Non-Communication of Extension u/s 28(9) Customs Act Does Not Invalidate Adjudication Process: Delhi HC [Read Order]

In a recent ruling, the Delhi High Court held that non-communication of an order granting extension of time under Section 28(9) of the Customs Act, 1962 does not invalidate the adjudication process, as the statute does not mandate that such extension must be communicated to the noticee.

Pranij Heights India Pvt. Ltd., the petitioner, filed a writ petition before the Delhi High Court challenging the continuation and culmination of adjudication proceedings arising from a show cause notice dated 7 July 2023 issued by the Customs Department. The notice proposed denial of exemption benefits claimed under the ASEAN-India Free Trade Agreement in respect of aluminium foil imports made during the period from 6 July 2018 to 6 March 2020.

The petitioner had claimed concessional customs duty by relying on Certificates of Origin issued by suppliers in Malaysia and Thailand. Subsequently, based on alerts issued by the Directorate of Revenue Intelligence and communications from Malaysian authorities questioning the authenticity of certain Certificates of Origin, the Customs Department initiated proceedings and issued the show cause notice.

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The petitioner’s counsel challenged the proceedings primarily on the ground of limitation. It was argued that under Section 28(9) of the Customs Act, adjudication must be completed within one year from the date of issuance of the show cause notice. According to the petitioner, although the department claimed that an extension of time had been granted by the competent authority, the extension order was never communicated to the petitioner.

On this basis, they argued that the adjudication was without jurisdiction and liable to be set aside. The petitioner also argued that relied-upon documents were not supplied, which affected its ability to effectively defend the case.

The Customs Department argued that the petitioner was repeatedly called upon to file its reply and to appear for personal hearings but chose not to participate meaningfully in the proceedings. They argued that Section 28(9) permits the competent authority to grant an extension of time by recording reasons in writing and does not require communication of such extension to the noticee.

The department also pointed out that an Order-in-Original had already been passed and that the petitioner had an effective statutory appellate remedy.

The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain observed that the language of Section 28(9) does not prescribe any requirement for communication of the extension order to the noticee. The court observed that this provision is materially different from Section 110(2) of the Customs Act, which expressly requires communication of an extension.

The court explained that while it may be desirable for the department to inform the noticee, absence of such communication does not render the adjudication invalid when the statute itself does not mandate it. The court also pointed out that the petitioner had adequate notice of the proceedings and multiple opportunities to respond.

The court held that no ground was made out to interfere with the adjudication proceedings in writ jurisdiction on the basis of non-communication of the extension. The court declined to invalidate the adjudication process and disposed of the writ petition.

Liberty was granted to the petitioner to file a statutory appeal against the Order-in-Original, with a direction that if such appeal is filed within the stipulated time granted by the court, it shall be decided on merits and not rejected on the ground of limitation.

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