TaxTMI 
TaxTMI 
2025 (4) TMI 1248
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....ased to the appellant on execution of a bond and bank guarantee amounting to Rs. 4.10 crore. The appellant has been directed to pay redemption fine of Rs. 1,00,00,000/- under section 125 of the Customs Act in lieu of confiscation. The redemption of the Aircraft was, however, permitted only upon payment of duty, interest and penalty by the importer and fine by the appellant. For this purpose, the bank guarantee executed at time of provisional release of the aircraft has to be encashed; and (ii) Penalty of Rs. 25,00,000/- upon the appellant under section 112 (a) of Customs Act. 2. The appellant is the owner of an aircraft called Embraer Phenom 100 [the Aircraft]. This Aircraft was leased to Aviators for operating the same in India and an agreement dated 06.05.2011 was executed. Aviators filed a Bill of Entry dated 24.06.2011 for assessment and clearance of the Aircraft for home consumption and claimed benefit of a Notification dated 01.03.2002, as amended by Notification dated 01.03.2011 [the Notification]. The Aircraft was assessed to concessional rate of 2.5% duty under the said Notification based on the following documents submitted by Aviators: (i) No Objecti....
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....lligence, New Delhi, commenced investigation against all the importers of aircrafts, including Aviators, who had claimed benefit under the Notification on import of aircrafts. 10. On 14.03.2013, the Aircraft was seized under section 110 of the Customs Act under the purported belief that the Aircraft was liable for confiscation under sections 111 (d) and 111 (o) of the Customs Act. 11. Subsequently, the seized Aircraft was provisionally released to the appellant by the Commissioner of Customs (Import and General), New Customs House New Delhi, based on a bond and bank guarantee of Rs. 4.10 crores given by the appellant. 12. However, a show cause notice dated 31.07.2013 was issued to Aviators, SSL and the appellant seeking to deny the benefit of the Notification. The show cause notice also proposed to recover differential duty of Rs. 2,76,26,309/- on the imported Aircraft from Aviators; Rs. 27,86,890/- on the imported spare parts from Aviators; and Rs. 27,86,890/- on the imported Aircraft from Aviators and SSL. It was also alleged that the imported Aircraft and the imported spare parts were liable to confiscation under sections 111 (o) and 111 (d) of the Customs Act. The appe....
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....t the conditions set out by the Directorate General of Civil Aviation in granting approval/no objection certificate must be complied with for the import of the Aircraft; (ii) In any view of the matter, the Aircraft was not used for any purpose other than for providing Non-Scheduled Operator Passenger Permit service. There is no post import condition in the Notification and, therefore, the Aircraft cannot be held liable to confiscation. In this connection, reliance has been placed on the decision of the Tribunal in Commissioner of Customs, New Delhi vs. Sameer Gehlot 2011 (263) E.L.T. 129 (Tri.-Del.), which decision was affirmed by the Supreme Court in Commissioner of Customs (Preventive), New Delhi vs. Airmid Aviation Services (P) Ltd. 2022 (381) E.L.T. 5 (S.C); (iii) The appellant cannot be held liable to pay duty, interest, penalty and fine; and (iv) The extended period of limitation under section 28 (4) of the Customs Act could not have been invoked in the facts and circumstances of the case. 17. Shri Gurdeep Singh, learned special counsel appearing for the department assisted by Shri Rakesh Kumar, learned authorized representative, however, support....
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....on (8), extend the period specified in clause (a) to a further period of six months and the period specified in clause (b) to a further period of one year: Provided further that where the proper officer fails to determine within such extended period, such proceeding shall be deemed to have concluded as if no notice had been issued. 28 (9A) Notwithstanding anything contained in sub-section (9), where the proper officer is unable to determine the amount of duty or interest under sub-section (8) for the reason that - (a) an appeal in a similar matter of the same person or any other person is pending before the Appellate Tribunal or the High Court or the Supreme Court; or (b) an interim order of stay has been issued by the Appellate Tribunal or the High Court or the Supreme Court; or (c) the Board has, in a similar matter, issued specific direction or order to keep such matter pending; or (d) the Settlement Commission has admitted an application made by the person concerned, the proper officer shall inform the person concerned the reason for non-determination of the amount of duty or interest under sub-section (8) and in su....
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....nt to file a reply to the show cause notice within thirty days, failing which it could be decided to ex-parte on the basis of evidence available on record. The relevant portion of the show cause notice is reproduced below: "15.3.2 M/s. Aviators India Pvt. Ltd., M/s. Shamanur. Sugars Ltd. and M/s. Innovale Investments Pte. Ltd. are hereby jointly and severally called upon to show cause to the adjudicating authority, viz., Deputy Commissioner of Custom, Air Cargo Complex, Near CSI Airport, Mumbai, within 30 days of the receipt of the notice as to why:- (i) the benefit of exemption contained in Notification No. 12/2012-Cus dated 17.03.2012 and 12/2012-CE dated 17.03.2012 should not be denied to the spare parts of the aircraft imported vide various Bills of Entry mentioned in Annexure 'C'. (ii) the total Customs duty amounting to Rs. 3,76,888/- (Rupees Three Lakhs Seventy Six Thousand Eight Hundred and Eighty Eight only) actually payable but for the aforesaid exemption in respect of the said aircraft (detailed in Annexure 'C'), should not be recovered in terms of respective undertakings given at the time of their importations, read, with Section 142 (2) of th....
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....ismissed by the Supreme Court on 26.11.2021, but in the meantime, the Supreme Court had in Canon India held that the officers of Directorate of Revenue Intelligence were not proper officers under section 28 of the Customs Act to issue the show cause notice. The order also mentions that the case was taken up for adjudication only on 01.04.2022 after amendments were made in the Customs Act. 26. The issue, therefore, that requires determination is whether the department can take advantage of expression "where it is possible to do so" for not adjudicating the show cause notice within one year. 27. Learned senior counsel for the appellant submitted that the department has not been able to substantiate that the adjudicating authority was prevented by "such circumstances or insurmountable exigencies" from concluding the adjudication proceedings within the stipulated period contemplated under sub-section (9) of section 28 of the Customs Act. 28. The show cause notice was required to be adjudicated within one year from the date of notice, as contemplated under sub-section (9) of section 28 of the Customs Act. The records indicate that it was only on 20.12.2013 that a common adjudic....
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....eded to again place the matter in the call book because the department had assailed the decision of the Tribunal rendered in Airmid Aviation. 31. These factors, under no circumstances, can be considered to be reasonable grounds for not adjudicating the show cause notice within the period stipulated. It clearly transpires that the adjudicating authority, without there being any plausible explanation, failed to adhere to the time limit set out in section 28 (9) of the Customs Act for adjudicating the show cause notice. In fact, sincere efforts were not made by the adjudicating authority to adjudicate the show cause notice within the stipulated time. 32. Sub-section (9) of section 28 of the Customs Act provides that the proper officer shall determine the amount of duty within one year from the date of notice. Though, a certain degree of flexibility has been granted to the proper officer because of the phrase "where it is possible to do so", but this would only be in circumstances where there are insurmountable exigencies that would impede the adjudication of the show cause notice. The purpose for which the legislature limited the time within which the show cause notice has to be....
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....dicated on the facts and circumstances of each case. 34. The flexibility, at the same time, in our opinion, cannot be equated with the lethargy of the Department or its officers. The Legislature has mandated the show cause notices to be adjudicated within six months or one year as the case may be; it has provided flexibility only to the extent that if the same is not practicable/possible the period can be extended. The phrase 'where it is possible to do so' would only mean that wherever it is not practicable/possible to do certain act, the period can be extended. The same, however, cannot be an endless period without any plausible justification." (emphasis supplied) 34. The Delhi High Court then relied upon an earlier decision of the Delhi High Court in Sundar System Pvt. Ltd. vs. Union of India 2020 (33) G.S.T.L. 621 (Del.) and observed that the legislature in its wisdom has provided a specific period for the authority to discharge its functions and indifference of the concerned officer to complete the adjudication within the time period cannot be condoned to the detriment of the assessee, for such indifference is not only detrimental to the interest of the ta....
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.... indeterminate period of time. The Legislature in its wisdom has provided a specific period for the authority to discharge its functions. The indifference of the concerned officer to complete the adjudication within the time period as mandated, cannot be condoned to the detriment of the assessee. Such indifference is not only detrimental to the interest of the taxpayer but also to the exchequer. 47. In the absence of any ground that it was not possible for the officer to determine the amount of duty within the prescribed period, the impugned SCN has lapsed and cannot be adjudicated." (emphasis supplied) 35. It would be seen from the aforesaid judgment of the Delhi High Court in Swatch Group that the High Court made it amply clear that the incorporation of words like "where it is possible to do so" merely give a certain degree of flexibility to the department where there are circumstances or insurmountable exigencies which make it impracticable or not possible for the authorities to adjudicate, and in such cases the authorities can deviate from the time limit provided in the Statute. The High Court further held that when the legislature has specifically provided....
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....the matter. The issue raised in the petition is no longer res-integra. Section 28 (9) of the 1962 Act unamended and amended have been considered in detail by coordinate Benches of this Court in Swatch Group India Pvt. Ltd.(supra) as also M/S Vos Technologies India (supra). All the issues which have been raised by the Department now stand adjudicated. The relevant observations in the said judgments are set out below: *****" (emphasis supplied) 38. All the aforesaid judgments of the Delhi High Court pertain to the un-amended provisions of section 28 (9) of the Customs Act, which provisions are also involved in the present appeal. 39. It would also be useful to refer to decisions that hold that even if a time limit is not prescribed for deciding a matter, it would still have to be decided within a reasonable period of time. 40. In State of Punjab & Ors. vs. Bhatinda District Cooperative Milk Producers Union Ltd. 2007 (217) E.L.T. 325 (S.C.), the Supreme Court reiterated the aforesaid principle in the following words: "20. ***** 18. It is trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction wit....
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....y of the duty as contemplated by Rule 12, the officer may act arbitrarily in recovering the amount after lapse of long period of time. We find no substance in the submission. While it is true that Rule 12 does not prescribe any period within which recovery of any duty as contemplated by the rule is to be made, but that by itself does not render the rule unreasonable or violative of Article 14 of the Constitution. In the absence of any period of limitation it is settled that every authority is to exercise the power within a reasonable period. What would be reasonable period, would depend upon the facts of each case. Whenever a question regarding the inordinate delay in issuance of notice of demand is raised, it would be open to the assesee to contend that it is bad on the ground of delay and it will be for the relevant officer to consider the question whether in the facts and circumstances of the case notice of demand for recovery was made within reasonable period. No hard and fast rules can be laid down in this regard as the determination of the question will depend upon the facts of each case." 78. More recently in SEBI vs. Sunil Krishna Khaitan [(2023) 2 SCC 643], the Su....
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.... of service tax within a period of one year in respect of cases falling under the proviso to sub-section (1) or the proviso to sub-section (4A), and within a period of six months from the date of notice in cases falling under Section 73(1) of the Act. ***** 19. It is settled law that where there is no period stipulated for exercising jurisdiction, the same must be done within a reasonable period." (emphasis supplied) 43. In UPL Ltd. vs. Union of India 2023 (79) G.S.T.L. 225 (Bom.), the Bombay High Court also examined a case where a show cause notice was issued on 21.10.2010 before insertion of sub-section (4B) to section 73 of the Finance Act but was not adjudicated for a long period of thirteen years and in this context the High Court observed: "4. We were constrained to make the above observations as we take judicial notice of series of petitions reaching this Court on the ground that the concerned jurisdictional officers exercising such enormous powers not only under the Finance Act, 1994, but also under the other Central Acts, for reasons which are totally ill-conceived and contrary to law, have not adjudicated and/or taken forward the sho....
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.... (emphasis supplied) 44. It would also be useful to refer to the earlier judgment of the Bombay High Court in Coventry Estates Pvt. Ltd. vs. The Joint Commissioner, CGST and Central Excise (2023) 10 Centax 38 (Bom.), that was followed by the Bombay High Court in UPL. The show cause notice was issued on 16.03.2012, but it was not adjudicated for a long period of more than ten years. The relevant observations of the Bombay High Court are: "8. The primary contention as canvassed by Mr. Raichandani, learned counsel for the petitioner is that there is no warrant for the adjudicating authority to adjudicate the show cause notice, after such long and unreasonable delay of more than 10 years, as the adjudication of the show cause notice after such inordinate delay is severely prejudicial to the rights of the petitioner. ***** It is hence submitted that by no stretch of imagination, in the absence of any justifiable reason, the show cause notice can be adjudicated after a long delay of 10 years. ***** 16. We are thus of the opinion that there has to be a holistic approach and reading of the provisions of Section 73, when it concerns the obligation and reposit....
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....ause notice would seriously nullify the noticee's rights causing irreparable harm and prejudice to the noticee. A protracted administrative delay would not only prejudicially affect but also defeat substantive rights of the noticee. In certain circumstances, even a short delay can be intolerable not only to the department but also to the noticee. In such cases, the measure and test of delay would be required to be considered in the facts of the case. This would however not mean that an egregions delay can at all be justified. This apart, delay would also have a cascading effect on the effectiveness and/or may cause an abridgement of a right of appeal, which the assessee may have. Thus, for all these reasons, delay in adjudication of show cause notice would amount to denying fairness, judiciousness, non-arbitrariness and fulfillment of an expectation of meaningfully applying the principles of natural justice. We are also of the clear opinion that arbitrary and capricious administrative behaviour in adjudication of show cause notice would be an antithesis to the norms of a lawful, fair and effective quasi judicial adjudication. In our opinion, these are also the principles which are ....