2022 (8) TMI 345 - HC - Customs

Jurisdiction to demand duty under Section 28 of the Customs Act, 1962 - whether the SCN, not having been adjudicated by Respondent No.2 and/or his predecessors for a period of 24 years, although Petitioners have filed replies and attended personal hearing, has become stale - Principles of natural justice - HELD THAT - Where show cause notices were issued but adjudicating order has not been passed for such a long period, in this case almost 25 years, such show cause notices cannot be kept pending. Such delayed adjudication wholly attributable to the revenue would be in contravention of procedural fairness and thus violative of the principles of natural justice. The action, which is unfair, and in violation of principles of natural justice cannot be sustained. Various judicial pronouncements have taken a view that the weight of judicial pronouncements leaned in favour of quashing the proceedings if there had been an undue delay in deciding the same. In the absence of any period of limitation it is incumbent upon every authority to exercise the power of adjudication post issuance of show cause notice within reasonable period. The view expressed by a division bench of this Court in SUSHITEX EXPORTS (INDIA) LTD. ORS. VERSUS THE UNION OF INDIA ANR. 2022 (1) TMI 777 - BOMBAY HIGH COURT . After 25 years, Petitioners, having approached this Court impugning the show cause notice, cannot be made to suffer an order to facilitate conclusion of the proceedings which, because of the inordinate delay in its conclusion, is most likely to work out prejudice to them. Had Petitioners not invoked the jurisdiction of this Court, the show cause notice would have continued to gather dust. It is concluded that not only the impugned show cause notice should be quashed, Petitioners are also certainly entitled to refund of amount of Rs.30,00,000/- - application disposed off.

Summary

Issues Involved:

1. Jurisdiction of Respondent No.1 to demand duty under Section 28 of the Customs Act, 1962.
2. Delay in adjudication of the show cause notice issued to the Petitioners and its implications.

Issue-wise Detailed Analysis:

1. Jurisdiction of Respondent No.1:
The Petitioners challenged the jurisdiction of Respondent No.1 to demand duty under Section 28 of the Customs Act, 1962. However, the Petitioners did not press this ground during the hearing, and no submissions were made on this issue.

2. Delay in Adjudication of Show Cause Notice:
The primary contention of the Petitioners was the undue delay in adjudicating the show cause notice issued on 27/06/1997. The Petitioners argued that the delay of 24 years without any adjudication rendered the notice stale and violative of the principles of natural justice.

- Background and Timeline:
- In March 1999, Petitioner No.1 took over the business of M/s. Rachana Enterprises.
- The show cause notice was issued on 27/06/1997, alleging inflated quantities of Poly Filament Yarn (PFY) in export documents and demanding duty with interest, fines, and penalties.
- Petitioners replied to the notice on 07/07/1997, disputing the test report and requesting a re-test and certain documents, which were not supplied.
- Over the years, Petitioners made multiple requests for the return of seized documents, re-tests, and personal hearings, which were attended but did not lead to any adjudication.

- Arguments by Petitioners:
- The delay of 24 years without adjudication was unconscionable and violated procedural fairness.
- The prolonged delay compromised the Petitioners' defense, causing mental agony and harassment.
- The Petitioners relied on several judgments to support their contention that such delayed adjudication was unfair and violative of natural justice.

- Arguments by Respondents:
- The delay was attributed to administrative reasons and the case being kept in the call book due to pending related cases and numerous noticees seeking adjournments.
- The Respondents admitted that Petitioners were not informed about the case being kept in the call book.

- Court's Analysis:
- The Court referred to several judgments establishing that undue delay in adjudication, especially without informing the affected party, contravenes procedural fairness and natural justice.
- The Court emphasized that the Petitioners, having approached the Court, should not suffer due to the inordinate delay, which was solely attributable to the Respondents.

Judgment:
- The Court quashed the impugned show cause notice dated 27/06/1997.
- The Respondents were directed to refund the amount of Rs.30,00,000/- deposited by the Petitioners in August 1995, with interest at 12% p.a. from the date of deposit until the date of refund.
- The refund was to be made within eight weeks of receiving the certified copy of the order.

Conclusion:
The Court allowed the Petition, setting aside the show cause notice and ordering a refund with interest, highlighting the importance of timely adjudication and adherence to principles of natural justice.