2025 (1) TMI 1105 - HC - Customs

Challenge to SCN - time limitation - seeking declaration that proceedings initiated under the SCN by Respondent No. 2 Principal Commissioner of Customs ICD Tughlakabad New Delhi to be barred by limitation under Section 28 (9) of the Customs Act 1962 - HELD THAT - The issue raised in the petition is no longer res-integra. Section 28 (9) of the Act unamended and amended have been considered in detail by the Coordinate Benches of this Court in Swatch Group India Pvt. Ltd. 2023 (8) TMI 864 - DELHI HIGH COURT as also M/s Vos Technologies India Pvt. Ltd. v. The Principle Additional Director General Anr. 2024 (12) TMI 624 - DELHI HIGH COURT . All the issues which have been raised by the Respondents now stand adjudicated. It was held in Swatch Group India Pvt. Ltd. that In the absence of any ground that it was not possible for the officer to determine the amount of duty within the prescribed period the impugned SCN has lapsed and cannot be adjudicated. The impugned SCN which was issued way back in 2008 due to repeated placing in the call book has not been adjudicated for so long. Repeated placing and removing from the call book is not a valid justification for non-adjudication of the impugned SCN for about 15 years. Moreover the gaps between the said periods is also inexplicable. Hearing notices have been given to the Petitioners but there is no reason for non-adjudication of the impugned SCN for long period. Conclusion - The SCN was quashed due to being barred by limitation and the justification of delay due to call book placement was rejected. Petition allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the Show Cause Notice (SCN) issued by the Directorate of Revenue Intelligence (DRI) is barred by limitation under Section 28(9) of the Customs Act, 1962.
Whether the repeated placement of the SCN in the call book justifies the delay in adjudication.
Whether the phrase "where it is possible to do so" in Section 28(9) allows for indefinite delay in adjudication.
Applicability of the amended provisions of Section 28(9) and 28(9A) of the Customs Act, 1962.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Limitation under Section 28(9) of the Customs Act, 1962

Relevant legal framework and precedents: Section 28(9) of the Customs Act stipulates a six-month period for adjudication of SCNs, extendable to one year. The amended provision removes the phrase "where it is possible to do so" and introduces Section 28(9A) for specific exceptions.
Court's interpretation and reasoning: The Court held that the phrase "where it is possible to do so" does not permit indefinite delays. It emphasized the need for expeditious resolution and the detrimental impact of delays on taxpayers and the exchequer.
Key evidence and findings: The SCN was issued in 2008 and remained unadjudicated for 15 years, primarily due to its repeated placement in the call book.
Application of law to facts: The Court applied the principles from previous judgments, concluding that the SCN lapsed due to the delay, as no valid reasons justified the non-adjudication within the prescribed period.
Treatment of competing arguments: The Department's reliance on the phrase "where it is possible to do so" was rejected, as the Court found no material evidence to justify the delay.
Conclusions: The SCN was quashed as it was barred by limitation under Section 28(9) of the Act.

Issue 2: Justification of Delay due to Call Book Placement

Relevant legal framework and precedents: The Court referred to multiple precedents establishing that placement in the call book does not justify prolonged delays.
Court's interpretation and reasoning: The Court found that repeated placements in the call book without adjudication are not valid reasons for delay.
Key evidence and findings: The SCN was placed and removed from the call book multiple times, contributing to the delay.
Application of law to facts: The Court concluded that the Department failed to provide valid reasons for the delay, rendering the SCN invalid.
Treatment of competing arguments: The Department's argument that call book placement justified the delay was dismissed due to lack of substantive reasons.
Conclusions: The delay was unjustified, leading to the quashing of the SCN.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "The mention of the words, 'where it is not possible to do so', in our opinion, does not enable the Department to defer the determination of the notices for an indeterminate period of time."
Core principles established: The Court reiterated the necessity for timely adjudication of SCNs and the limited scope for delay under Section 28(9).
Final determinations on each issue: The SCN was quashed due to being barred by limitation, and the justification of delay due to call book placement was rejected.

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