Delayed Adjudication: The Petitioner argued that the delay in adjudication was arbitrary and in breach of the principles of natural justice. According to Section 28(9) of the Customs Act, 1962, a show cause notice should be adjudicated within six months in normal cases and within one year in cases involving collusion, willful misstatement, or suppression of facts. The prolonged delay without any communication led the Petitioner to believe that the Respondents had dropped the proceedings. 4. Legal Precedents Regarding Delay in Adjudication of Show Cause Notices: The Petitioner relied on various judgments to support their contention that prolonged delay in adjudication warrants quashing of the show cause notice. Notable cases cited include: - Raymond Limited v Union of India (2019(368) E.L.T. 481(Bom.)): Delay in adjudication amounts to breach of principles of natural justice. - Premier Ltd v Union of India (2017 (354) E.L.T. 365(Bom.)): No vested right in prolonging the proceeding; delay leads to quashing of the notice. - Hindustan Lever Limited v. Union of India (2011 (264) E.L.T. 173 (Bom.)): Authorities must exercise power within a reasonable period. - Other judgments cited include Parle International Ltd v Union of India (2021 (375) E.L.T. 633 (Bom.)), Sanghvi Reconditioners Pvt. Ltd v Union of India (2018 (12) G.S.T.L.290 (Bom.)), and several others. 5. Justification Provided by Respondents for the Delay: The Respondents contended that the delay was due to the need for the validity of the impugned DFIA licenses to be decided by DGFT, Kanpur. They argued that the cases were kept in the call book pending the decision of DGFT and subsequent legal challenges. They also contended that the statutory provision for informing the noticee about the reason for non-determination of duty was only enacted as per the Finance Act, 2018, and thus was not applicable to the 2013 notice. 6. Applicability of Section 28(9) of the Customs Act, 1962: The Respondents argued that the provisions of Section 28(9) of the Customs Act, 1962, which prescribe a time limit for adjudication, were not applicable to the present case as the show cause notice was issued before the amendment in 2018. However, the court found this argument unconvincing, emphasizing that powers of adjudication should be exercised within a reasonable time even in the absence of a specific statutory time limit. Conclusion: The court concluded that the delay in adjudication of the show cause notice was unreasonable and unjustified, constituting a breach of the principles of natural justice. The court quashed and set aside the show cause notice and prohibited the Respondents from taking any further steps pursuant to the notice. The court emphasized that authorities are obligated to adjudicate show cause notices with expediency and that prolonged delays without justifiable reasons violate procedural fairness. Order: 1. The show cause notice No. DRI F. No. VIII/DRI/LZU/26/17/EASTERN AGENCIES/2012/724 dated 26.09.2013 is quashed and set aside. 2. The Respondents are prohibited from taking any further steps or proceeding pursuant to or in furtherance of the impugned show cause notice. 3. No order as to costs.
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