Legal principle

A show cause notice under Section 28 of the Customs Act that is not adjudicated within the prescribed period lapses and cannot be adjudicated, and repeated placement of the matter in the 'call book' is not a valid justification for non-adjudication, the burden being on the authority to prove it was genuinely impeded.

Court decision

The Court quashed and set aside the SCN dated 20th March 2014, holding that it had lapsed and could not be adjudicated, following the decisions of the Coordinate Benches of the Delhi High Court; the writ petition was allowed and disposed of in the petitioner's favour.

Facts

The petitioner imported water purifier parts (RO membranes, booster pumps, carbon and sediment filters) through various ports, allegedly under the control of one Mr. Ashok Singhla using name-sake IEC holders. DRI suspected mis-declaration and undervaluation, searched premises in April 2012, and issued SCN dated 20.03.2014 alleging the declared assessable value of Rs. 15,06,62,426 was incorrect and proposing a re-determined value of Rs. 52,64,80,439. The SCN proposed differential duty of Rs. 8,81,92,681 under Section 28(4) (erstwhile proviso to Section 28(1)), confiscation under Section 111(m), penalties under Sections 112(a) and 114A, and valuation under Section 14 read with Rules 3, 5, 10 and 12 of the Customs Valuation Rules, 2007. The SCN, pending before the Principal Commissioner, ICD Patparganj, was repeatedly placed in and taken out of the 'call book' and remained unadjudicated for about 9 years.

Key provisions

• Section 28(9), Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Rule 3, Customs Valuation (Determination of value of Imported goods) Rules, 2007 — Determination of the method of valuation
• Section 111(m), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 14, Customs Act, 1962 — Valuation of goods
• Section 112(a), Customs Act, 1962 — Penalty for improper importation of goods
• Rule 10, Customs Valuation (Determination of value of Imported goods) Rules, 2007 — Cost and services
• Rule 12, Customs Valuation (Determination of value of Imported goods) Rules, 2007 — Rejection of declared value
• Section 114AA, Customs Act, 1962 — Penalty for use of false and incorrect material
• Section 46, Customs Act, 1962 — Entry of goods on importation
• Section 9(a), Customs Act, 1962 — [Omitted] ****
• Rule 5, Customs Valuation (Determination of value of Imported goods) Rules, 2007 — Transaction value of similar goods