2023 (9) TMI 1272 - HC - Customs

Show Cause Notice Dismissed After Eight-Year Delay; Adjudication Period Expired, Applications Resolved.

The HC allowed the petitions, setting aside the impugned letters and ruling that the show cause notice could not be adjudicated due to the elapsed ... Delay of 14 years in adjudication of SCN - Assessee was not knowing that matter was put in the call book - constitutional validity of Section 97 of the Finance Act, 2022 - provision authorising an officer of the Directorate of Revenue Intelligence (DRI) to act as a proper officer under the Customs Act, 1962 can have any retrospective operation or not. Whether the time period for adjudicating the show cause notices in terms of Section 28(9) of the Customs Act, as in force prior to 29.03.2018, has lapsed? - Whether it is permissible for the Commissioner (Adjudicating) to now resume adjudication of the impugned show cause notice? HELD THAT:- During the prolonged period of 03.04.2009 to 21.07.2016, no effective steps were taken for adjudication of the impugned show cause notice. It is not disputed that during this period there was no impediment for the concerned officers to proceed with the adjudication. The fact that various communications were sent by the Adjudicating Authority to the concerned officers of the DRI for supply of the RUDs is clearly no ground to justify that it was not possible to adjudicate the impugned show cause notice during the said period. In view of the above, it cannot be accepted that it was not feasible or possible for the Adjudicating Authority to adjudicate the impugned show cause notice till 06.02.2017. It is stated that the impugned show cause notice was retrieved from the Call Book on 06.02.2017 in view of the instructions dated 06.01.2017. However, the Board opined that it was not feasible to adjudicate the notices issued prior to 08.07.2011 and therefore the said impugned show cause notice was not adjudicated. It is stated that it was re-entered in the Call Book and was retrieved from the Call Book on 23.01.2023 - Admittedly, the petitioners were not informed that the impugned show cause notice was put in the Call Book. It is at once clear that the period within which the impugned show cause notice was required to be adjudicated has long since elapsed. The controversy raised is squarely covered by the recent decision of this Court in SWATCH GROUP INDIA PVT LTD & ORS. VERSUS UNION OF INDIA & ORS. [2023 (8) TMI 864 - DELHI HIGH COURT]. In view of the above, it is no longer open for the respondents to proceed with the adjudication of the impugned show cause notice. Accordingly, the impugned letters recommencing the adjudication proceedings are set aside. Since the period for adjudication of the impugned show cause notice has elapsed, the same cannot be adjudicated. Petition allowed. 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 NoticeThe 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, 2022The 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 NoticeThe 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.ConclusionThe 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.