2024 (1) TMI 646 - HC - Customs

Validity of SCN issued under Section 124 of the Customs Act, 1962 - consignments imported / shipped, which reached Chennai on various dates - show cause notices were issued almost 12 years after the consignments have been imported / shipped - HELD THAT - Any proceedings initiated or completed after a reasonable period would suffer from the vice of arbitrariness thereby falling foul of Article 14 of the Constitution of India - though the limitation prescribed under Section 110 of the Act may not be applicable to proceedings under Section 124 of the Act. Nevertheless, the proceedings under Section 124 of the Act ought to be initiated within a reasonable period. Now on gleaning through the provisions of the Act, the largest period for taking action is provided under Section 28 of the Act for recovery of duty in case of fraud, suppression or wilful misstatement. Keeping the scheme of the Act in mind it appears to me that impugned proceedings under Section 124 of the Act, 12 years after the date of the subject import cannot stand the scrutiny of reasonableness/arbitrariness. Thus, it leaves no room for any doubt in my mind that the impugned proceedings under Section 124 of the Act, 12 years after the import is liable to be set aside on the ground of unreasonable delay. Thus the impugned proceedings are set aside - petition disposed off.

Summary

Issues involved:
The judgment deals with the issue of the validity of notices issued under Section 124 of the Customs Act, 1962, in relation to consignments imported/shipped to Chennai, which were issued almost 12 years after the import, raising concerns of arbitrariness and violation of Article 14 of the Constitution of India.

Issue 1: Reasonableness of Delay in Issuing Notices
The petitioner argues that the notices issued 12 years after the import are arbitrary and unreasonable, violating the principle of reasonableness in state actions. The absence of a specific limitation under Section 124 of the Act does not justify such prolonged delay, as all state actions must pass the test of reasonableness.

Issue 2: Pre-shipment Certificate Requirement
The respondent contends that a pre-shipment certificate is mandatory for importing metal scrap, as per specific provisions in the Handbook of Procedures and relevant circulars. The certification agency must confirm the absence of hazardous materials in the consignment, emphasizing the importance of complying with these requirements.

Issue 3: Legal Precedents and Lack of Limitation
Citing Supreme Court judgments, the respondent argues that in the absence of an express limitation period under Section 124 of the Act, proceedings cannot be restricted by time constraints. The court refrains from delving into the merits of the case but highlights the necessity of reasonable timelines for state actions.

Judicial Precedents and Reasonableness
The judgment references various legal precedents emphasizing the need for state actions to be taken within a reasonable period, even in the absence of specific statutory limitations. Instances where delays in adjudication were deemed unreasonable and illegal are cited to support the argument that prolonged delays can vitiate proceedings and disturb the rights of citizens.

Conclusion
Based on the reasoning from legal precedents and the principle of reasonableness, the court sets aside the impugned proceedings under Section 124 of the Act, initiated 12 years after the import, due to unreasonable delay. The judgment disposes of the writ petitions, with no costs imposed, and closes the connected miscellaneous proceedings.