2024 (9) TMI 713 - HC - Customs

Adjudication of SCN after a period of almost 8 years - Primary ground is that Respondents have not adjudicated the SCN for almost 8 years and, therefore, the impugned SCN is required to be set aside - HELD THAT - The decision of this Court in the case of COVENTRY ESTATES PVT. LTD. VERSUS THE JOINT COMMISSIONER CGST AND CENTRAL EXCISE ANR. 2023 (8) TMI 352 - BOMBAY HIGH COURT has analysed this issue in depth and has held that such delay in adjudication of SCN is required to be quashed. The decision relied upon by Respondents in COLLECTOR OF CENTRAL EXCISE, NEW DELHI VERSUS BHAGSONS PAINT INDUSTRY (INDIA) 2003 (10) TMI 49 - SC ORDER is distinguishable on facts. The justification which is sought in the present case before us for the delay in adjudication of the SCN was not the fact case before the Supreme Court. It is important to note that Section 28 (9) provides for determination of the amount of duty or interest within 6 months/1 year from the date of notice as the case may be with further extension of the same period and subject to the conditions specified in the proviso therein. Therefore, insofar as, the provision with which we are concerned, i.e., Section 28 (9) of the Customs Act, there is an express bar in passing the order. Petition allowed.

Summary

Issues Involved:
1. Delay in adjudication of Show Cause Notice (SCN).
2. Non-communication of transfer of SCN to "call book".
3. Applicability of precedents and statutory provisions.

Detailed Analysis:

1. Delay in Adjudication of Show Cause Notice (SCN):
The petitioner challenged the SCN issued on 10th March 2015 by the Directorate of Revenue Intelligence (DRI) which was sought to be adjudicated after almost 8 years. The petitioner argued that the delay in adjudication necessitated the quashing of the SCN. The petitioner cited more than 30 decisions where similar delays led to the quashing of SCNs. The court noted that the petitioner had not been informed about the transfer of the case to the "call book," which was a justification provided by the respondents for the delay. The court emphasized that the respondents were duty-bound to inform the petitioner about the transfer, which they failed to do.

2. Non-communication of Transfer of SCN to "Call Book":
The court found that the petitioner was not informed about the transfer of the SCN to the "call book." The respondents did not provide any proof of such communication. The court referred to previous judgments, including ICICI Home Finance Company Limited vs. The Union of India, where non-communication of the transfer of SCN to the "call book" was considered fatal to the respondents' case. The court reiterated that procedural fairness and the principles of natural justice were violated due to the non-communication, making the delay unjustifiable.

3. Applicability of Precedents and Statutory Provisions:
The court examined the applicability of Section 28(9) of the Customs Act, which mandates the determination of duty or interest within a specified period. The court noted that the provision was not in existence at the time of the SCN issuance but emphasized that the respondents were still duty-bound to inform the petitioner about the transfer to the "call book." The court also distinguished the respondents' reliance on the Supreme Court's decision in Collector of Central Excise, New Delhi vs. Bagsons Paints Industry (India), stating that the facts of the present case were different and the cited decision did not concern the provisions of Section 28(9) of the Customs Act.

Conclusion:
The court allowed the petition, quashing the impugned SCN dated 10th March 2015 and the letter dated 24th November 2022. The court ruled that the respondents' failure to communicate the transfer of the SCN to the "call book" and the inordinate delay in adjudication violated the principles of natural justice and procedural fairness. The rule was made absolute in favor of the petitioner.