Gujarat HC quotes Pink Floyd verse, quashes 15-year-old unadjudicated show-cause notice of Customs Department

According to the case, the petitioning company had undertaken the export of “Synthetic organic dyes Acid Black-210” under two shipping bills dated September 14, 2009, from the Inland Container Depot (ICD) at Ahmedabad. The company had availed the benefits of the Duty Entitlement Pass Book Scheme (DEPB). On September 15, 2009, the Directorate of Revenue Intelligence (DRI) carried out a search at the factory and the registered premises of the company, obtaining samples for testing on the suspicion that the exports involved “mis-declaration of products”.

On September 29, 2009, the chemical examiner in his report stated that the samples of one of the shipping bills was Acid Black 234 and not Acid Black 210 as declared by the company. The DRI issued a show cause notice on March 8, 2010, stating that the company “wrongfully availed benefits under DEPB scheme and thus, proposed the confiscation of goods.” The company was also made to contribute Rs 75 lakh as a pre-deposit amount towards “protection of revenue interest” as per a DRI direction.

The second show-cause notice was issued by DRI on November 3, 2011, seeking recovery of the benefits availed along with the entire DEPB from April 2005 to April 2010, amounting to Rs 1.23 crore with interest and penalties. In their reply on June 15, 2012, the company clarified that there had been no mis-declaration and that “Acid Black 210 and Acid Black 234 were similar and identical products, and there is no difference in their chemical composition or structure”.

Meanwhile, according to the parallel proceedings undertaken by the office of the Joint Director of Foreign Trade, Ahmedabad, the contention of the company was considered in an order dated July 10, 2013, that the DEPB benefits had been “duly availed” for exports, other than Acid Black 234 and Orange 6, for which, a recovery of Rs 11,68,682 with its interest of Rs 96,316, was ordered and immediately paid by the company.

Advocate Himanshi Patwa, appearing for the company, submitted the facts of the order of the Joint Director of Foreign trade, Ahmedabad and stated that the customs authorities “conducted parallel proceedings” and “not even adjudicated” the show cause notices dated March 8, 2010, and November 3, 2011. “Therefore, today, it is too late in the day to permit the Customs Authority to adjudicate the aforesaid show-cause notices… (which) ought to be quashed as having left unadjudicated over a very large period of time,” Patwa submitted in court.

The court observed that the advocates representing the department were “not able to contradict the applicability” of the decision of the HC on which Patwa had relied to make her submissions.

Stating that the notice issued by the Joint Director General Foreign Trade, Ahmedabad, was “substantially similar” to the impugned show cause notices issued by the Customs Authority, the court order said, “The impugned show-cause notices have remained pending for more than 15 years and 13 years, respectively. Considering the aforesaid decisions, this Court has no hesitation in holding that due to an inordinately long lapse of time, the impugned show cause notices… can no longer remain pending for adjudication and must be quashed and set aside on that score alone. Accordingly, the petition succeeds and the impugned notices… are hereby quashed
and set aside.”