In a recent ruling, the Madras High Court observed that cross-examination requests should not be entertained unless there is a substantive reply on the merits to the Show Cause Notice (SCN).
The petitioner, Nalin Gupta received a Show Cause Notice (SCN) under Section 28(4) of the Customs Act, 1962 from the Commissioner of Customs. The SCN related to alleged irregularities, demanding duty within the prescribed time under the Customs Act.
An appeal challenging the notice on grounds of limitation as per Section 28(9) of the Customs Act, 1962 was filed by the petitioner. In response, the Customs Department claimed an extension of time to adjudicate the notice was granted by the Chief Commissioner of Customs.
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The appellant did not file a reply on the merits of the SCN but instead requested the cross-examination of witnesses mentioned in the notice. This request was made on 10.04.2023, and the Deputy Commissioner of Customs rejected the cross-examination request on 19.04.2023.
Aggrieved by the rejection of the cross-examination request, the petitioner filed an appeal before the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT). On 26.05.2023, CESTAT set aside the rejection and directed the Customs Department to allow cross-examination before proceeding with adjudication.
Following CESTAT’s direction, the Customs Department allowed and conducted the cross-examination. Then, the petitioner filed a Writ Petition before the Madras High Court challenging the SCN as time-barred under Section 28(9) of the Customs Act.
The petitioner’s counsel argued that the customs department failed to adjudicate the matter within stipulated time limits which makes it null and void. On 08.08.2024, the Writ Court disposed of the petition directing the Customs Department to complete adjudication within the extended period granted by the Chief Commissioner.
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Aggrieved with the Writ Court’s decision, the appellant filed the present Writ Appeal challenging the validity of the extension granted by the Chief Commissioner.
The department’s counsel argued that the extension was granted by the Chief Commissioner within the permissible period under the first proviso to Section 28(9). The delay in adjudication was due to the petitioner’s request for cross-examination of witnesses.
The bench comprising Justice R.Suresh Kumar and Justice C.Saravanan observed that the Chief Commissioner validly extended the time for adjudication. The court observed that the petitioner’s actions of filing for cross-examination and appealing procedural orders caused the procedural delay.
The court criticized the customs department for allowing cross-examination without even getting a substantive reply to the Show Cause Notice. The court found procedural lapses, including improper handling of appeals and disciplinary actions against officials responsible for delays.
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The court observed disciplinary action was initiated against two junior officials, the court pointed out that this was insufficient and called for an investigation into the role of senior officers who may have contributed to these lapses.
The court found no reason to interfere in the writ court’s order and directed the Customs Department to complete adjudication proceedings quickly. The court directed the Principal Commissioner of Customs (Preventive) to refer the entire case file to the vigilance department for disciplinary action against the officers involved in the delay.
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