Court sets aside Customs Act show-cause notice due to delay, orders return of deposited amount.

The Court set aside the show-cause notice issued under the Customs Act, 1962, and subsequent proceedings due to unreasonable delay in adjudication. It ordered the return of the deposited amount of Rs. 2 crore under protest, along with interest at 12% per annum, to be completed within two months. The writ petition was allowed, and each party was directed to bear its own costs.

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Issues Involved:
1. Validity of the show-cause notice issued under the Customs Act, 1962.
2. Reasonableness of the delay in adjudicating the show-cause notice.
3. Entitlement to the return of the amount deposited under protest along with interest.

Issue-wise Detailed Analysis:

1. Validity of the show-cause notice issued under the Customs Act, 1962:
The petitioners challenged the show-cause notice dated 30th April 1997 issued to the Company under section 124 read with section 28 of the Customs Act, 1962, alleging fraudulent export and duty-free import in contravention of the Act’s provisions. The petitioners argued that the notice was invalid due to the inordinate delay in adjudicating the proceedings, which remained pending for 23 years.

2. Reasonableness of the delay in adjudicating the show-cause notice:
The petitioners contended that the delay of nearly two and a half decades in concluding the proceedings was unreasonable. They cited several precedents, including a decision in Writ Petition No.12904 of 2019 (Parle International Limited v. Union of India and Others), where a delay of 13 years was deemed unreasonable. The respondents, in their affidavit-in-reply, failed to provide a satisfactory explanation for the delay, attributing it to departmental restructuring and loss of sight of the case file. The Court noted that the respondents had not acted as required by law and that the delay was unreasonable. It emphasized that the power to initiate proceedings must be exercised reasonably and rationally, and the excessive delay without sufficient explanation constituted an arbitrary exercise of power.

3. Entitlement to the return of the amount deposited under protest along with interest:
The petitioners sought the return of Rs. 2 crore deposited under protest during the investigation, along with accrued interest. The respondents argued that the claim for the return of money was in the nature of a money claim and could not be entertained by the writ Court. However, the Court disagreed, stating that the relief for the return of the amount was consequential to the principal relief of setting aside the show-cause notice. The Court referred to several decisions, including Kuil Fireworks Industries v. Collector of Central Excise & another and Commissioner of Central Excise, Hyderabad v. ITC Ltd., where interest at 12% per annum was awarded. The Court directed that the sum of Rs. 2 crore be returned with interest at 12% per annum within two months of receipt of a certified copy of the order by the respondents.

Conclusion:
The Court set aside the show-cause notice dated 30th April 1997 and all subsequent proceedings due to the unreasonable delay in adjudication. It ordered the return of Rs. 2 crore deposited under protest, with interest at 12% per annum, to be effected within two months. The writ petition was allowed, with each party bearing its own costs.

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