9911796707
TMI Blog2025 (4) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... bank guarantee amounting to Rs. 4.10 crore. The appellant has been directed to pay redemption fine of Rs. 1,00,00,000/- under section 125 of the Customs Act in lieu of confiscation. The redemption of the Aircraft was, however, permitted only upon payment of duty, interest and penalty by the importer and fine by the appellant. For this purpose, the bank guarantee executed at time of provisional release of the aircraft has to be encashed; and (ii) Penalty of Rs. 25,00,000/- upon the appellant under section 112 (a) of Customs Act. 2. The appellant is the owner of an aircraft called Embraer Phenom 100 [the Aircraft]. This Aircraft was leased to Aviators for operating the same in India and an agreement dated 06.05.2011 was executed. Aviators filed a Bill of Entry dated 24.06.2011 for assessment and clearance of the Aircraft for home consumption and claimed benefit of a Notification dated 01.03.2002, as amended by Notification dated 01.03.2011 [the Notification]. The Aircraft was assessed to concessional rate of 2.5% duty under the said Notification based on the following documents submitted by Aviators: (i) No Objection Certificate issued by the Office of the Directorate General of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding Aviators, who had claimed benefit under the Notification on import of aircrafts. 10. On 14.03.2013, the Aircraft was seized under section 110 of the Customs Act under the purported belief that the Aircraft was liable for confiscation under sections 111 (d) and 111 (o) of the Customs Act. 11. Subsequently, the seized Aircraft was provisionally released to the appellant by the Commissioner of Customs (Import and General), New Customs House New Delhi, based on a bond and bank guarantee of Rs. 4.10 crores given by the appellant. 12. However, a show cause notice dated 31.07.2013 was issued to Aviators, SSL and the appellant seeking to deny the benefit of the Notification. The show cause notice also proposed to recover differential duty of Rs. 2,76,26,309/- on the imported Aircraft from Aviators; Rs. 27,86,890/- on the imported spare parts from Aviators; and Rs. 27,86,890/- on the imported Aircraft from Aviators and SSL. It was also alleged that the imported Aircraft and the imported spare parts were liable to confiscation under sections 111 (o) and 111 (d) of the Customs Act. The appellant was also called upon to show cause as to why redemption fine under section 125 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied with for the import of the Aircraft; (ii) In any view of the matter, the Aircraft was not used for any purpose other than for providing Non-Scheduled Operator Passenger Permit service. There is no post import condition in the Notification and, therefore, the Aircraft cannot be held liable to confiscation. In this connection, reliance has been placed on the decision of the Tribunal in Commissioner of Customs, New Delhi vs. Sameer Gehlot 2011 (263) E.L.T. 129 (Tri.-Del.), which decision was affirmed by the Supreme Court in Commissioner of Customs (Preventive), New Delhi vs. Airmid Aviation Services (P) Ltd. 2022 (381) E.L.T. 5 (S.C); (iii) The appellant cannot be held liable to pay duty, interest, penalty and fine; and (iv) The extended period of limitation under section 28 (4) of the Customs Act could not have been invoked in the facts and circumstances of the case. 17. Shri Gurdeep Singh, learned special counsel appearing for the department assisted by Shri Rakesh Kumar, learned authorized representative, however, supported the impugned order and submitted that it was not possible to adjudicate the show cause within one year and to substantiate this submission extensive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls to determine within such extended period, such proceeding shall be deemed to have concluded as if no notice had been issued. 28 (9A) Notwithstanding anything contained in sub-section (9), where the proper officer is unable to determine the amount of duty or interest under sub-section (8) for the reason that - (a) an appeal in a similar matter of the same person or any other person is pending before the Appellate Tribunal or the High Court or the Supreme Court; or (b) an interim order of stay has been issued by the Appellate Tribunal or the High Court or the Supreme Court; or (c) the Board has, in a similar matter, issued specific direction or order to keep such matter pending; or (d) the Settlement Commission has admitted an application made by the person concerned, the proper officer shall inform the person concerned the reason for non-determination of the amount of duty or interest under sub-section (8) and in such case, the time specified in sub-section (9) shall apply not from the date of notice, but from the date when such reason ceases to exist" 22. In the present case, the provisions of sub-section (4) of section 28 of the Customs Act had been involved. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Shamanur. Sugars Ltd. and M/s. Innovale Investments Pte. Ltd. are hereby jointly and severally called upon to show cause to the adjudicating authority, viz., Deputy Commissioner of Custom, Air Cargo Complex, Near CSI Airport, Mumbai, within 30 days of the receipt of the notice as to why:- (i) the benefit of exemption contained in Notification No. 12/2012-Cus dated 17.03.2012 and 12/2012-CE dated 17.03.2012 should not be denied to the spare parts of the aircraft imported vide various Bills of Entry mentioned in Annexure 'C'. (ii) the total Customs duty amounting to Rs. 3,76,888/- (Rupees Three Lakhs Seventy Six Thousand Eight Hundred and Eighty Eight only) actually payable but for the aforesaid exemption in respect of the said aircraft (detailed in Annexure 'C'), should not be recovered in terms of respective undertakings given at the time of their importations, read, with Section 142 (2) of the Customs Act, 1962. The above duty is also recoverable under Section 28 along with applicable interest as per Section 28AA of the Customs Act, 1962. (iii) the said spares of the aircraft totally valued at Rs. 21,00,092/- (Rupees Twenty One Lakhs and Ninety Two only) as detailed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion only on 01.04.2022 after amendments were made in the Customs Act. 26. The issue, therefore, that requires determination is whether the department can take advantage of expression "where it is possible to do so" for not adjudicating the show cause notice within one year. 27. Learned senior counsel for the appellant submitted that the department has not been able to substantiate that the adjudicating authority was prevented by "such circumstances or insurmountable exigencies" from concluding the adjudication proceedings within the stipulated period contemplated under sub-section (9) of section 28 of the Customs Act. 28. The show cause notice was required to be adjudicated within one year from the date of notice, as contemplated under sub-section (9) of section 28 of the Customs Act. The records indicate that it was only on 20.12.2013 that a common adjudication authority was appointed to adjudicate the show cause notice. If the appellant failed to file a reply to the show cause notice within thirty days from the date of receipt of show cause notice, nothing prevented the adjudicating authority from adjudicating the show cause notice within the stipulated period of one year on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e adjudicating authority, without there being any plausible explanation, failed to adhere to the time limit set out in section 28 (9) of the Customs Act for adjudicating the show cause notice. In fact, sincere efforts were not made by the adjudicating authority to adjudicate the show cause notice within the stipulated time. 32. Sub-section (9) of section 28 of the Customs Act provides that the proper officer shall determine the amount of duty within one year from the date of notice. Though, a certain degree of flexibility has been granted to the proper officer because of the phrase "where it is possible to do so", but this would only be in circumstances where there are insurmountable exigencies that would impede the adjudication of the show cause notice. The purpose for which the legislature limited the time within which the show cause notice has to be adjudicated has to be appreciated and it cannot work to the detriment of the assessee or the interest of a exchequer. 33. Sub-section (9) of section 28 of the Customs Act, as it stood at the relevant time prior to the amendments incorporated on 29.03.2018, came up for interpretation before the Delhi High Court in Swatch Group India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same is not practicable/possible the period can be extended. The phrase 'where it is possible to do so' would only mean that wherever it is not practicable/possible to do certain act, the period can be extended. The same, however, cannot be an endless period without any plausible justification." (emphasis supplied) 34. The Delhi High Court then relied upon an earlier decision of the Delhi High Court in Sundar System Pvt. Ltd. vs. Union of India 2020 (33) G.S.T.L. 621 (Del.) and observed that the legislature in its wisdom has provided a specific period for the authority to discharge its functions and indifference of the concerned officer to complete the adjudication within the time period cannot be condoned to the detriment of the assessee, for such indifference is not only detrimental to the interest of the taxpayer but also to the interest of the exchequer. The relevant observations of the Delhi High Court are as follows: "40. It is apparent from the documents and the timelines reflects by them that no sincere efforts have been made by the Department for adjudicating the impugned SCN. Despite being aware of the provisions of the Customs Act, admittedly, no steps were taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce 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." (emphasis supplied) 35. It would be seen from the aforesaid judgment of the Delhi High Court in Swatch Group that the High Court made it amply clear that the incorporation of words like "where it is possible to do so" merely give a certain degree of flexibility to the department where there are circumstances or insurmountable exigencies which make it impracticable or not possible for the authorities to adjudicate, and in such cases the authorities can deviate from the time limit provided in the Statute. The High Court further held that when the legislature has specifically provided flexibility only to the extent that it was not practicable/possible to adjudicate within the stipulated time, the period can be extended only on satisfaction of such circumstances. The Delhi High Court specifically observed that the phrase "where it is possible to do so" would only mean wherever it is not practicable or possible to do a certain act, the period can be extended but the same cannot provide endless time limit to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid judgments of the Delhi High Court pertain to the un-amended provisions of section 28 (9) of the Customs Act, which provisions are also involved in the present appeal. 39. It would also be useful to refer to decisions that hold that even if a time limit is not prescribed for deciding a matter, it would still have to be decided within a reasonable period of time. 40. In State of Punjab & Ors. vs. Bhatinda District Cooperative Milk Producers Union Ltd. 2007 (217) E.L.T. 325 (S.C.), the Supreme Court reiterated the aforesaid principle in the following words: "20. ***** 18. It is trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors." 21. As noted above, Section 73 of the Act, as in force at the material time, did not stipulate any period within which the show cause notice was required to be adjudicated. It merely stipulated the period within which the show cause notice was required to be issued. However, there is no cavil that the authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat would be reasonable period, would depend upon the facts of each case. Whenever a question regarding the inordinate delay in issuance of notice of demand is raised, it would be open to the assesee to contend that it is bad on the ground of delay and it will be for the relevant officer to consider the question whether in the facts and circumstances of the case notice of demand for recovery was made within reasonable period. No hard and fast rules can be laid down in this regard as the determination of the question will depend upon the facts of each case." 78. More recently in SEBI vs. Sunil Krishna Khaitan [(2023) 2 SCC 643], the Supreme Court again reiterated the principle that when no limitation period is prescribed for initiating proceedings under a statute, action must still be taken within a reasonable period and which could vary based on the facts and circumstances of each case. The key factors to be considered, the Supreme Court explained, would include the nature of the violation, whether it was concealed, potential prejudice caused, and the creation of third-party rights. The Court reaffirmed that authorities must act without undue delay to prevent injustice and abuse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 21.10.2010 before insertion of sub-section (4B) to section 73 of the Finance Act but was not adjudicated for a long period of thirteen years and in this context the High Court observed: "4. We were constrained to make the above observations as we take judicial notice of series of petitions reaching this Court on the ground that the concerned jurisdictional officers exercising such enormous powers not only under the Finance Act, 1994, but also under the other Central Acts, for reasons which are totally ill-conceived and contrary to law, have not adjudicated and/or taken forward the show cause notice for unduly long periods and in some case about 10 years. In our opinion, a serious view in this regard is required to be taken by the Ministry of Finance in regard to the officers who are not diligently discharging such vital duties and who in fact are playing with the public revenue. In such context, in our decision in Coventry Estates Pvt. Ltd. v. Joint Commissioner CGST and Central Excise & Anr. [Writ Petition No. 4082 of 2022, decided on 25 July, 2023] [(2023) 10 Centax 38 (Bom.)] which concerned delayed adjudication of a show cause notice, considering the binding statutory prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice, after such long and unreasonable delay of more than 10 years, as the adjudication of the show cause notice after such inordinate delay is severely prejudicial to the rights of the petitioner. ***** It is hence submitted that by no stretch of imagination, in the absence of any justifiable reason, the show cause notice can be adjudicated after a long delay of 10 years. ***** 16. We are thus of the opinion that there has to be a holistic approach and reading of the provisions of Section 73, when it concerns the obligation and repository of the power to be exercised by the concerned officer to recover service tax, in adjudicating any show cause notice, issued against an assessee considering the raison d'etre of the provision. It is hence expected that the approach and expectation from the officer adjudicating the show cause notice would be to strictly adhere to the timelines prescribed by provisions of the Act, as there is a definite purpose and intention of the legislature to prescribe such time limits, either under Section 73 (4B) of six months and one year respectively or of five years under Section 73 (1). 17. In our opinion, in the facts of the present case, such requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have. Thus, for all these reasons, delay in adjudication of show cause notice would amount to denying fairness, judiciousness, non-arbitrariness and fulfillment of an expectation of meaningfully applying the principles of natural justice. We are also of the clear opinion that arbitrary and capricious administrative behaviour in adjudication of show cause notice would be an antithesis to the norms of a lawful, fair and effective quasi judicial adjudication. In our opinion, these are also the principles which are implicit in the latin maxim "lex dilationes abhorret", i.e., law abhors delay." (emphasis supplied) 45. It transpires from the aforesaid decisions that: (i) The phrases "as far as possible" and "as far as practicable" are more or less inter-changeable along with the word "feasible"; (ii) Only when circumstances or insurmountable exigencies make it impracticable or not possible for the adjudication to take place within the stipulated period that the authorities may deviate from the time limit prescribed under the Statute; (iii) The mandate of the legislature that the show cause notice should be adjudicated within six months or one year, as the case may be, only provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missible." (emphasis supplied) 49. The same view was also expressed by the Delhi High Court in VOS Technologies and the relevant observations are: "80. The disclosures made in this batch, however, establish that the respondents in each case, adopted a repetitive exercise of placing matters in the call book, retrieval therefrom, followed by those matters being transferred back to that book yet again. These actions appear to have been taken mechanically and casually based solely on the directions of the Board and without any application of mind to the facts obtaining in individual cases or the formation of requisite opinion as contemplated under Section 28 (9-A)." 50. In the present case, it is seen that there was no justifiable reason for the department to place the show cause notice in the call book and thereby delay the adjudication contrary to the specific mandate of sub-section (9) of section 28 of the Customs Act. 51. In this view of the matter, as the impugned order is being set aside for the reason that it was not passed within the time stipulated in sub-section (9) of section 28 of the Customs Act, it would not be necessary to examine the contentions raised by the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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