Case Note & Summary
The petitioner, Paresh H. Mehta, a sole proprietor of M/s. P. H. Mehta and Co., challenged a show cause notice dated 16 May 2008 issued under Section 112(a) of the Customs Act, 1962, alleging clandestine clearance of 663 import assignments without payment of appropriate duty. The notice had been pending adjudication for over 15 years. The petitioner filed detailed responses in 2008 and attended personal hearings in December 2008, but no effective hearing took place. Thereafter, there was no progress until December 2011, when another hearing was fixed but again ineffective. After a gap of five years, a hearing was scheduled in February 2017, and then again in February 2021, but no effective adjudication occurred. The department transferred the matter to the call book in March 2021 without intimation to the petitioner. The petitioner sought quashing of the show cause notice relying on several decisions of the Bombay High Court. The respondents filed an affidavit but offered no explanation for the delay from 2008 to 2021. The court found the delay inordinate and unexplained, and held that the transfer to the call book without intimation violated Section 28(9) of the Customs Act. The court rejected the respondents' reliance on the Supreme Court's order in Swati Menthol and Allied Chemicals Ltd., noting that it did not lay down a proposition that gross delay must be excused. The court also rejected the argument that prejudice must be separately pleaded, holding that prejudice is inherent in such delay. Following the reasoning in Coventry Estates Pvt Ltd, Eastern Agencies Aromatics (P) Ltd, ICICI Home Finance Company Ltd, Bhushan Vohra, and The Great Eastern Shipping Company Ltd, the court quashed the show cause notice and restrained further proceedings.
Headnote
A) Customs Law - Show Cause Notice - Delay in Adjudication - Section 112(a) and Section 28(9) of Customs Act, 1962 - Inordinate and unexplained delay of 15 years in adjudicating show cause notice - Held that such delay warrants quashing of the notice, as prejudice is inherent and the department failed to provide any explanation for the delay (Paras 3-12, 16-17). B) Customs Law - Call Book - Transfer Without Intimation - Section 28(9) of Customs Act, 1962 - Transfer of show cause notice to call book without intimation to the noticee - Held that this breaches the statutory requirement and principles of natural justice, and the department is duty-bound to inform the party (Paras 9-10, 17). C) Customs Law - Prejudice - Inherent in Delay - Section 112(a) of Customs Act, 1962 - Prejudice need not be separately pleaded or established when there is gross delay - Held that contesting a show cause notice after 15 years inherently causes prejudice to the noticee (Para 20).
Issue of Consideration
Whether a show cause notice issued under Section 112(a) of the Customs Act, 1962, can be quashed due to inordinate and unexplained delay in its adjudication, and whether transfer of the matter to the call book without intimation to the noticee is valid.
Final Decision
The show cause notice dated 16 May 2008 is quashed, and the respondents are restrained from proceeding further based on the same.
Law Points
- Inordinate and unexplained delay in adjudication of show cause notice warrants quashing
- Transfer to call book without intimation violates principles of natural justice and Section 28(9) of Customs Act
- 1962
- Prejudice is inherent in long-delayed proceedings
