Delhi HC Quashes Customs Order Over 10-Year Delay and Procedural Lapse [Read Order]

The Delhi High Court, quashed a Customs order issued nearly a decade after the show cause notice, holding that the 10-year delay in adjudication and failure to provide proper opportunity of hearing rendered the proceedings unsustainable.

Gurjit Singh Bains, petitioner-assessee, along with Sandeep Arora filed writ petitions challenging a show cause notice dated 30th December 2014 and the Order-in-Original issued on 30th March 2024, passed in continuation of the notice.

GST ITC Draft Replies & Internal Controls! Click here

The Directorate of Revenue Intelligence(DRI) had investigated M/s Seiger International for customs duty evasion between May 2011 and October 2012. It was alleged that its Proprietor, Ms. Kulpreet Kaur, along with Mr. Sandeep Arora and the petitioner, used duplicate lower-value invoices to clear imported goods.

Statements of Ms. Kaur and Mr. Arora were recorded in August 2014, while petitioner, based in Italy, did not appear despite summons. Based on the statements and documents, a show cause notice was issued on 30th December 2014.

Ms. Kaur later approached the Settlement Commission, which settled the matter through an order dated 13th April 2016 after she paid the duty, interest, and a penalty. Immunity was granted to her, but the Department was allowed to proceed against the others.

GST ITC Draft Replies & Internal Controls [New Edition – 2nd Edn 2024]! Click here.

The petitioners claimed they received no further notice or personal hearing after the show cause. However, a final order was passed on 30th March 2024, stating that repeated hearing notices were issued a claim the petitioners disputed.

The division bench of Prathiba M. Singh(Judge) and Rajneesh Kumar Gupta(Judge) heard the counsels and found that the case deserved to be allowed on three main grounds. First, placing the matter in the call book was not a valid reason to delay adjudication. Second, there was no stay from any court, so the show cause notice should have been acted upon. Third, the Customs Department was aware of the Settlement Commission’s order.

Read More: Right to Cross Examination under Customs Act : Madras HC directs to pass a speaking order on request of DRI Officer’s Cross Examination

The court referred to its earlier rulings in Vos Technologies and Vijay Enterprises, where it had held that long delays in adjudication, especially due to repeated placement in the call book, were not justified. In this case, the show cause notice was issued in December 2014, and the Order-in-Original was passed only in March 2024,almost ten years later.

The bench held that such delay was not acceptable, set aside the Order-in-Original, and quashed the proceedings.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates