Repeated Placing and Removing from Call Book, Not a valid justification for Non-Adjudication of Customs SCN for 15 years: Delhi HC [Read Order]

In a recent case, the Delhi High Court ruled that repeated placing and removing from the call book is not a valid justification for non-adjudication of the impugned SCN for about 15 years.

Tilak Raj Jain A, the petitioner filed writ petition for quashing the Show Cause Notice (“SCN”) issued by the Respondent No. 1 - Additional Director General, Directorate of Revenue Intelligence, Delhi Zonal Unit ( “DRI”) and to declare the proceedings initiated under the SCN by Respondent No. 2 – Principal Commissioner of Customs, ICD Tughlakabad, New Delhi, to be barred by limitation under Section 28(9) of the Customs Act, 1962 (“Act”).

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The case of the Petitioners is that they were engaged in the trading of indigenous and imported Galvanised Iron wires (“GI wires”) through their firm M/s. Ikon Wire (India). According to the Petitioners, the imported GI wires were being procured from one Shri Sandeep Aggarwal who used to import the same through various firms, either owned or operated, being M/s. Shivalik Impex, M/s. Raghav Impex, M/s. Popular Mart and M/s. White Leaf. The DRI suspected undervaluation in the import of GI wires and “Wire Mesh” that was being imported by these four firms.

Accordingly, on 25th February, 2008, the DRI conducted certain searches at the premises of the supplier i.e., Mr. Sandeep Aggarwal and his firms, as also the godown of the Petitioners who had purchased the said products from him. It is the case of the Petitioners that they were forced to deposit a sum of Rs. 75,00,000/- in the name of the said importing firms. On 12th June, 2008, the Petitioners sought to resile from the statements made by them and also sought release of the sum deposited, i.e., Rs. 75,00,000/-.

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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 Customs Act. The Petitioners were made answerable to different jurisdictional Assessing Officers i.e., (i) Commissioner of Customs, JNPT, Nhavasheva, Raigad, (ii) Commissioner of Customs, Kandla, Gujarat, (iii) Commissioner of Customs, ICD, Tughlakabad, New Delhi, (iv) Commissioner of Customs, Rajaji Salai, Chennai. On the basis of the allegations stated in the impugned SCN, the DRI raised various demands including penalty against the persons and firms, including against the Petitioners, alleged to be involved in undervaluation in the import of GI Wires and Wire Mesh.

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The impugned SCN, however, was not adjudicated for a substantial period of time by the concerned assessing authorities, despite the SCN being made answerable to four separate authorities i.e., Commissioner of Customs at New Delhi, Maharashtra, Chennai and Kandla. Since there were multiple adjudicating authorities a common adjudicating authority i.e., Commissioner of Customs, ICD, Tughlakabad, New Delhi was appointed on 23rd December 2009 to adjudicate the impugned SCN. Communication took place for exchange of ‘Relied Upon Documents’ ( “RUDs”) and four personal hearings were conducted on 30th December, 2014, 21st May, 2015, 17th September, 2015 and 29th October, 2015.

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Thereafter, certain instructions were issued by the Central Board of Indirect Taxes & Customs (“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.

The case of the Petitioner 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.  It was 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.

Counsel for the Petitioner submitted 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.

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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 are 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.

Relying upon the decision of Shri Balaji Enterprises v. Additional Director General New Delhi & Ors., Justice Prathiba M. Singh and Justice Dharmesh Sharma quashed the impugned SCN and set aside the order.

To Read the full text of the Order CLICK HERE

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