2020 (9) TMI 311 - HC - Customs

Validity of Show cause notice issued in 2011 - long pending issue - Reasonable period of limitation for adjudication of case - Mis-declaration of imported goods - imported consignment was found to contain undeclared as well as short declared goods - Section 28(4) of the Customs Act, 1962 - determination of duty or interest under Section 28(8) has not been done within six months or one year as stipulated under Section 28(9) (a) or (b). Whether it would have been possible for the respondents to complete such determination within the time frame fixed or whether they had been prevented from doing so by reason of an impediment or bar, justifying the elapse of time from 22.12.2011 till date excluding the period 31.10.2012 to 25.07.2013, that is, eight (8) years, nine (9) months and counting? HELD THAT - Admittedly, there is no bar, legal or otherwise that stood in the way of completion of adjudication. The interim injunction granted in W.P.No.29833 of 2012 was in force between 31.10.2012 and 25.07.2013 only (268 days). In any event, the Miscellaneous Petitions had come to be dismissed and the injunction vacated on 25.07.2013 for the reason that no notice had been served upon the respondents by the petitioner, either privately or by service through Court. Thus the existence of the injunction between 31.10.2012 and 25.07.2013 was itself not within the knowledge of the respondents and they could well have proceed with the matter. The fact that the petitioner has challenged the SCN only now, in 2020, only indicates to me that the petitioner fully intended to comply with and respond to notices and participate in adjudication proceedings only repeatedly requesting for relied upon and other materials - It is unnecessary to state that an assessee is entitled to all documents, both relied upon as well as unrelied upon including those that were seized in the course of search, in order to enable it to respond to the show cause notice. This is not an unreasonable request. Thus the elapse of time from 2013 till January, 2020 when the show cause notice was challenged does not, in my view, indicate delay and there is no laches on the part of the petitioner to have filed the present Writ Petition challenging the show cause notice. Petition allowed - decided in favor of petitioner.

Issues Involved:
1. Seizure of undeclared and short-declared goods.
2. Issuance and challenge of the show cause notice.
3. Supply of seized documents.
4. Adjudication delay and limitation period under Section 28(9) of the Customs Act.
5. Legal implications of the term "where it is possible to do so."

Issue-wise Detailed Analysis:

1. Seizure of Undeclared and Short-Declared Goods:
The petitioner imported consumer goods as a Power of Attorney holder for two proprietary entities. The consignment imported by one of these entities was found to contain undeclared and short-declared goods, leading to seizure by the Department of Revenue (Intelligence) (DRI) and subsequent searches at the residential premises of the petitioner and the customs broker. Voluminous documents were seized during these searches.

2. Issuance and Challenge of the Show Cause Notice:
A show cause notice dated 22.12.2011 was issued by the DRI under Section 28(4) of the Customs Act, 1962, demanding duty for 84 bills of entry and three Import General Manifests. The petitioner requested copies of the seized documents to furnish a reply, which was denied, leading to summons for a personal hearing. The petitioner challenged the summons in two writ petitions, one of which was dismissed, and the other granted an interim injunction. The petitioner filed another writ petition seeking a quash of the proceedings dated 12.10.2012 and a direction to supply the documents, which was disposed of with directions to the petitioner and respondents.

3. Supply of Seized Documents:
The petitioner and respondents communicated regarding the supply of documents, with the respondents claiming not all documents were available. The petitioner reiterated requests for the documents, and the court directed the supply of all documents, both relied upon and not relied upon, by 31.12.2019. The petitioner filed another writ petition on 03.01.2020 seeking a quash of the show cause notice dated 22.12.2011.

4. Adjudication Delay and Limitation Period Under Section 28(9) of the Customs Act:
The court examined whether the show cause notice dated 22.12.2011 was barred by limitation under Section 28(9) of the Customs Act. The provision mandates the proper officer to determine the amount of duty or interest within six months or one year from the date of notice. The court found no legal or otherwise bar preventing the completion of adjudication within this period, except for an interim injunction in force for 268 days. The court cited various precedents emphasizing the need for adjudication within a reasonable period and concluded that the delay of over eight years was unjustifiable.

5. Legal Implications of the Term "Where it is Possible to do so":
The court interpreted the term "where it is possible to do so" in Section 28(9) of the Customs Act, noting that the legislature intended for determinations to be made within the specified time frame unless genuine reasons prevented it. The court found no proper explanation from the revenue for the delay and cited several judgments where delays in adjudication were held to violate principles of natural justice.

Conclusion:
The court quashed the show cause notice dated 22.12.2011, concluding that the Customs Department failed to proceed with the enquiry and complete the adjudication in time. The writ petition was allowed, and the connected miscellaneous petition was closed.

← Previous Next →