The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that the Customs Department is legally bound to adjudicate a show cause notice (SCN) within one year.
Innovale Investment Pte. Ltd., owner of an Embraer Phenom aircraft leased to Aviators, faced a show cause notice (SCN) in 2011 regarding denial of duty benefits and recovery of differential duty. The appellant challenged the order, citing a nearly 10-year delay in adjudication, arguing it violated Section 28(9) of the Customs Act. The department defended the delay and upheld the penalties imposed by the Principal Commissioner.
The bench of Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) observed, “The factual position, as noticed above, leaves no manner of doubt that the adjudicating authority, 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 in the present case.”
In this case, the tribunal found no valid reason for the department to delay adjudication by placing the show cause notice in the call book, violating Section 28(9) of the Customs Act. As a result, the impugned order was set aside due to the delay, making it unnecessary to consider the appellant’s arguments on merits.
Read Here: