The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the customs department’s statutory obligation to adjudicate show cause notice (SCN) within 1 year.
The bench of Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) has observed that despite the specific mandate contained in sub-section (9) of section 28 of the Customs Act to adjudicate the show cause notice within one year, completely failed to discharge the statutory obligation cast upon it. The phrase “where it is possible to do so”, does give a certain degree of flexibility to the adjudicating authority when circumstances are such that make it not possible for the adjudicating authority to decide or there are insurmountable exigencies, but such exceptional circumstances or exigencies do not exist.
The appellant/assessee, Innovale Investment Pte. Ltd. is the owner of an aircraft called Embraer Phenom 1004. This Aircraft was leased to Aviators for operating the same in India and an agreement dated 06.05.2011 was executed. Aviators filed a Bill of Entry dated 24.06.2011 for assessment and clearance of the Aircraft for home consumption and claimed benefit of a Notification dated 01.03.2002, as amended by Notification dated 01.03.2011.
A show cause notice was issued to Aviators, SSL and the appellant seeking to deny the benefit of the Notification. The show cause notice also proposed to recover differential duty on the imported Aircraft from Aviators; on the imported spare parts from Aviators; and on the imported Aircraft from Aviators and SSL.
The appellant contended that order is liable to be set aside for the sole reason that there was an inordinate delay in adjudication of the show cause notice. Learned senior counsel submitted that the show cause notice was issued, but it was adjudicated only after a period of about ten years. The appellant was in no way responsible for the delay in adjudication and there is nothing on the record to show that it was not possible to adjudicate the show cause notice within a period of one year provided for in section 28(9) of the Customs Act.
The department contended that it was not possible to adjudicate the show cause within one year and to substantiate this submission extensively referred to the facts stated in the order dated 19.01.2023 passed by the Commissioner. Even on merits the appellant has no case and that the Principal Commissioner committed no illegality in imposing redemption fine and penalty on the appellant.
The tribunal held that delay in adjudication of show cause notice would amount to denying fairness, judiciousness, non-arbitrariness and fulfillment of an expectation of meaningfully applying the principles of natural justice. The arbitrary and capricious administrative behaviour in adjudication of show cause notice would be an antithesis to the norms of a lawful, fair and effective quasi judicial adjudication. These are also the principles which are implicit in the latin maxim “lex dilationes abhorret”, i.e., law abhors delay.”
Case Details
Case Title: Innovale Investment Pte. Ltd. Versus The Principal Commissioner of Customs
Case No.: CUSTOMS APPEAL NO. 50522 OF 2024
Date: 21.04.2025
Counsel For Appellant: Prakash Shah, Senior Counsel
Counsel For Respondent: Gurdeep Singh, Special Counsel
Read More: SCN Can’t Be Issued When Entire the service Tax Is Deposited Along With Interest: CESTAT
