In a recent ruling, the Delhi High Court quashed a Show Cause Notice ( SCN ) issued in 2008 and an Order-in-Original dated 31.01.2024, citing an unjustified 15-year delay in adjudication. The court rejected the customs department’s justification for the delay, including the repeated placement of the matter in the “call book.”
Vijay Enterprises & Anr. filed a writ petition challenging the SCN issued by the Directorate of Revenue Intelligence (DRI) and the subsequent Order-in-Original. The case involved allegations of fraudulent undervaluation and misdeclaration of imported goods to evade customs duties.
The SCN was based on accusations that the petitioners declared lower invoice values, made payments through hawala channels, and diverted imported goods meant for printing newspapers into the local market.
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The customs authorities argued that the delay was due to litigation dependency and administrative instructions, which led to the SCN being repeatedly placed in the call book. They also argued that all necessary documents had been provided to the petitioners and that they had complied with statutory requirements.
The petitioners argued that the customs authorities violated the six-month to one-year statutory timeline prescribed under Section 28(9) of the Customs Act, 1962. They also argued procedural lapses, including the non-provision of relied-upon documents (RUDs) and extended periods of inactivity by the department, despite multiple personal hearings between 2010 and 2017.
A bench comprising Justice Prathiba M. Singh and Justice Dharmesh Sharma observed that the 15-year delay in adjudication violated statutory timelines and natural justice principles. The court held that the practice of repeatedly placing matters in the call book does not justify indefinite delays.
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The court stated that “administrative practices like call book placements cannot be used as a shield to bypass statutory obligations.” The court referred to similar cases, including Swatch Group India Pvt. Ltd. v. Union of India and Vos Technologies India Pvt. Ltd. v. Principal Additional Director General, which emphasized that administrative delays cannot override legal mandates.
The court also cited Parle International Ltd. v. Union of India, where the Bombay High Court quashed SCNs and orders delayed for over 13 years, and Gala International Pvt. Ltd. v. Additional Director General, DRI, which similarly criticized prolonged inaction.
The court observed that the customs authorities’ failure to adjudicate the SCN for 15 years amounted to a denial of natural justice. The court observed that the phrase “where it is possible to do so” in Section 28(9) of the Customs Act should not be interpreted as allowing indefinite extensions.
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The court criticized the passing of the Order-in-Original during the pendency of the writ petition, stating that it constituted an attempt at judicial proceedings. It clarified that administrative action cannot proceed in parallel when the court is actively adjudicating the validity of the underlying SCN. The court quashed both the SCN and the Order-in-Original ruling that the excessive delay and procedural lapses rendered the proceedings invalid.
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