Delay in adjudication of customs show cause notices bars recommencement of proceedings where statutory adjudication period has expired.

Delay in adjudication of customs show cause notices caused the statutory period for adjudication to lapse where no effective steps were taken over an extended period, and mere communications seeking records do not justify non-adjudication; therefore notices retrieved from the call book and recommenced cannot be lawfully adjudicated once the adjudication period has expired. The decision also addresses contention over retrospective designation of investigative officers as proper officers, but the operative effect is that recommencement letters are set aside and adjudication is barred by expiry of the adjudication period.

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Issues Involved:
1. Delay in adjudication of the impugned show cause notice.
2. Constitutional validity of Section 97 of the Finance Act, 2022.
3. Jurisdiction of DRI officers to issue and adjudicate the show cause notice.

Summary:

Issue 1: Delay in Adjudication of the Impugned Show Cause Notice

The petitioners challenged the impugned show cause notice dated 30.04.2009 and subsequent letters on the grounds of delay in adjudication. They argued that the adjudication is barred by limitation as it has not been adjudicated for almost fourteen years. The respondents contended that the delay was due to the complexity of the issues and the necessity to place the notice in the Call Book due to ongoing jurisdictional debates and legal uncertainties. The Court found that no effective steps were taken for adjudication from 30.04.2009 to 21.07.2016, and the impugned show cause notice was not adjudicated for over eight years without any impediment. The Court held that the period within which the impugned show cause notice was required to be adjudicated has long since elapsed, and thus, it is no longer open for the respondents to proceed with the adjudication. The impugned letters recommencing the adjudication proceedings were set aside.

Issue 2: Constitutional Validity of Section 97 of the Finance Act, 2022

The petitioners challenged the constitutional validity of Section 97 of the Finance Act, 2022, claiming it was violative of Articles 14, 19(1)(g), and 300A of the Constitution of India. They argued that the provision authorizing DRI officers to act as proper officers under the Customs Act, 1962, should not have retrospective operation. However, the petitioners reserved the right to challenge this at a later stage, if necessary. The Court did not delve into this issue as the primary challenge was confined to the delay in adjudication.

Issue 3: Jurisdiction of DRI Officers to Issue and Adjudicate the Show Cause Notice

The respondents argued that the delay in adjudication was also due to jurisdictional issues being debated before the High Courts and the Supreme Court. They cited the Supreme Court's decision in Commissioner of Customs v. Sayed Ali & Anr., which necessitated amendments to Section 28(11) of the Customs Act. The impugned show cause notice was placed in the Call Book following instructions from the Board and was retrieved only after legal clarifications. The Court, however, did not find this justification sufficient to overcome the delay and ruled that the adjudication period had expired.

Conclusion

The Court allowed the petitions, setting aside the impugned letters and ruling that the impugned show cause notice cannot be adjudicated due to the elapsed adjudication period. All pending applications were also disposed of.

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