Delhi High Court
Vijay Enterprises & Anr. vs The Principal Commissioner Of Customs & … on 10 January, 2025
Bench: Prathiba M. Singh, Dharmesh Sharma
$~13&14
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 10th January, 2025
+ W.P.(C) 5809/2024
VIJAY ENTERPRISES & ANR. .....Petitioners
Through: Mr. Tarun Gulati, Senior Advocate
with Prem Ranjan Kumar and Ms.
Shruti, Advocates
versus
THE PRINCIPAL COMMISSIONER OF CUSTOMS
& ANR. .....Respondents
Through: Mr. Harpreet Singh, Senior Standing
Counsel along with Mr. Suhani
Mathur and Shivang Chawla, Advs.
for R-2.
14 WITH
+ W.P.(C) 15436/2023
VIJAY ENTERPRISES ANDANR .....Petitioners
Through: Mr. Tarun Gulati, Senior Advocate
with Prem Ranjan Kumar and Ms.
Shruti, Advocates
versus
ADDITIONAL DIRECTOR GENERAL DIRECTORATE OF
REVENUE INTELLIGENCE AND ORS. .....Respondents
Through: Mr. Anurag Ojha, SSC along
with Mr. Subham Kumar, Adv.
CORAM:
JUSTICE PRATHIBA M. SINGH
JUSTICE DHARMESH SHARMA
Prathiba M. Singh, J. (Oral)
1. This hearing has been done through hybrid mode.
Factual Background:
2. The present writ petitions have been filed under Articles 226 and 227
of the Constitution of India seeking inter alia issuance of an appropriate writ
Signature Not Verified W.P.(C) 5809/2024 & 15436/2023 Page 1 of 22
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Signing Date:22.01.2025
11:32
for quashing the impugned Order-in-Original No.
3/2024/VCG/Pr.Commr./ICD-IMP/TKD dated 31st January, 2024 passed by
the Respondent No. 1 - Principal Commissioner of Customs (Import), ICD
Tughlakabad, New Delhi, and the impugned Show Cause Notice bearing No.
DRI F.No. 23/118/2005-DZU/VE (hereinafter "SCN") dated 23rd May, 2008,
issued by the Respondent No. 2 - Additional Director General, Directorate of
Revenue Intelligence, Delhi Zonal Unit (hereinafter "DRI").
3. The impugned Order-in-Original is challenged, inter alia, on the
ground that validity of the impugned SCN was under consideration before this
Court in W.P.(C) 15436/2023 and the impugned Order-in-Original was
passed while the said petition was pending, in violation of the principles of
natural justice. The impugned SCN and the proceedings initiated thereunder
have been challenged on the ground that the same are barred by limitation in
terms of Section 28 of the Customs Act, 1962 (hereinafter, "Act").
4. The Petitioners are engaged in the business of importing and trading of
various types of papers and paper board including newsprint and lightweight
coated paper (hereinafter "subject goods"). The DRI suspected mis-
declaration and undervaluation in the import of subject goods by certain
importers, who were alleged to be working with various 'Registrar of
Newspapers in India' certificate holders (hereinafter "RNI holders"). As per
the DRI one Mr. Prakash Garg alleged to be the owner/controller of the
Petitioners i.e., M/s Vijay Enterprises and M/s Salwan International Paper
Pvt. Ltd., as also M/s. Newsprint Trading, was involved in the said mis-
declaration and undervaluation. The DRI had also received information that
the said importers were violating the user conditions specified under ITC
(HS) & Customs Notification No. 21/2002 dated 1st March, 2002 in respect
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of import of 'Newsprint & Light Weight Coated Paper' (hereinafter "LWC"),
by diverting the said goods to the local market instead of using the same for
printing of newspapers & magazines. Accordingly, on 28th December, 2005,
the DRI conducted certain searches at the premises of Mr. Prakash Garg, his
firms, including the Petitioners. It is alleged by the Petitioners that during the
investigation, the Petitioner No. 2 was forced to submit a Bank Guarantee of
Rs. 6,16,941/- towards provisional release of consignment.
5. Thereafter, the impugned SCN was issued by the DRI, upon completion
of its investigation, holding the Petitioners, inter alia, jointly and severally
liable for payment of differential duty under Section 28(1) of the Act. The
allegations against the Petitioners in the impugned SCN qua one of the
consignments which is alleged to have been undervalued by the Petitioners,
are reproduced hereinunder:
"53.1 From the investigation conducted, it transpires
that Prakash Garg in his firm M/s Vijay Enterprises and
M/s Salwan International Paper Pvt. Ltd had
fraudulently imported 115 and 05 consignments of
paper respectively.
53.2 Prakash Garg was the master mind behind this
fraudulent import of paper. He managed & controlled
all the activities of his firms to perpetuate the said fraud
including Customs clearance of imported papers on the
basis of invoices showing suppressed value and payment
of undervalued amounts to the respective .foreign
suppliers through hawala.
53.3.1 In M/s Vijay Enterprises, Prakash Garg had
imported 22 consignments of paper by mis-declaring its
actual value from M/s Belsun Corp. USA (TableA- 1). In
the import documents submitted before the Indian
Customs authority he had declared the price ranging
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from USO 210 to USD 250 PMT, whereas, the
investigation revealed that the actual price was in the
range of USO 350 PMT to USO 600 PMT.
53.3.2 In view of the real transaction value in case of 14
consignments imported by M/s Vijay Enterprises from
M/s Belsun Corp., USA obtained during investigation as
reflected in table under Para 50 above the unit price as
declared in the import documents of consignments of
goods imported in M/s Vijay Enterprises from M/s
Belsun Corp. USA needs to be rejected under Section 14
of the Customs Act, 1962 read with Rule 4 and 10A of
the Customs Valuation (Determination of Prices of the
Imported Goods) Rules, 1988 and needs to be enhanced
as shown in Table A-1.
53.3.3 From the evidences of actual transaction value
as explained in paras herein above in relation to 14
consignments imported by M/s Vijay Enterprises from
Belsun Corporation, where the value declared ranged
between USD 180 to USD 250 PMT, it can be
reasonably concluded that the rest of the eight
consignments imported from M/s Belsun Corporation in
the name of Vijay Enterprises have also been imported
by undervaluing & mis-declaring the value to be USD
180 to USD 250 PMT. Thus their value needs to be re-
determined under Rule 6 of the Valuation Rules. As the
actual values of the consignments ranged from USD 350
to USD 600 PMT, hence as per Rule 6, the lowest value
of USD 350 PMT of the similar goods needs to be taken
as the unit price for determining the actual assessable
value and duty to be paid.
53.3.4 The total declared assessable value Rs 4075232/-
of the goods imported as shown in Table A-1 becomes
liable for rejection under Section 14 of the Customs Act,
1962 read with Rule 4 and 10A of the Customs Valuation
(Determination of Prices of the Imported Goods) Rules,
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1988 and the actual assessable value for determination
of duty needs to be enhanced to Rs. 8431668/-, as shown
in Table A-1 under Section 14 of the Act & Rule 4 & 6
of the Rules ibid as discussed in the Paras above.
53.3.5 They have knowingly and fraudulently evaded
Customs duty on 22 no. of consignments imported
amounting to Rs. 11,30,728/- as shown in Table A-1 by
suppression and mis-declaration in value, and therefore
such amount along with interest becomes payable under
Section 28 (1) proviso and 28 AB of the Customs Act,
1962, respectively. As the said have been evaded by
taking recourse to willful mis-statement and
suppression of fact, they are also liable for penalty
under Section 114 A of the Act ibid."
6. On the basis of the allegations stated in the impugned SCN, the DRI
had raised the following demands against the persons and firms, including
against the Petitioners, alleged to be involved in undervaluation in the import
of the subject goods:
"55. Now, therefore, Salwan International Paper Pvt.
Ltd, its Director Ashish Garg & Vijay Garg and its
controller Prakash Garg are hereby called upon to show
cause to the Commissioner of Customs, ICD, TKD, New
Delhi within 30 days from the date of receipt of this
show cause notice as to why:
I:(i) The assessable value of 520.623 MTS of imported
paper, imported vide 5 bills of entry, as detailed in Table
Al4, should not be rejected and determined as Rs.
12662638/under Section 14 of the Customs Act, 1962
read with Rule 4 & 6 and 10 A of the Customs Valuation
(Determination of prices of the imported goods) Rules
1988 as discussed in paras 47 to 62 above.
(ii) The 520.623 MT of imported paper, as detailed in
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Signing Date:22.01.2025
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Table A- 14 should not be held liable to confiscation
under Section 111(d) and 111(m) of the Customs Act,
1962. Since the goods are not available for confiscation,
fine in lieu of the confiscation should not be imposed
upon them.
(iii) The differential duty amounting to Rs. 1255417/-
evaded on 520.623 MT of paper covered under bills of
entry as detailed in Table A-14, which have been
imported and cleared by them, fraudulently, should not
be demanded from them under the Proviso to section 28
(1) of the Customs Act, 1962.
(iv) Interest under Section 28 AB should not be
demanded from them.
(v) Penalty should not be imposed upon them under
Section 112 (a) & (b) and/or 114 A of the Customs Act,
1962.
(vi) The bank guarantee for Rs 616941/- executed by
M/s Salwan International Paper Pvt. Ltd for provisional
release of consignment imported under bill of entry no.
497335/10.4.06, 497048/7.4.06, 497049/7.4.06,
497336/10.4.06 and 497063 dated 7.4.06 should not be
revoked and appropriated and adjusted towards the
duty liability."
7. It is the case of the Petitioners that after issuance of the impugned SCN,
the Petitioners had made several request vide letters dated 3rd February, 2010
and 5th February, 2010 with the concerned assessing officer to provide all the
'relied upon documents' (hereinafter "RUDs"). However, the Petitioners were
not provided with all the RUDs. It is stated that between 15th January, 2010
and 17th February, 2012, the Petitioners did not receive any communication
from the Department. Thereafter, the Petitioners were granted personal
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Signing Date:22.01.2025
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hearing on 27th February, 2012 as also on 16th March, 2012 and the Petitioners
are stated to have reiterated the request to provide all RUDs. It is stated that
between 17th August, 2012 and 22nd April, 2014, the Petitioner again did not
receive any communication from the concerned assessing officer. A personal
hearing was granted to the Petitioners on 13th May, 2014. It is alleged that
between October, 2014 to April, 2017 no proceedings were conducted in
respect of the impugned SCN. Finally, vide letter dated 22nd May, 2017, the
concerned assessing officer fixed the date for personal hearing on 2nd June,
2017 on which date the Petitioners are stated to have submitted another letter
requesting to provide all RUDs and other documents.
8. It is the case of the Petitioners that that after 22nd May, 2017, there has
been no progress in the proceedings under the impugned SCN. Since, the
impugned SCN was not adjudicated for about 15 years since its issuance, the
Petitioners filed W.P.(C) 15436/2023 seeking quashing of the same.
9. During the pendency of the said writ petition the concerned assessing
officer had passed the impugned Order-in-Original dated 31st January 2024,
inter alia ordering the confiscation of the imported goods and imposing
interest and penalty upon the Petitioners. The operative portion of the
impugned Order-in-Original is as under:
"13. In view of above discussion and findings, Pass
the following order:
ORDER
I. In case of Mis Vijay Enterprises
(i) I reject the declared assessable value of Rs.
3,08,02,847/- for 3308.186 MTS (including 1733.898
MTS of seized goods) imported vide 115 Bills of Entry
as detailed in Annexure to Show Cause Notice and re-
determine the same as Rs.6,45,72,662/- as discussed in
para 9 supra;
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Signing Date:22.01.2025
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(ii) I order for confiscation of goods having re-
determined value of Rs.6,45,72,662/-under Section 111
(m) of the Customs Act, 1962. Since the goods are not
available for confiscation, no redemption fine is
imposed;
(iii) I determine the short-paid customs duty
Rs.99,52,308/- (Rupees Ninety Nine Lakh Fifty Two
Thousand Three Hundred and Eight) in respect of
imported goods under section 28(2) of Customs Act and
order recovery under proviso to Section 28(1) of the
Customs Act, 1962 along with applicable interest under
Section 28AB of the Customs Act, 1962 as discussed at
para 10 supra;
(iv) I impose penalty of Rs. 7,00,000/- (Rs. Seven
Lacs) under Section 112(a)(ii) and Rs.99,52,308/-
(Rupees Ninety Nine Lakh Fifty Two Thousand Three
Hundred and Eight) under Section 114A of the Customs
Act, 1962 on M/s Vijay Enterprises;
(v) I order to appropriate the amount of
Rs.98,63,154/- (Rs.86,61,722/- + Rs.12,01,432/-)
already paid by noticee during Investigation as
discussed at para 10 and order to adjust towards
liability against duty, interest and penalty.
I further order to appropriate of Bank Guarantees
of Rs. 49,05,945/-(Rs.48,05,730/- + Rs.1,00,215/-)
submitted by M/s Vijay Enterprises for provisional
release during investigation as discussed at para 10 and
order to adjust towards liability against duty, interest
and penalty. That I order recovery of balance amount of
duty, interest and penalty on M/s Vijay Enterprises from
M/s Vijay Enterprises (Noticee no 1 / 2) through its
prop/ controller Sh Prakash Garg;
(vi) I impose a penalty of Rs 5,00,000/- (Rs. Five
Lacs) on Shri Utpal Gupta, CHA, under Section
112(a)(ii) of the Act;
(vii) I impose a penalty of Rs 3,00,000/- (Rs. Three
Lacs) on Shri K.M.R.Nambiar, under Section 112(b)(ii)
of the Act;
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(viii) I impose a penalty of Rs 3,00,000/- (Rs. Three
Lacs) on Shri Shyam R Sundar, under Section 112(b)(ii)
of the Act;
(ix) I impose a penalty of Rs 3,00,000/- (Rs. Three
Lacs) on Shri Shri Gopal T Khetan, under Section
112(b)(ii) of the Act;
II. In case of M/s Salwan International Papers Pvt.
Ltd.
(i) I reject the declared assessable value of Rs.
93,94,801/- for the goods imported by them vide 5 Bills
of Entry as detailed in Annexure of Show Cause Notice
and re-determine the same as Rs.1,26,62,638/- as
discussed in para 9 supra;
(ii) I order for confiscation of goods having re-
determined value of Rs.1,26,62,638/- under Section 111
(m) of the Customs Act, 1962. Since the goods are not
available for confiscation, no redemption fine is
imposed;
(iii) I determine the short-paid customs duty
Rs.12,55,417/- (Rupees Twelve lakh Fifty Thousand
Four Hundred and Seventeen) in respect of imported
goods under section 28(2) of Customs Act and order
recovery under proviso to Section 28(1) of the Customs
Act, 1962 along with applicable interest under Section
28AB of the Customs Act, 1962 as discussed at para 10
supra;
(iv) I impose penalty of Rs.1,00,000/- (Rs one lac)
Under Section 112(a)(ii) and Rs.12,55,417/- (Rupees
Twelve lakh Fifty Thousand Four Hundred and
Seventeen) under Section 114A of the Customs Act,
1962 on M/s Salwan International Papers Pvt. Ltd;
(v) I order to appropriate of Bank Guarantee of
Rs. 6,16,941/- submitted by M/s Salwan International
Papers Pvt. Ltd for provisional release during
investigation as discussed at para 10 and order to adjust
towards liability against duty, interest and penalty. That
I order recovery of balance amount of duty, interest and
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Signing Date:22.01.2025
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penalty on M/s Salwan International Papers Pvt. Ltd
from M/s Salwan International Papers Pvt. Ltd (Noticee
no 3) through its Director Shri Ashish Garg and
controller Sh Prakash Garg;
(vi) I impose a penalty of Rs.1,00,000/- (Rs one lac)
on Shri Prakash Garg under Section 112(a)(ii) of the
Customs Act, 1962;
(vii) I impose a penalty of Rs. 70,000/- (Rs Seventy
thousand) on Shri Ashish Garg under Section
112(a)(ii) of the Customs Act, 1962;
(viii) I impose a penalty of Rs. 50,000/- (Rs Fifty
thousand) on Shri Utpal Gupta, CHA, under Section
112(a)(ii) of the Act;
(ix) I impose a penalty of Rs. 20,000/- (Rs Twenty
thousand) on Shri K.M.R.Nambiar, under Section
112(b)(ii) of the Act;
(x) I impose a penalty of Rs. 20,000/- (Rs Twenty
thousand) on Shri Shyam R Sundar, under Section
112(b)(ii) of the Act;
(xi) I impose a penalty of Rs. 20,000/- (Rs Twenty
thousand) on Shri Shri Gopal T Khetan. under Section
112(b)(ii) of the Act.”
10. The Petitioners have filed W.P.(C) 5809/2024 challenging the
impugned Order-in-Original on the ground of violation of principles of
natural justice by the concerned assessing officer.
Submissions of Parties:
11. It is the case of the Customs Department that, during the relevant period
for adjudication of the impugned SCN, the decision of the Coordinate Bench
of this Court in Mangli Impex Ltd. v. Union of India & Ors.
[2016:DHC:3435-DB] was rendered due to which the impugned SCN was
put in the call book on 29th June, 2016 and again taken out from the call book
on 3rd January, 2017. Thereafter, certain instructions were issued by the
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Central Board of Indirect Taxes & Customs (hereinafter “CBIC”) which
resulted in the impugned SCN again being put in the call book on 3rd
November, 2017 and taken out from the call book on 3rd May, 2019. As per
the Respondents after the judgment of the Supreme Court in M/s Canon India
Private Limited v. Commissioner of Customs, Civil Appeal No. 1827 Of
2018, the impugned SCN was again transferred to the call book on 17th March,
2021 and taken out from the call book on 31st March, 2022 in view of the
CBIC circular dated 31st February, 2022. It is also stated by the DRI that the
Petitioners were provided with all RUDs and Non-RUDs on 25th June, 2009
and 9th April, 2009 respectively. It is also argued by the DRI that the
Petitioners have an alternate efficacious remedy and thus the present writ
petition is not maintainable.
12. The case of the Petitioner however is that under Section 28(9) of the
Act there is a specific time-period fixed for the purpose of adjudication of
show-cause notices and determination of amount of duty or interest. The
period specified in the said provision is six months and a maximum period of
one year. Section 28(9) of the Act reads as under:
Section 28(9) of the Customs Act, as in force prior to 29th March 2018
read as under:
“28. Recovery of [duties not levied or not paid or short-
levied or short-paid] or erroneously refunded.
xxx xxxx xxxx
xxxx
(9) The proper officer shall determine the amount of
duty or interest under sub-section (8),–
(a) within six months from the date of notice, [where it
is possible to do so], in respect of case falling under
clause (a) of sub- section (1);
(b) within one year from the date of notice, [where it is
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possible to do so] in respect of cases falling under sub-
section (4):”
Section 28(9) and 9(A) of the Customs Act, 1962 pursuant to
amendment reads as under:
“28. Recovery of [duties not levied or not paid or short-
levied or short-paid] or erroneously refunded.
xxx xxx
xxxx
(9) The proper officer shall determine the amount of
duty or interest under sub-section (8),–
(a) within six months from the date of notice, [xxx], in
respect of case falling under clause (a) of sub- section
(1);
(b) within one year from the date of notice, [xxx] in
respect of cases falling under sub-section (4):
[PROVIDED that where the proper officer fails to so
determine within the specified period, any officer senior
in rank to the proper officer may, having regard to the
circumstances under which the proper officer was
prevented from determining the amount of duty or
interest under sub-section (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.][(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
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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 such case, the time
specified in subsection (9) shall apply not from the date
of notice, but from the date when such reason ceases to
exist.]…”
13. It is argued on behalf of the Petitioner that substantial delay of almost
fifteen years in adjudication of the show-cause notice cannot be justified by
relying upon the phrase “where it is possible to do so” as contained in Section
28(9) of the Act. Ld. Counsel for the Petitioner relies upon a number of
decisions passed by this Court where the aforesaid provision has been
interpreted including the decision in Swatch Group India Pvt. Ltd. v. Union
of India & Ors. 2023 SCC OnLine Del 4938, and Gala International Pvt.
Ltd. v. Additional Director General, Directorate of Revenue Intelligence,
Delhi and Ors, 2023 SCC OnLine Del 6073.
14. Ld. Counsel for the Petitioner submits that this phrase – “where it is
possible to do so” has been omitted after the amendment and post the
omission, the window which existed for delay in adjudication after the
issuance of show cause notice does not exist.
15. Ld. Counsel for the Petitioner has also relied upon the following
judgments:
i. State of Punjab & Ors. v. Shreyans Industries Ltd., (2016)
SCC769
ii. Shri Ram Agro Chemicals Pvt. Ltd. v. Union of India & Ors.,Signature Not Verified W.P.(C) 5809/2024 & 15436/2023 Page 13 of 22
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2019 SCC OnLine P&H 4918Analysis and Findings
16. Heard.
17. The Court has considered the matter. The issue raised in the petition is
no longer res-integra. Section 28(9) of the Act, unamended and amended,
have been considered in detail by the Coordinate Benches of this Court in
Swatch Group India Pvt. Ltd. (supra) as also M/s Vos Technologies India
Pvt. Ltd. v. The Principle Additional Director General & Anr., 2024 SCC
OnLine Del 8756 . All the issues which have been raised by the Respondents
now stand adjudicated. The relevant observations in the said judgments are
set out below:
Swatch Group India Pvt. Ltd. v. Union of India & Ors. 2023 SCC OnLine
Del 4938“43. We have perused the documents and letters
produced by the Department as referred above. It is seen
that for a period of almost three years, various letters
were exchanged. The matter was fixed for personal
hearing on more than five occasions. No reason has
been provided as to why the hearings were not
concluded on the said dates and the duties payable, if
any, were not determined.
44. We have also perused the instruction dated
17.03.2021 issued to the Principal Additional Director
General, Directorate General of Intelligence (DRI). In
terms thereof, a decision was taken by the Board to keep
the show cause notices referred therein pending. It is
significant to note that the instruction categorically
mentions about a show cause notice dated 19.03.2019
and that in terms of the judgment passed by the Apex
Court in Canon India Private Limited v. Commissioner
of Customs (supra), the proceedings in the case haveSignature Not Verified W.P.(C) 5809/2024 & 15436/2023 Page 14 of 22
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become invalid. It was mentioned that since the notice
was dated 19.03.2019, it would get barred by limitation
on 18.03.2021 and be kept pending till the decisions is
taken by the Board. The said instructions appear to have
been issued to extend the period in terms of Section
28(9A) of the Customs Act. In terms thereof, if the
proper officer is unable to determine the amount of the
duty for the reason of a specific direction being issued
by the Board for keeping the matter pending, then the
time specified in Sub-section (9) shall apply not from the
date of notice but from the date when such reason
ceased to exist.
45. It is the case of the Revenue that the amended
provision of Section 28 of the Customs Act is not
applicable in the present case for the reason that the
impugned SCN was issued prior to the Finance Act,
2018, coming into force. Therefore, in our opinion the
benefit of extension of limitation as provided under
Section 28(9A) of the Customs Act would be applicable
only in those cases where the show cause notices have
been issued after the enactment of the Finance Act, 2018
since even as per the Revenue the notice issued prior to
coming into effect of Finance Act, 2018 would be
governed by the unamended provisions.
46. In our view, there is no material to show that it was
not possible for the proper Officer to determine the
amount of duty within the prescribed period. 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. 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.
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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.”
M/s Vos Technologies India Pvt. Ltd. v. The Principal Additional Director
General & Anr., 2024 SCC OnLine Del 8756
“85. The position which thus emerges from the
aforesaid discussion and a review of the legal
precedents is that the respondents are bound and
obliged in law to endeavour to conclude adjudication
with due expedition. Matters which have the potential of
casting financial liabilities or penal consequences
cannot be kept pending for years and decades together.
A statute enabling an authority to conclude
proceedings within a stipulated period of time “where
it is possible to do so” cannot be countenanced as a
license to keep matters unresolved for years. The
flexibility which the statute confers is not liable to be
construed as sanctioning lethargy or indolence.
Ultimately it is incumbent upon the authority to
establish that it was genuinely hindered and impeded
in resolving the dispute with reasonable speed and
dispatch. A statutory authority when faced with such a
challenge would be obligated to prove that it was either
impracticable to proceed or it was constricted by factors
beyond its control which prevented it from moving with
reasonable expedition. This principle would apply
equally to cases falling either under the Customs Act,
the 1994 Act or the CGST Act.”
18. The record also shows that there are several other orders/judgments
have been passed by various authorities following the same reasoning and
rationale, including the following decisions:
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– Nanu Ram Goyal v. Commissioner of CGST and Central Excise,
Delhi, [(2023) 6 Centax 148 (Del.)]
– Gala International Pvt. Ltd. v. Additional Director General,
Directorate of Revenue Intelligence, Delhi and Ors, 2023 SCC
OnLine Del 6073
– Parle International Limited v. Union of India & Ors.
[MANUIMHI196S12020]
– Union of India vs. ATA Freight Line (I) Pvt. Ltd. [Supreme Court
Order dated 10.02.2023- SLP (Civil) Diary No. 828/2023];
– Sushitex Exports India Ltd. And Ors. Vs. The Union of India and
Anr. [2022-TIOL-123-HC-MUM-CUS]
– Sidhi Vinayak Syntex Pvt. Ltd. v. Union of India [2017 (352) E.L.T.
455 (Guj.)]
– Shree Shakambari Silk Mills vs. Union of India [2018 (13) G.S.T.L.
279 (Guj.)]
In all of these cases, the Court has examined the facts and has also considered
as to whether the placing of a matter in the call book, for whatever reasons,
would justify non-adjudication of the notice within a reasonable period.
19. It is also noted that in the present case, the impugned Order-in-Original
dated 31st January, 2024 has been passed during the pendency of W.P.(C)
15436/2023 wherein the validity of the impugned SCN is under adjudication
by this Court. The passing of the impugned Order-in-Original while the
impugned SCN was under challenge before this Court would amount to
initiation of parallel proceedings rendering the scrutiny of the Court as
infructuous. A similar situation has been dealt by the High Court of Bombay
in Parle International Ltd. v. Union of India, 2020 SCC OnLine Bom 8678,
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wherein the SCN was not adjudicated for over 13 years and after the same
was assailed before the High Court, the concerned authority passed the order-
in-original. The High Court quashed both the impugned SCN therein and the
consequential proceedings resulting in the order-in-original. The relevant
paragraphs of the said judgement of the Bombay High Court are reproduced
under:
“24. There is one more aspect which we would like to
point out. The respondents had not taken any action
pursuant to the show-cause notices for long 13 years
till issuance of notice for personal hearing on August
13, 2019. After the petitioner approached this court by
filing the present writ petition on September 6, 2019
with due intimation to the respondents, respondent No.
3 went ahead and passed the order-in-original dated
November 11, 2019. We fail to understand when the
respondents could wait for 13 long years after
issuance of the show-cause notices, there could not
have been any earthly reason to proceed at such great
speed and pass the order-in-original before the court
could adjudicate on the correctness of the action of
the respondents. Is it open to the respondents to
materially alter the subject matter of the writ petition
pending before the court and then contend that
because of such material alteration, the writ petition
has become infructuous and that the petitioner
should avail the alternative remedy of appeal ?
25. In Harihar Collections v. Union of India [2020]
14 GSTR-OL 294 (Bom), decided on October 15,
2020, this court was confronted with a similar
situation when during the pendency of the writ
petition, the Commissioner of Customs had passed
review order on October 1, 2020 under section
129D(2) of the Customs Act, 1962. This court held as
under (page 305 of 14 GSTR-OL) :
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“26. When this court had taken cognizance
of the grievance made by the petitioner and
was in seisin of the matter fixing October 6,
2020 for consideration, it was highly
improper on the part of Commissioner of
Customs (Import-II) to have passed the
order dated October 1, 2020 without any
intimation to or taking leave of the court. It
needs no reiteration that when the court,
that too the High Court, is in seisin of a
matter, an administrative or executive
authority cannot start a parallel
proceeding on the very same subject matter
at its own ipse dixit and record a finding. It
would amount to interfering with the
dispensation of justice by the courts. In the
instant case, when the court was set to
examine the grievance of the petitioner
regarding non-release of the goods despite
the order-in-original, what was sought to
be done was to present the court with an
order passed in the midst of such
examination keeping the court totally in the
dark saying that the order-in-original
suffers from illegality or impropriety
directing the subordinate authority to apply
to the Commissioner (Appeals) to set aside
the order-in-original and then contending
that the writ petition should be dismissed
because of the subsequent development or
that the petitioner should be relegated to
the appellate forum to contest the
subsequent order. As pointed out above,
this amounts to interfering with the
administration of justice and is thus not at
all acceptable. A view may be taken that
such an order should be ignored as it isSignature Not Verified W.P.(C) 5809/2024 & 15436/2023 Page 19 of 22
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contumacious.”
26. The above aspect also requires a serious
consideration and, therefore, has been re-stated.
When a matter is brought before the court or the
court is examining the matter, respondents cannot
initiate or proceed with a parallel proceeding on its
own to render the court scrutiny redundant. Such an
approach is neither acceptable nor permissible.
27. In any view of the matter when the commencement
of adjudication proceedings after inordinate delay of
13 years post-issuance of show-cause notices and
submission of reply is held to be untenable in law, any
consequential decision or order based on such delayed
adjudication would also be rendered invalid.”
20. The above-observations have been referred to by the Co-ordinate
Bench of this Court in Vos Technologies (supra), wherein further to the SCN,
the order-in-original was also passed in certain writ petitions. Despite this, the
Court held that the SCN as also the final order that came to be passed in the
corresponding proceedings would be liable to be quashed due to the delay in
adjudication of the impugned SCN therein.
21. Considering the aforesaid discussion, the opinion has been unanimous
of the Coordinate Benches of this Court as also of other High Courts, that
placing of the matter on the call book and taking it up after several years would
not be permissible, even if the order-in-original is passed.
22. Coming to the facts of this case, the Show Cause Notice dates back to
23rd May, 2008. The first notice for personal hearing was sent to the
Petitioners on 15th January, 2010. Thereafter, communication for providing
all the RUDs happened between the Petitioners and the concerned
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adjudicating officer. The Petitioners were granted personal hearing on 27th
February, 2012, 16th March, 2012 and a personal hearing also scheduled for
13th May, 2014. Despite the repeated personal hearing conducted by the
concerned adjudicating officer, the impugned SCN was not adjudicated
between 2008 and 2016. Even if the date is reckoned from 13th May, 2014 the
Mangli Impex decision came only on 3rd May, 2016 and the matter has been
placed in the callbook on 29 June, 2016. A few months later, it was retrieved
on 3rd January, 2017. Thereafter, impugned SCN was again put in the call
book on 3rd November, 2017 and taken out from the call book on 3rd May,
2019. Further, in view of the judgment of the Supreme Court in M/s Canon
India (supra), the impugned SCN was again transferred to the call book on
17th March, 2021 and taken out from the call book on 31st March, 2022.
23. A perusal of the above would show that the impugned SCN, which was
issued way back in 2008, due to repeated placing in the call book has not been
adjudicated for so long. Repeated placing and removing from the call book is
not a valid justification for non-adjudication of the impugned SCN for about
15 years. Moreover, the gaps between the said periods is also inexplicable.
Hearing notices have been given to the Petitioners but there is no reason for
non-adjudication of the impugned SCN for long period. The present case is
fully covered by the decisions of the Coordinate Bench of this Court,
including the recent decision of this Court in Shri Balaji Enterprises v.
Additional Director General New Delhi & Ors., W.P.(C) 11207/2023
(decided on 19th December, 2024).
24. Thus, following the decisions of the Coordinate Benches, the impugned
SCN dated 25th May, 2008, deserves to be quashed and is accordingly set
aside.
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25. Considering that the impugned SCN which forms the basis for passing
of the impugned Order-in-Original itself has been set aide, the said impugned
Order-in-Original cannot be sustained or survive in terms of the settled
principles of law. Thus, the impugned Order-in-Original also deserves to be
quashed and is accordingly set aside.
26. Ordered accordingly.
27. The present petitions are allowed and disposed of in the aforesaid
terms. Pending applications, if any, are also disposed of.
PRATHIBA M. SINGH
JUDGE
DHARMESH SHARMA
JUDGE
JANUARY 10, 2025
Rahul/ms
(corrected and released on 21st January, 2025)
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Digitally Signed
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Signing Date:22.01.2025
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