‘Maintain Delivery Proof for Every Speed-Post Notice’: Delhi HC Directs Customs Noting ‘Proof of Service’ Lapses [Read Order]

In a very recent order, the Delhi High Court has directed the Customs Department to strictly maintain delivery proof for all speed-post notices after finding serious lapses in the service of Show Cause Notice (SCN) and hearing notices.

The Court set aside the ex-parte Order-in-Original dated 26 July 2024 and the corrigendum dated 9 October 2024, after noting that the petitioner was never effectively served with hearing notices despite the adjudicating authority proceeding against it.

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JusticePrathiba M. Singh and Justice Renu Bhatnagar directed that “In future, the Department shall ensure that whenever notices are issued through speed post, the tracking receipts and the delivery reports shall be maintained properly in the database.”

The fact is that the petitioner, Govind Global Ventures challenged the adjudication order before the Delhi High Court under Articles 226 and 227, arguing that although the show cause notice dated 2 February 2016 was initially responded to through adjournment requests and document requisitions, no further hearing notice was served after the case was placed in the call book due to the Supreme Court’s decision in Canon India.

According to the petitioner, neither the three alleged notices dated 9 January 2024, 6 February 2024, and 12 March 2024, nor the final order, were ever received. The impugned order came to know only when the petitioner contacted the Department for a status update.

Mr. Prem Ranjan Kumar, the petitioner’s counsel submitted that the ex-parte adjudication violated natural justice because no notice of hearing was actually delivered, despite the Department claiming otherwise in its order. They argued that the absence of delivery receipts or tracking reports deprived the petitioner of its statutory right to defend itself.

On the contrary, the Department filed an affidavit acknowledging that while notices were dispatched via speed post, delivery could not be proved.

The Department submitted that several notices had been issued in accordance with changes in adjudicating authority following amendments under the Finance Act, 2022, but conceded that the Department was “unable to prove service.”

The Bench expressed displeasure at the Department’s failure to prove proper service, noting that outright ex-parte adjudication despite lack of delivery evidence is a serious procedural defect.

In addition, the court said that the Department has the duty to maintain complete tracking and delivery records of all notices sent through speed post. The Court also noted that the challenged order involved huge demands including reassessment of value, duty short-payment of ₹1.29 crore, redemption fine of ₹1.20 crore, interest liabilities, and penalties on directors.

As the petitioner had already deposited ₹39 lakh during investigation, which exceeded the usual 10% pre-deposit requirement for appeals, which made the court to interfere in the matter. Accordingly, the matter was remanded back to the adjudicating authority for fresh hearing.

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