Customs SCN issued in 2008 quashed after 15 years of non-adjudication under Section 28(9) limitation bar

Delhi HC allowed petition challenging SCN issued by Principal Commissioner of Customs under Section 28(9) of Customs Act, 1962. Court held SCN issued in 2008 was barred by limitation after 15 years of non-adjudication. Repeated placement in call book without valid justification for delay was rejected as insufficient ground. Following precedents in Swatch Group India and Vos Technologies cases, court ruled that absent grounds showing impossibility to determine duty within prescribed period, SCN lapses and cannot be adjudicated. SCN was quashed due to limitation bar.

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1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the Show Cause Notice (SCN) issued by the Directorate of Revenue Intelligence (DRI) is barred by limitation under Section 28(9) of the Customs Act, 1962.
• Whether the repeated placement of the SCN in the call book justifies the delay in adjudication.
• Whether the phrase "where it is possible to do so" in Section 28(9) allows for indefinite delay in adjudication.
• Applicability of the amended provisions of Section 28(9) and 28(9A) of the Customs Act, 1962.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Limitation under Section 28(9) of the Customs Act, 1962

• Relevant legal framework and precedents: Section 28(9) of the Customs Act stipulates a six-month period for adjudication of SCNs, extendable to one year. The amended provision removes the phrase "where it is possible to do so" and introduces Section 28(9A) for specific exceptions.
• Court's interpretation and reasoning: The Court held that the phrase "where it is possible to do so" does not permit indefinite delays. It emphasized the need for expeditious resolution and the detrimental impact of delays on taxpayers and the exchequer.
• Key evidence and findings: The SCN was issued in 2008 and remained unadjudicated for 15 years, primarily due to its repeated placement in the call book.
• Application of law to facts: The Court applied the principles from previous judgments, concluding that the SCN lapsed due to the delay, as no valid reasons justified the non-adjudication within the prescribed period.
• Treatment of competing arguments: The Department's reliance on the phrase "where it is possible to do so" was rejected, as the Court found no material evidence to justify the delay.
• Conclusions: The SCN was quashed as it was barred by limitation under Section 28(9) of the Act.

Issue 2: Justification of Delay due to Call Book Placement

• Relevant legal framework and precedents: The Court referred to multiple precedents establishing that placement in the call book does not justify prolonged delays.
• Court's interpretation and reasoning: The Court found that repeated placements in the call book without adjudication are not valid reasons for delay.
• Key evidence and findings: The SCN was placed and removed from the call book multiple times, contributing to the delay.
• Application of law to facts: The Court concluded that the Department failed to provide valid reasons for the delay, rendering the SCN invalid.
• Treatment of competing arguments: The Department's argument that call book placement justified the delay was dismissed due to lack of substantive reasons.
• Conclusions: The delay was unjustified, leading to the quashing of the SCN.

3. SIGNIFICANT HOLDINGS

• Preserve verbatim quotes of crucial legal reasoning: "The mention of the words, 'where it is not possible to do so', in our opinion, does not enable the Department to defer the determination of the notices for an indeterminate period of time."
• Core principles established: The Court reiterated the necessity for timely adjudication of SCNs and the limited scope for delay under Section 28(9).
• Final determinations on each issue: The SCN was quashed due to being barred by limitation, and the justification of delay due to call book placement was rejected.

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