M/S Star International & Anr. vs. The Commissioner Of Customs & Ors.

Facts

The petitioners, Shri Rakesh Kumar Mangala and M/s. Star International & Anr., challenged an Order-in-Original dated March 26, 2024, and a Show Cause Notice (SCN) dated June 20, 2012. The SCN was issued by the Commissioner of Customs, ICD (Export), Tughlakabad, and the Directorate of Revenue Intelligence (DRI). The DRI suspected misdeclaration and undervaluation of imported goods by entities allegedly controlled by Mr. Rafique, and also by firms believed to be operated by Petitioner Rakesh Kumar Mangala, including M/s. Star International, whose proprietor is Petitioner Dayanand Baghel. The SCN alleged joint and severe liability for differential duty, confiscation, and penalties under various sections of the Customs Act, 1962. The adjudication of the SCN was significantly delayed, spanning approximately 12 years from its issuance.

Held

The Court held that the impugned Show Cause Notice (SCN) dated June 20, 2012, was liable to be quashed due to inordinate and inexplicable delay in adjudication, spanning approximately 15 years. The Court found that repeated placing and removal of the SCN from the 'Call Book' did not constitute a valid justification for such a prolonged delay. The Court noted that while the respondents claimed the delay was due to the petitioners' requests for documents and adjournments, this argument had been rejected by coordinate benches of the Delhi High Court in similar cases. The Court relied on precedents like Vos Technologies (supra), Shri Balaji Enterprises (supra), and Vijay Enterprises (supra), which emphasized the need for expedition in adjudicatory processes. Consequently, since the SCN itself was quashed, the impugned Order-in-Original dated March 26, 2024, which was based on the SCN, was also found unsustainable and was set aside. The Court directed accordingly, allowing the petitions.

Key Issues

1. Whether the impugned Show Cause Notice dated 20th June, 2012, is liable to be quashed on grounds of inordinate delay in adjudication, contrary to the principles of natural justice and the mandate for expedition in proceedings under the Customs Act, 1962? 2. Whether the impugned Order-in-Original dated 26th March, 2024, which is based on the delayed SCN, is sustainable? Petitioner's Arguments: The petitioners contended that the adjudication of the SCN was unduly delayed for approximately 12 years, violating principles of natural justice. They argued that despite their requests for relied-upon documents (RUDs) and subsequent detailed replies, and multiple personal hearings, the proceedings remained pending for an inordinate period, with significant gaps in communication. They relied on decisions of coordinate benches of the Delhi High Court, such as Vos Technologies (supra), Shri Balaji Enterprises (supra), and Vijay Enterprises (supra), which have quashed SCNs due to prolonged delays. Revenue's Arguments: The respondents (Customs Department) argued that the delay was not attributable to their inaction but was caused by legal processes and the petitioners' repeated requests for additional documents. They contended that the SCN was placed in the 'Call Book' for valid reasons, including challenges to the DRI's power to issue SCNs, and that the petitioners' insistence on documents and adjournments prolonged the adjudication. They asserted that the petitioners were granted repeated opportunities for personal hearings.