The Karnataka High Court has set aside a Customs, Excise and Service Tax Appellate Tribunal (CESTAT) order that dismissed a customs appeal solely on the ground of a 324-day delay, holding that courts must adopt a justice-oriented approach and not reject potentially meritorious matters on technical grounds. 

The bench of Justice S.G. Pandit and Justice Rajesh Rai K has observed that the delay was supported by a plausible and bona fide explanation and could not be treated as mala fide, deliberate, or intentional. The objective of courts should be to advance substantial justice rather than shut out litigants on procedural technicalities. 

The dispute arose from two show cause notices issued by the Customs Department in 2022 alleging pilferage of imported jewellery. The notices called upon the company to explain why the goods should not be confiscated under Section 111 of the Customs Act, 1962, and why penalties should not be imposed under the Act. 

Following adjudication proceedings, the Customs authorities passed Orders-in-Original in respect of both show cause notices and imposed penalties for alleged contraventions of customs law. Aggrieved by these orders, the company filed separate appeals before CESTAT. 

However, while one appeal relating to Show Cause Notice No. 169/2022 remained pending before the Tribunal, the second appeal concerning Show Cause Notice No. 55/2022 was dismissed because it had been filed with a delay of 324 days. 

Before the High Court, the company contended that the delay was neither deliberate nor intentional. It explained that it was undergoing a major corporate restructuring process involving the disinvestment of Air India and its merger-related activities with the Tata Group.

The petitioner submitted that the disinvestment process had commenced in January 2020 and that Tata Group’s proposal to merge Air India with Air Asia India and Vistara had been approved in June 2022. Due to these significant organizational changes, the appeal could not be filed within the prescribed period, despite the order having been received in June 2023. Eventually, the appeal was filed before CESTAT on July 29, 2024. 

The High Court found merit in the explanation offered by the petitioner and observed that CESTAT had failed to properly appreciate the circumstances that led to the delay.

According to the Court, condonation of delay depends on the facts and circumstances of each case and requires a pragmatic, justice-oriented approach. Where no negligence or bad faith is evident, courts should adopt a liberal stance in condoning delays to ensure disputes are decided on their merits. 

Allowing the writ petition, the High Court quashed CESTAT’s Defect/Miscellaneous Order dated February 18, 2025, which had rejected the appeal on limitation grounds. The Court condoned the 324-day delay and remitted the matter back to the Bengaluru Bench of CESTAT for adjudication on merits. 

As a result, the customs appeal relating to the jewellery pilferage allegations will now be heard and decided by the Tribunal alongside the other pending appeal arising from similar issues.

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