2024 (12) TMI 1208 - HC - Customs

Validity of SCN issued u/s 28(9) of the Customs Act, 1962 - Delay of almost eight years in adjudication of the SCN - HELD THAT - Coming to the facts of this case, the Show Cause Notice dates back to 17th April, 2015. The counter affidavit claims that there was certain re-organisation within the Customs Department and on 12th January, 2016, a Common Adjudication Authority was appointed. Even if the date is reckoned from 12th January, 2016 when the adjudication authority was appointed, the Mangli Impex decision came only on 3rd May, 2016 and the matter has been placed in the callbook on 21st July, 2016. A few months later, it was retrieved on 2nd February, 2017 but again from 2017 till 2023, there can be no reason for not adjudicating the show-cause notice. Four hearing notices have been given during this period. Despite the reply having been filed to the show-cause notice, there has been no adjudication. In the opinion of this Court, there existed no reason for the non-adjudication of the show-cause notice and therefore this Court is of the opinion that the facts do not reveal any glaring impossibility for the Customs Department to deal with the show-cause notice. The impugned show-cause notice dated 17th April, 2015 deserves to be quashed and is set aside - petition allowed.

Issues Involved:

1. Validity of the impugned show-cause notice issued under the Customs Act, 1962.
2. Delay in adjudication of the show-cause notice and its implications under Section 28(9) of the Customs Act, 1962.
3. Interpretation of the phrase "where it is possible to do so" in the context of the Customs Act, 1962.
4. Impact of placing the matter in the callbook on the adjudication process.

Detailed Analysis:

1. Validity of the Impugned Show-Cause Notice:

The petitioner challenged the validity of the show-cause notice dated 17th April 2015, issued by the Directorate of Revenue Intelligence (DRI), which demanded duty along with interest and imposed penalties. The notice was related to the import and trade of car accessories by the petitioner between 2010 and 2013. The petitioner argued that the notice was invalid due to the significant delay in its adjudication, which violated the statutory time limits prescribed under the Customs Act, 1962.

2. Delay in Adjudication of the Show-Cause Notice:

The petitioner contended that there was an unjustifiable delay of almost eight years in the adjudication of the show-cause notice. Section 28(9) of the Customs Act, 1962, prescribes a specific time period for adjudication, which is six months and a maximum of one year. The petitioner argued that the delay could not be justified by the phrase "where it is possible to do so," as the amendment to the Act had removed this phrase, eliminating any window for delay beyond the prescribed period.

The court noted that the delay was attributed to the decision in Mangli Impex Ltd. v. Union of India, which resulted in the matter being placed in the callbook. However, the court found that there was no substantial reason for the delay from 2017 to 2023, as the matter was retrieved from the callbook in February 2017, and several hearing notices were issued without adjudication.

3. Interpretation of the Phrase "Where it is Possible to Do So":

The court examined the interpretation of the phrase "where it is possible to do so" in Section 28(9) of the Customs Act. It referred to previous judgments, including Swatch Group India Pvt. Ltd. v. Union of India, which clarified that the phrase does not permit indefinite delay in adjudication. The legislature intended for the adjudication to be completed within the specified period, and any indifference or lethargy on the part of the authorities cannot be condoned.

The court emphasized that the statutory authority must demonstrate genuine hindrance or impediments in resolving the dispute within the prescribed time. The flexibility provided by the statute is not a license for indefinite delay, and the authorities must act with reasonable speed and dispatch.

4. Impact of Placing the Matter in the Callbook:

The court considered whether placing the matter in the callbook justified the non-adjudication of the notice within a reasonable period. It referred to multiple judgments, including Vos Technologies India Pvt. Ltd. v. The Principal Additional Director General, which held that placing a matter in the callbook does not permit indefinite delay in adjudication.

The court concluded that the facts of the case did not reveal any glaring impossibility for the Customs Department to adjudicate the show-cause notice. The delay was not justified, and the impugned show-cause notice was quashed.

Conclusion:

The court quashed the impugned show-cause notice dated 17th April 2015, finding that the delay in adjudication was unjustified and not permissible under the Customs Act, 1962. The petition was allowed, and the notice was set aside, emphasizing the need for timely adjudication by the authorities.

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