Tilak Raj Jain And Anr. vs. Additional Director General, Directorate Of Revenue Intelligence, Delhi Zonal Unit And Ors.

Facts

The Petitioners, Tilak Raj Jain and Mohan Lal Jain, trading as M/s. Ikon Wire (India), are challenging a Show Cause Notice (SCN) dated December 26, 2008, issued by the Additional Director General, Directorate of Revenue Intelligence (DRI). The SCN alleges undervaluation in the import of Galvanised Iron (GI) wires and Wire Mesh by certain firms, including those operated by Shri Sandeep Aggarwal, from whom the Petitioners procured these goods. The DRI conducted searches on February 25, 2008, and the Petitioners claim they were compelled to deposit Rs. 75,00,000/-. They sought to retract their statements and recover the deposit on June 12, 2008. The SCN, issued under Section 28(1) of the Customs Act, 1962, holds the Petitioners jointly and severally liable for differential duty and penalties. The adjudication of the SCN has been significantly delayed, with the matter being repeatedly placed in and removed from the 'call book' by the respondents.

Held

The Court held that the impugned Show Cause Notice (SCN) dated December 26, 2008, is liable to be quashed and is accordingly set aside due to the inordinate and unexplained delay in its adjudication. The Court found that the repeated placing of the SCN in the 'call book' and its subsequent removal over a period of approximately 15 years does not constitute a valid justification for the non-adjudication. The Court noted that the respondents' counter-affidavit admitted the repeated use of the 'call book' mechanism. The Court emphasized that statutory authorities are obligated to proceed with reasonable expedition and must prove that it was impracticable or that they were constrained by factors beyond their control to justify any delay. The Court found that the present case is fully covered by the decisions of its Coordinate Benches, which have consistently held that placing matters in the 'call book' for extended periods and then adjudicating them after several years is not permissible. The ratio decidendi is that unreasonable delay in adjudication, even if explained by procedural actions like 'call book' entries, violates the principle of timely resolution and can lead to the quashing of the proceedings. The Court allowed the petition and quashed the SCN.

Key Issues

1. Whether the proceedings initiated under the Show Cause Notice dated December 26, 2008, are barred by limitation under Section 28(9) of the Customs Act, 1962, due to the undue delay in adjudication? Petitioner's arguments: The Petitioners contend that Section 28(9) of the Customs Act, 1962, mandates adjudication of show-cause notices within a specific time frame (six months, extendable to one year). They argue that the prolonged delay in adjudicating the SCN, which was issued in 2008 and has not been finalized even by 2023, violates this provision. The repeated placement of the SCN in the 'call book' by the respondents is not a valid justification for this inordinate delay, as it prevents timely resolution. They rely on various High Court judgments, including those from their own court, which have held that such delays are impermissible. Revenue/State's arguments: The respondents, through their counter-affidavit, admit that the SCN was repeatedly placed in and removed from the 'call book' due to various legal challenges and Board instructions. They provide a timeline of these actions, citing Board's instructions and Supreme Court judgments as reasons for the delays. They do not explicitly argue that the delay is permissible under Section 28(9) but rather explain the circumstances leading to it.