Bombay High Court
Eastern Agencies Aromatics (P) Ltd vs The Union Of India on 24 November, 2022
Author: Gauri Godse
Bench: Nitin Jamdar, Gauri Godse
Digitally signed
VARSHA by VARSHA
VIJAY RAJGURU
VIJAY Date:
RAJGURU 2022.12.05
18:12:00 +0530 907-wpl-30629-2022(j) (1)final.doc
varsha
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL JURISDICTION
WRIT PETITION(L) NO. 30629 OF 2022
Eastern Agencies Aromatics(P) Ltd
a company registered under the provisions
of Companies Act, 1956 and having its
registered office at 301 Mangal Simran,
28th Road, Bandra(West), Mumbai-400 050. ... Petitioner
Vs.
1. The Union of India
through the Secretary,
Department of Revenue,
Ministry of Finance, Government of India,
New Delhi - 110 001.
2. The Commissioner of Customs-IV
(Export), having his office at
Air Cargo Complex, Sahar, Andheri(East),
Mumbai Zone-III, Mumbai - 400 099.
3. The Additional Director General
Directorate of Revenue Intelligence,
Lucknow Zonal Unit, having his office at
2/31, Vishal Khand, Gomti Nagar,
Lucknow, Uttar Pradesh - 226 010.
4. The Principal Additional Director
General, Directorate of Revenue
Intelligence, 2/31, Vishal Khand,
Gomti Nagar, Lucknow,
Uttar Pradesh - 226010. ... Respondents
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907-wpl-30629-2022(j) (1)final.doc
Mr Prakash Shah, a/w Ms. Revati Nansi, i/b PDS Legal, Advocate for
the Petitioner.
Mr Dhanjay Deshmukh, Advocate for Respondents.
CORAM : NITIN JAMDAR AND
GAURI GODSE, JJ.
DATE : 24 NOVEMBER 2022
JUDGMENT (per Gauri Godse, J)
Rule. Rule made returnable forthwith. Learned Advocate for the Respondents waive service. Taken up for final hearing. Heard both sides.
2. This Petition challenges Show Cause cum Demand Notice No. DRI F.No.VIII/DRI/LZU/26/17/EASTERN AGENCIES/2012/724, dated 26th September 2013 ("the show cause notice"), issued by Respondent No.3 - Additional Director General, Directorate of Revenue, Intelligence('Additional Director General'). By the show cause notice, the Petitioner was called upon to show cause as to why import duty foregone on the import amounting to Rs. 1,66,03,427/- (One Crore Sixty Six Lacs Three Thousand Four Hundred and Twenty Seven Only) should not be demanded under Section 28 of the Customs Act, 1962 along with interest under Section 28AA/28AB of the Customs Act 1962. The adjudication of the show cause notice was kept pending for almost 9 years. The Superintendent of Customs, Adjudication(Export), by letter dated 26th August 2022, for the first time called upon the Petitioner for personal hearing scheduled on 8 th 2/12 907-wpl-30629-2022(j) (1)final.doc September 2022. Hence, the Petitioner filed the present Petition for challenging the show cause notice as well as sought directions, thereby restraining the Respondents from taking any further steps pursuant to the show cause notice.
3. It is contented by the Petitioner that the show cause notice was issued on the information received that several Exporters (M/s Pan Parag India Ltd. Kanpur, M/s Kothari Products Ltd., Kanpur, M/s Kothari Food and Fragrances, Kanpur and M/s Shiv Shakti Agri Foods Ltd., Delhi) had made irregular exports and had obtained DFIA (Duty Free Import Authorisation) licences on the basis of the said export to get undue benefits of import duty exemption. The show cause notice further recorded that the Petitioner had availed the benefit of duty free imports under the DFIA license issued to the said exporters and that on the basis of the furnished details, the quantum of import duty foregone on the aforesaid imports were calculated and demanded in the show cause notice.
4. By letter dated 21st January 2014, Petitioner had responded to the show cause notice. In the said reply, the Petitioner had stated all the factual background and also dealt with the contentions raised in the show cause notice. Petitioner had submitted that each of the DFIA licenses were endorsed as transferable by the Licensing Authority and the Petitioner had acquired the DFIA licenses by way of transfer for valuable consideration. It was submitted that as bonafide transferees of the DFIA license for a value, the Petitioner was entitled to import the goods specified in the DFIA licenses.
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5. The Petitioner contended that at the relevant time Late Sushil K Bhatia, who was then Director, was looking after the day to day management of the goods including import of the goods. Shushil K Bhatia died on 19th May 2019 and upon his demise no other person was aware of the proceeding of the show cause notice and the record relating thereto. The Petitioner was unaware of the cause for not adjudicating the show cause notice for almost 9 years. Petitioner for the first time by letter dated 26th August 2022 were called upon for personal hearing pursuant to the show cause notice. Petitioner submitted that the show cause notice was replied in June 2014 itself. Thereafter the Petitioner was never intimated with respect to any further adjudication of the show cause notice and /or any action with respect to reply submitted by the Petitioner to the show cause notice. Petitioner never received any notice with respect to transferring the show cause notice to the call book. Petitioner was never put to notice that the adjudication of the show cause notice was kept pending for some reason. Thus, Petitioner was under bonafide belief that the Respondents were not interested in adjudication of the show cause notice and the proceedings were dropped.
6. The Petitioner submitted that Section 28(9) of the Customs Act 1962 stipulates that a show cause notice issued in normal cases need to be adjudicated within a period of six months and a show cause notice issued involving collusion, willful mis-statement or suppression of facts, should be adjudicated within a period of one year. Thus, the Petitioner submitted that the action of the Respondents of seeking to revive the 4/12 907-wpl-30629-2022(j) (1)final.doc adjudication proceedings after inordinate and unjustifiable delay of 9 years is arbitrary and in breach of principles of natural justice. Hence, the Petitioner submitted that the show cause notice deserves to be quashed and set aside, the same being arbitrary and illegal.
7. Mr Shah on behalf of the Petitioner has relied upon various decisions to support the contentions of the Petitioner, that pendency of adjudication of show cause notice for a prolonged period is unjustified and warrants quashing of the show cause notice on the ground of delay. Mr Shah has relied the Judgment of this Court in the case of Raymond Limited v Union of India1 which lays down the proposition that delay in adjudication of show cause notice amounts to breach of principles of natural justice and thus quashed and set aside the show cause notice on the ground of delay. This Court in paragraph 7 has observed as under:
7. In the aforesaid facts, the issue that arises for our consideration is whether in the present facts, commencement of adjudication proceedings after a long delay of 14 to 17 years is justified when the party in all these years has not been put to notice that the proceedings were kept in abeyance. In fact, this Court, in the case of Bhagwandas Tolani (supra) decided as far back as 1982, has held that even if there is no time limit provided in the statute for adjudication proceeding, yet it is not permissible to commence adjudication proceeding after a long period of 10/15/20 years, particularly when the delay is not on account of any default on the part of the answering party. It further held that re-opening of an adjudication proceeding after a long time would cause serious prejudice to the parties, as in the meantime, the relevant records may have 1 2019(368) E.L.T. 481(Bom.) 5/12 907-wpl-30629-2022(j) (1)final.doc been misplaced, the persons who were in charge of the affairs relating to issue raised in the show cause notice may no longer be available. Further, in Cambata Industries Pvt. Ltd. v. Additional Dir. Of Enforcement, Mumbai, 2010(254) E.L.T. 269 (Bom), this Court held that in absence of any fault on the part of the petitioners, it is not open to the Revenue to re-
open proceedings after long delay without justifiable reasons. In Hindustan Lever Limited v. Union of India, 2011 (264) E.L.T. 173 (Bom), this Court has observed as under:-
"15..........
The weight of the judicial pronouncements lean in favour of quashing the proceedings, if there has been an undue delay in deciding the same. See Government of India v. The Citedal Fine Pharmaceuticals, Madras and Ors., 1989 (42) E.L.T. 515 (S.C.) and the judgment reported in 1983 (12) E.L.T. 44 (Bom) and Universal Generics Pvt. Ltd. v. Union of India reported in 1993 (68) E.L.T. 27 (Bom). The underlying principle laid down in the said judgments is that in absence of any period of limitation, it is required that every Authority is to exercise the power within a reasonable period."
(emphasis applied)
8. The Judgment of this court in the case of Premier Ltd v Union of India2 also holds that there is no vested right in prolonging the proceeding and none can claim that the law permits this course. This court had quashed and set aside the show cause notice on the ground of inordinate delay in adjudication of the same.
2 2017 (354) E.L.T. 365(Bom.) 6/12 907-wpl-30629-2022(j) (1)final.doc
9. In support of the contention that delay in adjudication of show cause notice amounts to breach of principles of natural justice, Mr Shah has also relied upon various other Judgments of this Court in cases of (1) Parle International Ltd v Union of India 3, (2) Sanghvi Reconditioners Pvt. Ltd v Union of India 4, (3) Reliance Transport and Travel Pvt. Ltd v The Union of India, 5 (4) ATA Freight Line(I) Pvt Ltd v Union of India,6 (5) Rachana Garments Pvt. Ltd. v Commissioner of Customs7, (6) Beico Industries Pvt Ltd. v the Union of India & Ors 8, (7) Lanvin Synthetics Private Ltd v Union of India 9, (8) Godrej & Boyce Mfg. Co. Ltd v Union of India10.
10. An affidavit in reply is filed on behalf of Respondent Nos. 1 and 2 and reasons are sought to be made out for revival of the show cause notice. It is contended on behalf of Respondent Nos. 1 and 2 that by Order dated 2nd May 2014 in terms of Notification dated 7th March 2002, 16 cases were assigned by DRI, Lucknow to the Commissioner of Customs (Export) (ACC). The Affidavit in Reply further states that on 10th November 2014, DRI (Lucknow Zonal Unit) informed that these cases can be adjudicated only after validity of the impugned DFIA licenses were decided by DGFT, Kanpur who had issued show cause notices to the original license holders. By letter dated 10 th May 2015, DRI, Lucknow had informed that show cause notices were challenged before the Delhi High Court and by Order dated 26 th April 3 2021(375) E.L.T. 633(Bom.) 4 2018(12) G.S.T.L.290(Bom.) 5 2022(3) TMI 1169 6 2022(3) TMI 1162 7 2022(8) TMI 345 8 2022(8) TMI 1090 9 2015 (322) E.L.T. 429(Bom.) 10 2022(9)TMI 318 7/12 907-wpl-30629-2022(j) (1)final.doc 2016, DGFT was directed to review the orders passed by Joint DGFT, Kanpur, under Section 16 of the FTDR Act, 1992. There was a review filed and by Order dated 25th October 2017, it was held that maintainability of review under Section 16 of the FTDR Act can be urged before the concerned authority, DGFT.
11. It is further contended that Delhi High Court passed an Order dated 25th October 2017 and thereafter the DRI, Lucknow by letter dated 20th November 2017 had requested DGFT to review the Orders in the light of Order dated 25th October 2017 passed by the Delhi High Court. On 30th March 2022, a letter was written by the Respondent No.2 to intimate whether DRI is contemplating any other action after receipt of letter from DGFT. It is further stated that on 2 nd May 2022, a letter was written to DRI intimating that the cases were retrieved from the call book by Commissioner(Export) and adjudicating process would be completed. It is thus contended that subsequently a personal hearing was scheduled to adjudicate the show cause notice. Thus, it was contended that since DRI, Lucknow had informed that DGFT that the cases needed to be adjudicated only after the validity of the impugned DIFA licences were decided by DGFT Kanpur, no further process was initiated and the case was kept in the call book.
12. Mr Deshmukh, thus, submitted on behalf of the Respondents that the reasons stated by the Respondents, justified the act of placing the case under call book and therefore, there was no violation of any statutory provision in force. It was contended that the statutory 8/12 907-wpl-30629-2022(j) (1)final.doc provision for informing the noticee the reason for non determination of duty was enacted as per the Finance Act, 2018. It was further stated on behalf of Respondents that the show cause notice was issued on 26 th September 2013, demanding duty under Section 28 of the Customs Act 1962 and therefore, no time period has been stipulated by statue in the case prior to 29th March 2018. Thus, it was submitted that the Petitioner's case was not covered under the provision of Section 28(9) of the Customs Act, 1962. With these contentions, it was submitted that there was no merit in the Petition and the same deserves to be dismissed.
13. Considering the aforementioned facts of the case and the submissions made on behalf of both the parties, the question to be decided is that, whether the Respondent Nos. 1 and 2 were justified in law by keeping the adjudication of the show cause notice pending for a period of 9 years and that whether they were justified in reviving the show cause notice.
14. Perusal of the show cause notice shows that the breach alleged for initiating action for demanding the forgone import duty was on the ground of irregular exports by the exporters and breach of the provisions committed by the exporters. It is not in dispute that the Petitioner had promptly replied the show cause notice well within time in the year 2014 itself. It is further not in dispute that the Petitioner was never intimated in respect of any adjudication of the show cause notice and/or any decision of keeping the adjudication pending. Thus, the 9/12 907-wpl-30629-2022(j) (1)final.doc Petitioner is justified in submitting that the Petitioner was under
bonafide belief that the Respondents were not interested in adjudicating the show cause notice and that the same was dropped. Though the Respondent Nos. 1 and 2 have sought to justify their action to revive the show cause notice after a period of 9 years, the contentions raised by the Respondent Nos. 1 and 2 are unreasonable and not supported by any statutory provisions.
15. We have perused the consistent view taken by this Court, that the concerned Authority is under an obligation to adjudicate upon the show cause with expediency. In our view, unreasonable and unjustified delay in adjudication of the show cause notice is in contravention of procedural fairness and is violative of principles of natural justice.
16. We find sufficient merit in the submissions made on behalf of the Petitioner that delay in adjudication of the show cause notice constitutes breach of principle of natural justice. In the present case, show cause notice issued in the year 2013 was replied by the Petitioner well within time in the year 2014 itself. The Petitioner has specifically pleaded that the previous Director of the Petitioner, who was looking after the day to day management including the import of goods expired on 19th May 2019 and that no other person was aware about the proceedings of the show cause notice. There is no dispute that the Petitioner was never intimated with respect to adjudication on the show cause notice or the same being kept in the call book. Learned counsel for the Petitioner is right in contending that the Petitioner is gravely 10/12 907-wpl-30629-2022(j) (1)final.doc prejudiced as the Respondents never informed the Petitioner about the show cause notice being kept in the call book and that due to passage of time the relevant papers may not be available and it will not be possible to defend the show cause notice. Petitioner is also right in contending that even otherwise pendency of proceedings was not in respect of the Petitioner. Hence it is obvious that revival of show cause notice will seriously prejudice the Petitioner.
17. In the present case, reasons given by the Respondents for the delay caused in seeking to revive the show cause notice do not constitute any reasonable ground and the delay caused is not sustainable, as the same is in breach of the principles of natural justice. Though in Affidavit-In-Reply it is sought to be contented that the period of limitation prescribed by the amending Act, 2018 is not applicable to the present show cause notice of the year 2013, nothing was argued before us in support of this contention. In our view, even otherwise the powers of such nature of adjudicating the show cause notice are required to be exercised within reasonable time. We do not find any justification for the inaction on the part of the Respondents for keeping the adjudication of the show cause notice pending and for seeking revival of the same after a period of 9 years. For the reasons recorded above, the show cause notice impugned in the Petition is required to be quashed and set aside and it is also necessary to prohibit the Respondent from adjudicating the show cause notice any further.
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18. Hence, following order is passed:
i) Rule is made absolute in terms of prayer clauses (a) and (b) which read as under:
(a) that this Hon'ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioners' case and after going into the validity and legality thereof to quash and set aside the impugned show cause notice No. DRI F. No. VIII/DRI/LZU/26/17/EASTERN AGENCIES/2012/724 dated 26.09.2013, with consequential reliefs;
(b) That this Hon'ble Court be pleased to issue writ of Prohibition or any other appropriate writ in the nature of prohibition prohibiting the Respondents to refrain from taking any further steps or proceeding pursuant to or in furtherance of the impugned Show Cause Notice No. DRI F. No.VIII/DRI/LZU/26/17/EASTERN AGENCIES/ 2012/724 dated 26.09.2013".
ii) There will be no order as to costs.
(GAURI GODSE, J.) (NITIN JAMDAR, J.)
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