2017 (4) TMI 836 - HC - Customs

Maintainability of SCN - jurisdiction to issue SCN - case of petitioner is that SCN is issued ex-fecie without jurisdiction - Held that - The SCN which was adjudicated earlier but the adjudication order is challenged in Appeal and the Appeal is still pending. Therefore, it is not as if a SCN duly adjudicated and resulting in a finding or a final conclusion against the petitioner before this Court. We do not see how in the present facts and circumstances and peculiar to the petitioner before us he can claim that this is a second SCN. This is a first and substantive SCN to the petitioner. His role has already been set out in the SCN issued to the private limited companies. It is only with a view to get over any technical objections that a separate SCN has been issued to the petitioner. There is, therefore, no impediment in an adjudication of the SCN issued to the petitioner. The SCN against the petitioner be adjudicated in this order - petition allowed.

Issues Involved:
1. Validity and maintainability of the show-cause notice dated 26th August, 2015.
2. Jurisdiction of the authority issuing the show-cause notice.
3. Whether the show-cause notice constitutes a second show-cause notice on the same allegations.
4. Impact of previous adjudications and appeals on the current show-cause notice.
5. Procedural fairness and delay in issuing the show-cause notice.

Detailed Analysis:

1. Validity and Maintainability of the Show-Cause Notice:
The petitioner challenged the show-cause notice dated 26th August, 2015, asserting it was "ex-facie" without jurisdiction. The petitioner argued that the notice was issued after a significant delay of over three years and after substantive adjudications had already taken place. The court, however, found that the show-cause notice was valid and maintainable. It emphasized that the notice was issued before the adjudication against the two private limited companies reached finality. The court noted that the notice was necessary to address technical grounds and ensure completeness in the adjudication process.

2. Jurisdiction of the Authority Issuing the Show-Cause Notice:
The petitioner contended that the authority lacked jurisdiction to issue the show-cause notice. The court disagreed, stating that the notice was issued under Section 124 of the Customs Act, 1962, which provides the necessary jurisdiction. The court highlighted that the petitioner was specifically implicated based on his statements and role in facilitating the importation, thus justifying the issuance of the notice by the relevant customs authorities.

3. Whether the Show-Cause Notice Constitutes a Second Show-Cause Notice on the Same Allegations:
The petitioner argued that the show-cause notice was a second notice on the same allegations, which is impermissible in law. The court rejected this argument, clarifying that the earlier show-cause notices were issued to the private limited companies, not the petitioner. The court distinguished this case from those cited by the petitioner, where second show-cause notices were issued on the same set of allegations after final adjudications. Here, the court found that this was the first substantive show-cause notice addressed to the petitioner, and thus it was not a second notice on the same allegations.

4. Impact of Previous Adjudications and Appeals on the Current Show-Cause Notice:
The petitioner referenced previous adjudications and appeals, including the CESTAT's order and pending appeals, to argue against the current show-cause notice. The court noted that the previous adjudications and appeals were still pending and had not reached finality. Therefore, the court found no impediment in issuing a separate show-cause notice to the petitioner. The court also allowed the petitioner to incorporate observations and findings from the appeals in his reply to the current show-cause notice.

5. Procedural Fairness and Delay in Issuing the Show-Cause Notice:
The petitioner claimed that the delay in issuing the show-cause notice compromised procedural fairness and impartial adjudication. The court acknowledged the delay but emphasized that the notice was necessary to address technical grounds and ensure a comprehensive adjudication. To address the petitioner's apprehensions, the court directed that the appellate authority should first decide the appeals and modification applications related to the private limited companies. Only thereafter should the adjudication of the show-cause notice against the petitioner proceed. This approach was intended to ensure procedural fairness and allow the petitioner to benefit from relevant findings in the appeals.

Conclusion:
The writ petition was disposed of with the court directing that the appellate authority first decide the appeals and modification applications of the private limited companies before proceeding with the adjudication of the show-cause notice against the petitioner. The court clarified that its observations were prima facie and tentative, and it did not express any opinion on the merits of the allegations in the show-cause notice. No order as to costs was made.

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