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2024 (11) TMI 418 - HC - CustomsExtension of the limitation period under the first proviso to Section 28(9) of the Customs Act, 1962 - whether the proceedings initiated in the Show Cause Notice dated 28.09.2022 can be continued in the light of the extension granted by the Chief Commissioner of Customs, Chennai Customs Zone, Custom House, Chennai on 07.05.2024 under the first proviso to Section 28(9) of the Customs Act, 1962.? HELD THAT - A reading of Section 28(9) (a) and (b) of the Customs Act, 1962 makes it clear that at the expiry of six months or one year as the case may be, from the date of Show Cause Notice, the concerned proper officer who was to adjudicate the Show Cause Notice would have become functus officio. It is only thereafter, any senior officer in rank to the proper officer can extend the period by six months or one year as is stipulated in Section 28(9)(a) and (b) of the Customs Act, 1962 under proviso to it. The question of granting extensions under the first proviso to Section 28(9) of the Customs Act, 1962 will arise only after the limitation for passing Order determining duty or interest, as the case may be, within the time stipulated under Section 28(9) of the Customs Act, 1962 had expired. Therefore, only after the period of six months or one year, as the case may be, the senior officer could extend the period by another six months or one year specified in Clause (a) and Clause (b) under the first proviso to Section 28(9) of the Customs Act, 1962. The second proviso to Section 28(9) of the Customs Act, 1962, further contemplates abatement of the proceedings if after the extension period under the first proviso to Section 28(9) of the Customs Act, 1962, no Orders are passed. Clarification of the Commissioner of Customs, NS-IV, Mumbai Customs Zone-II, Nhava Sheva, Raigad-400 707 in Standing Order was issued in the wake of amendment to Section 28(9) of the Customs Act, 1962 vide Finance Act, 2018 (13 of 2018). The clarification issued therein itself is a non-application of mind as the second proviso to Section 28(9) of the Customs Act, 1962 deals with abatement of the proceedings after extension is granted. It is irrelevant. The argument of appellant that the standing orders have been issued by various Commissionerates for the procedures to be adopted for processing of adjudication files is merely a guideline for ensuring that there is no lapsing of proceeding under Section 28 of the Customs Act, 1962. In this case, the appellant has not been filed a reply to the Show Cause Notice dated 28.09.2022. Only, a request was made by the appellant for cross-examining the persons named in the Show Cause Notice dated 28.09.2022 as per the decisions of the Hon'ble Supreme Court in Andaman Timber Industries 2015 (10) TMI 442 - SUPREME COURT and in M/s.Kanungo Co. 1972 (2) TMI 35 - SUPREME COURT , long after the receipt of Show Cause Notice dated 28.09.2022 on 10.04.2023. As mentioned above, the request was rejected by the Deputy Commissioner of Customs (Adjudication), Chennai-III vide a communication even though the said Officer was not concerned with the adjudication of the Show Cause Notice dated 28.09.2022. Thus, the proceedings got derailed for further illegality by the said Officer. The decision taken to file an appeal before the High Court was transferred on 16.06.2023. The file was returned by the Commissioner of Customs, Chennai II Import Commissionerate, Chennai, on 29.04.2024 as the limitation for filing an appeal against CESTAT Order dated 26.05.2023 had expired.Therefore, a decision appears to have been rightly taken on 29.04.2024 for getting extension. It is also strange to note that no steps was taken by the Customs Department to file appeal with an application for condonation of delay. That apart, since the Order of the Deputy Commissioner of Customs (Adjudication), Chennai-III was without jurisdiction, the correct remedy that was available was to file a Writ Petition under Article 226 of the Constitution of India.
Issues Involved:
1. Validity of the Show Cause Notice dated 28.09.2022 under Section 28(9) of the Customs Act, 1962. 2. Extension of the limitation period for adjudication under the first proviso to Section 28(9) of the Customs Act, 1962. 3. Jurisdictional errors in the adjudication process and appeal procedures. 4. Alleged complicity and procedural lapses by Customs Department officials. Detailed Analysis: 1. Validity of the Show Cause Notice: The appellant challenged the validity of the Show Cause Notice dated 28.09.2022, arguing that it was time-barred under Section 28(9) of the Customs Act, 1962. The appellant contended that the limitation period expired on 27.09.2023, rendering the proceedings initiated by the Principal Commissioner of Customs void. The appellant sought to quash the notice on these grounds, asserting that the proceedings were deemed concluded under the second proviso to Section 28(9) of the Act. 2. Extension of Limitation Period: The respondent Customs Department countered that the limitation period was extended to 27.09.2024 by an order dated 07.05.2024 from the Chief Commissioner of Customs, Chennai. This extension was purportedly granted under the first proviso to Section 28(9) of the Customs Act, 1962, which allows a senior officer to extend the adjudication period by an additional year under certain circumstances. The court examined whether this extension was validly granted after the initial period had expired. 3. Jurisdictional Errors: The court identified several jurisdictional errors in the adjudication process. The appellant's request for cross-examination was initially rejected by an officer not competent to adjudicate the Show Cause Notice, leading to an appeal before the CESTAT, which was entertained without jurisdiction. The court noted that the correct appellate remedy should have been before the Appellate Commissioner under Section 128 of the Customs Act, 1962, not the CESTAT. Consequently, the CESTAT's order allowing cross-examination was deemed a nullity. 4. Alleged Complicity and Procedural Lapses: The court expressed concerns over potential complicity and procedural lapses by Customs Department officials, suggesting an attempt to allow the appellant to evade liability. Disciplinary action was initiated against two officers, but the court stressed the need for a comprehensive probe into the actions of all involved officials, including senior officers. The court directed the Principal Commissioner of Customs to refer the matter to the Vigilance Department for further investigation and to report back within six months. Conclusion: The court upheld the Impugned Order dated 08.08.2024, dismissing the writ petition and directing the respondent to complete the adjudication proceedings expeditiously. It emphasized that the time taken before various forums should be excluded from the limitation period computation. The court dismissed the writ appeal as infructuous in light of the extension granted and underscored the importance of adhering to statutory safeguards and jurisdictional mandates in customs adjudication processes.
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