2019 (10) TMI 1401 - HC - Customs

Court quashes Show Cause Notice for delay & procedural lapses. Precedents emphasize timely adjudication & procedural compliance.

M/s. Shri Ram Agro Chemicals Pvt. Ltd Versus Union of India and others

M/s. Shri Ram Agro Chemicals Pvt. Ltd Versus Union of India and others - TMI Issues Involved:1. Jurisdiction of DRI to issue Show Cause Notice.2. Delay in adjudication of Show Cause Notice.3. Maintainability of writ petition in presence of alternative remedy.4. Retroactive application of amended Section 28(9) and (9A) of the Customs Act, 1962.5. Extension of adjudication period under Section 28(9) and (9A) of the Customs Act, 1962.Issue-wise Detailed Analysis:1. Jurisdiction of DRI to Issue Show Cause Notice:The petitioner challenged the Show Cause Notice dated 17.05.2007 issued by the Directorate of Revenue Intelligence (DRI) on the grounds of jurisdiction. The DRI had initiated an investigation against the petitioner, alleging misdeclaration of the value of goods. The petitioner initially approached the Settlement Commissioner, who rejected the application and relegated the petitioner to the Adjudicating Authority.2. Delay in Adjudication of Show Cause Notice:The petitioner argued that more than twelve years had passed since the issuance of the Show Cause Notice, yet no adjudication order had been passed. The petitioner cited judgments from this Court, including GPI Textile Ltd. Vs. Union of India, Anil Kumar Soni Vs. Union of India, and Harkaran Dass Vedpal Vs. Union of India, to support the contention that the delay in adjudication warranted the quashing of the Show Cause Notice.3. Maintainability of Writ Petition in Presence of Alternative Remedy:The respondents contended that the petitioner had an alternative remedy to file a reply and raise all pleas before the authorities, making the writ petition not maintainable. However, the Court found this preliminary objection devoid of merits, citing the Supreme Court's judgment in State of Punjab Vs. Bhatinda District Co-Op. Milk P. Union Ltd., which held that questions of reasonable period of limitation could not be decided by authorities appointed under the relevant statute. Thus, the Court deemed it appropriate to entertain the writ petition under Article 226 of the Constitution of India.4. Retroactive Application of Amended Section 28(9) and (9A) of the Customs Act, 1962:The Court examined the amended provisions of Section 28(9) and (9A) of the Customs Act, 1962, which mandate that authorities must pass an order within one year from the date of the Show Cause Notice, extendable by another year under specific circumstances. The Court found that the amended provisions were retroactive, meaning they applied to pending Show Cause Notices as if issued on 29.03.2018. Since the respondent had not adjudicated the Show Cause Notice within the stipulated period, the notice was deemed to have lapsed.5. Extension of Adjudication Period under Section 28(9) and (9A) of the Customs Act, 1962:The respondents claimed that the period for adjudication had been extended by an officer senior in rank to the proper officer. However, the Court found no evidence of such an extension order being passed or communicated to the petitioner. The Court emphasized that any extension of the adjudication period must be reasoned, involve an opportunity of hearing, and be communicated to the concerned party. The absence of these procedural safeguards rendered the respondents' contention invalid.Conclusion:The Court concluded that the Show Cause Notice dated 17.05.2007 was quashed due to the inordinate delay in adjudication and the failure to comply with the procedural requirements for extending the adjudication period. The judgment was based on the principles established in previous rulings, including GPI Textile Ltd. Vs. Union of India and Harkaran Dass Vedpal Vs. Union of India.