Gala International PVT. LTD. vs. Additional Director General, Directorate Of Revenue Intelligence, Delhi & Ors.

Held

The Court held that the period for adjudicating the show cause notice under Section 28(9) of the Customs Act, 1962, as in force prior to 29.03.2018, had long since elapsed. The Court found that the impugned show cause notice was not adjudicated for over eight years (from 30.04.2009 to 21.07.2016) even when there was no impediment. The Court noted that the petitioners were not informed about the notice being placed in the 'Call Book'. The Court relied on its recent decision in Swatch Group India Pvt. Ltd. & Ors. v. Union of India & Ors., which held that it was no longer open for the respondents to proceed with the adjudication of the impugned show cause notice once the period for adjudication had elapsed. Consequently, the impugned letters recommencing adjudication proceedings were set aside, and the show cause notice could not be adjudicated. The Court allowed the petitions on these grounds.

Facts

The petitioners, M/s Gala International Pvt. Ltd., M/s Ganesh Overseas Pvt. Ltd., and M/s Shirdi Exim Pvt. Ltd., filed writ petitions challenging a show cause notice dated 30.04.2009 issued by the Additional Director General, Directorate of Revenue Intelligence (DRI), and subsequent letters dated 20.01.2023 and 06.03.2023 from the Commissioner (Adjudication) calling them for a hearing. The show cause notice, issued after investigations into alleged fraudulent exports to Russia under the Rupee-Rouble Scheme and DEPB Scheme between 2000 and 2005, proposed demands for duty, interest, and penalty. The petitioners argued that the adjudication was barred by limitation due to a significant delay of nearly fourteen years. The respondents contended that the delay was justified due to the complexity of issues and the placement of the notice in the 'Call Book'.

Key Issues

1. Whether the adjudication of the impugned show cause notice dated 30.04.2009 is barred by limitation under Section 28(9) of the Customs Act, 1962, as it stood prior to 29.03.2018, given the significant delay in adjudication? 2. Whether the procedure of placing the show cause notice in the 'Call Book' and its subsequent retrieval justifies the delay in adjudication and permits the resumption of proceedings? Petitioner's Arguments: The petitioners contended that the adjudication of the show cause notice was time-barred as it had not been adjudicated for approximately fourteen years. They argued that the delay was unreasonable and fatal to the proceedings. They also reserved the right to challenge the constitutional validity of Section 97 of the Finance Act, 2022, at a later stage. They relied on the ratio of this Court's decision in Nanu Ram Goyal v. Commissioner of CGST and Central Excise, Delhi & Ors. Respondents' Arguments: The respondents argued that the delay was not fatal, as the issues involved were complicated and it was not practicable to complete adjudication within the stipulated period under Section 28(9) of the Customs Act. They contended that the expression 'possible' in Section 28(9) should be interpreted liberally. They also submitted that the show cause notice was placed in the 'Call Book' on 21.07.2016 due to ongoing legal debates regarding the jurisdiction of DRI officers and was retrieved on 20.01.2023, making the resumption of proceedings permissible.