Delay in adjudication of show cause notice found to breach natural justice; revival after nine years quashed.

Alleged delay of nine years in adjudicating a show cause notice was examined as a breach of the principles of natural justice because the addressee replied timely and was not informed of pendency, and inaction and unexplained postponement prejudiced the party; unreasonable delay and revival of long-dormant proceedings were found legally impermissible as adjudicatory powers must be exercised within a reasonable time, causing bona fide belief that proceedings were dropped. Consequence: revival after prolonged inaction was unsustainable and the impugned show cause notice was quashed.

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Issues Involved:
1. Validity of the show cause notice issued by the Additional Director General, Directorate of Revenue Intelligence.
2. Delay in adjudication of the show cause notice.
3. Principles of natural justice in the context of delayed adjudication.
4. Legal precedents regarding delay in adjudication of show cause notices.
5. Justification provided by Respondents for the delay.
6. Applicability of Section 28(9) of the Customs Act, 1962.

Detailed Analysis:

1. Validity of the Show Cause Notice:
The Petitioner challenged the Show Cause cum Demand Notice No. DRI F.No.VIII/DRI/LZU/26/17/EASTERN AGENCIES/2012/724 dated 26th September 2013, issued by the Additional Director General, Directorate of Revenue Intelligence. The notice demanded import duty foregone amounting to Rs. 1,66,03,427/- under Section 28 of the Customs Act, 1962, along with interest under Section 28AA/28AB of the Customs Act, 1962. The notice was based on information that several exporters had made irregular exports and obtained DFIA licenses to get undue benefits of import duty exemption.

2. Delay in Adjudication of the Show Cause Notice:
The adjudication of the show cause notice was pending for almost 9 years. The Petitioner responded to the notice in January 2014, stating that they had acquired the DFIA licenses by way of transfer for valuable consideration and were entitled to import the goods specified in the licenses. The Petitioner was called for a personal hearing only in August 2022, leading to the filing of the present Petition.

3. Principles of Natural Justice in the Context of Delayed Adjudication:
The Petitioner argued that the delay in adjudication was arbitrary and in breach of the principles of natural justice. According to Section 28(9) of the Customs Act, 1962, a show cause notice should be adjudicated within six months in normal cases and within one year in cases involving collusion, willful misstatement, or suppression of facts. The prolonged delay without any communication led the Petitioner to believe that the Respondents had dropped the proceedings.

4. Legal Precedents Regarding Delay in Adjudication of Show Cause Notices:
The Petitioner relied on various judgments to support their contention that prolonged delay in adjudication warrants quashing of the show cause notice. Notable cases cited include:
- Raymond Limited v Union of India (2019(368) E.L.T. 481(Bom.)): Delay in adjudication amounts to breach of principles of natural justice.
- Premier Ltd v Union of India (2017 (354) E.L.T. 365(Bom.)): No vested right in prolonging the proceeding; delay leads to quashing of the notice.
- Hindustan Lever Limited v. Union of India (2011 (264) E.L.T. 173 (Bom.)): Authorities must exercise power within a reasonable period.
- Other judgments cited include Parle International Ltd v Union of India (2021 (375) E.L.T. 633 (Bom.)), Sanghvi Reconditioners Pvt. Ltd v Union of India (2018 (12) G.S.T.L.290 (Bom.)), and several others.

5. Justification Provided by Respondents for the Delay:
The Respondents contended that the delay was due to the need for the validity of the impugned DFIA licenses to be decided by DGFT, Kanpur. They argued that the cases were kept in the call book pending the decision of DGFT and subsequent legal challenges. They also contended that the statutory provision for informing the noticee about the reason for non-determination of duty was only enacted as per the Finance Act, 2018, and thus was not applicable to the 2013 notice.

6. Applicability of Section 28(9) of the Customs Act, 1962:
The Respondents argued that the provisions of Section 28(9) of the Customs Act, 1962, which prescribe a time limit for adjudication, were not applicable to the present case as the show cause notice was issued before the amendment in 2018. However, the court found this argument unconvincing, emphasizing that powers of adjudication should be exercised within a reasonable time even in the absence of a specific statutory time limit.

Conclusion:
The court concluded that the delay in adjudication of the show cause notice was unreasonable and unjustified, constituting a breach of the principles of natural justice. The court quashed and set aside the show cause notice and prohibited the Respondents from taking any further steps pursuant to the notice. The court emphasized that authorities are obligated to adjudicate show cause notices with expediency and that prolonged delays without justifiable reasons violate procedural fairness.

Order:
1. The show cause notice No. DRI F. No. VIII/DRI/LZU/26/17/EASTERN AGENCIES/2012/724 dated 26.09.2013 is quashed and set aside.
2. The Respondents are prohibited from taking any further steps or proceeding pursuant to or in furtherance of the impugned show cause notice.
3. No order as to costs.

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