The Bombay High Court quashed a show cause notice (SCN) issued by the Directorate of Revenue Intelligence (DRI) under Section 28 of the Customs Act, 1962, for demanding import duty on the ground of unreasonable delay in adjudication. The notice was issued in 2015, and no significant action was taken for eight years. The Court emphasized that procedural delays without proper communication to the petitioner violate principles of natural justice.

Issue:

A show cause notice was issued to Bhushan Vora by the DRI on March 10, 2015, demanding Rs. 3,66,360 in import duty under Section 28 of the Customs Act, along with interest under Sections 28AA/AB. Despite the petitioner’s detailed response, no action was taken for several years, except for the SCN being transferred to a "call book" in 2018 without informing the petitioner.

Grounds for Petition:

1. Delay in Adjudication: The primary ground for the petition was that the SCN had not been adjudicated for almost eight years.
2. Lack of Communication: The petitioner was not informed about the transfer of the case to a "call book" (used for cases pending due to conflicting legal issues) as required.
3. Violation of Natural Justice: The petitioner argued that the prolonged delay and lack of communication violated principles of fairness and natural justice.

Arguments by Respondents:

The respondents justified the delay by stating that the case was transferred to the call book due to conflicting decisions. They also referenced the Supreme Court decision in Collector of Central Excise, New Delhi vs. Bagsons Paints Industry to argue that there is no statutory bar on adjudicating an SCN after a long delay.

Court's Findings:

The Court found the delay unjustified, particularly since the petitioner was never informed about the transfer of the case to the call book. It cited previous judgments of the Bombay High Court, where SCNs were quashed due to procedural delays. It further stated that, in the absence of communication regarding the delay, the petitioner was justified in assuming that the notice had been dropped.

Acts and Sections Discussed:

• Customs Act, 1962:
  • Section 28: Governs the recovery of duties not levied or short-levied.
  • Section 28AA/AB: Discusses the interest on delayed payment of customs duties.
  • Section 28(9): Mandates a timeframe for adjudication of SCNs.

Ratio Decidendi:

The Bombay High Court held that the absence of timely adjudication and failure to inform the petitioner about the status of the SCN violated the principles of natural justice. Procedural delays, especially without communication, deprive the petitioner of the opportunity to defend themselves and maintain necessary records, making the SCN void.

Subjects:

Delayed adjudication of show cause notices under the Customs Act.

#CustomsAct #RevenueIntelligence #ShowCauseNotice #ProceduralDelay #NaturalJustice #ImportDuty