Sanghvi Reconditioners Pvt. Ltd vs Union Of India And 2 Ors
2017 Latest Caselaw 9508 Bom

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           IN THE HIGH COURT OF JUDICATURE AT BOMBAY
               ORDINARY ORIGINAL CIVIL JURISDICTION

                        WRIT PETITION NO. 2585 OF 2017

 Sanghvi Reconditioners Pvt. Ltd.
 Having its office at 4th Floor,
 Mahavir Darshan
 M. N. Koli Marg, Masjid,
 Mumbai - 400 003
 Through its director
 Shri Kiran I. Sanghvi                                              ... Petitioner

           Vs.

 1.        Union of India
           Through the Secretary
           Department of Revenue,
           Ministry of Finance,
           North Block, New Delhi-110 001

 2.        The Commissioner of Customs,
           Air Cargo Complex (Import),
           Adjudication Cell, Andheri (East)
           Mumbai - 400 099

 3.        The Additional Director General, DRI
           7th Floor, D Block, I.P. Bhawan,
           I.P. Estate, New Delhi - 110 002                         ... Respondents

                                ......
 Mr. Bharat Raichandani i/b. UBR Legal for the Petitioner.
 Mr. Pradeep Shivnarain Jetly for the Respondents.
                                ......

                               CORAM : S. C. DHARMADHIKARI &
                                           SMT. BHARATI H. DANGRE, JJ.

                              DATE    : DECEMBER 12, 2017.





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 ORAL JUDGMENT (PER S. C. DHARMADHIKARI, J) :

1. In this Petition, hearing was concluded yesterday and the

matter was closed for dictating judgment in open Court.

2. Rule. By consent, Rule is made returnable forthwith.

3. This Petition under Article 226 of the Constitution of India

seeks a writ of mandamus or a writ, order or direction in the

nature thereof, directing and commanding the respondents to

withdraw the letter dated 7th September, 2017 issued by the 2nd

respondent (Exhibit "A1" to the Petition). The impugned letter is

nothing but a communication to the petitioner inviting its

attention to a show cause notice bearing F. No. DRI/BZU/E/4/99

dated 28th March, 2002. The communication purports to inform

the petitioner that a personal hearing is fixed on 3rd October, 2017

at 11:30 a.m. before the Commissioner of Customs, Air Cargo

Complex (Import) in furtherance of this show cause notice and the

petitioner must attend the same.

4. The precise grievance of the petitioner, as highlighted by its

counsel Mr. Raichandani, is that the petitioner is a private limited

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company duly registered under the provisions of the Indian

Companies Act, 1956, and the 2 nd petitioner is its Director. The

respondents are the Union of India and the officers exercising

powers so also discharging duties under the Customs Act, 1962

read with the Rules thereunder.

5. The petitioner is holding Registration Certificate No.16 of

1996 dated 26th December, 1996 issued by the Director General of

Shipping, Government of India, Ministry of Surface Transport,

Mumbai. The petitioner is a Ship Repairing Unit. The petitioner

imports various inputs and capital goods, namely, parts, spares,

consumables etc. required to carry out repairs and maintenance

activities at the vessels. The petitioner claims to be entitled for an

exemption of import duty on the inputs and the capital goods

imported for repairs of vessels in terms of Customs notification

dated 2nd June, 1998. The petitioner no.1 clears the goods or parts

or spares imported for repairs or maintenance of vessels by filing

appropriate shipping bills which are assessed by the Customs

Officer and thereafter approved. During the period of dispute,

namely, January, 1998 to June, 1999, the petitioner imported

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Global Maritime Distress Safety System equipment required for

repair of ocean vessels. The said equipment was imported relying

upon the Customs notification (exemption notification) without

payment of duty. The consignment was directly sent to the vessel.

It is alleged that there was investigation carried out by the officers

of the 3rd respondent on the basis of certain information made

available. They searched three premises of the petitioner and

seized various records and documents found at the same. A

statement of the Director of the petitioner-company under Section

108 of the Customs Act, 1962, was also recorded together with

other employees. After all this, the petitioner was served with a

demand and that was for money. That was voluntarily complied

with in as much as the duty liability was deposited.

6. After all this, the 3rd respondent issued the impugned show

cause notice dated 28th March, 2002, alleging as under:-

"38.1 NOW THEREFORE, M/s. Sanghvi Reconditioners Pvt. Ltd., are hereby called upon to show cause to the Commissioner of Customs, Air Cargo Complex, Sahar, Mumbai, within 30 days of the receipt of this notice as to why:-

(a) the total duty amounting to Rs.2,06,42,669/- should not be demanded on the goods imported and cleared from Sahar Air Cargo Complex, Mumbai, as detailed in

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Annexure 'A' to this show cause notice and recovered from them in terms of Sec. 28(1) and Section 72 of the Customs Act, 1962, read with the proviso thereof;

(b) interest amount at applicable rate, demanded and should not be recovered from them on duty not paid in terms of Sec. 28AB and Section 72 ibid;

(c) the imported goods as detailed in Annexure 'A' to this show cause notice totally valued at Rs. 3,53,18,893/- which were imported and cleared through Sahar Air Cargo Complex, Mumbai, should not be held liable for confiscation under Section 111(d), 111(m) and 111(o) ibid; independently and with out prejudice to each other.

(d) penalty should not be imposed on them under Sec. 112(a) and Section 112(b) and Section 72 and/or Sec. 114A ibid; independently and without prejudice to each other.

38.2 NOW THEREFORE, M/s. Sanghvi Reconditioners Pvt. Ltd., are also hereby called upon to show cause to the commissioner of Customs, New Custom House, Ballard Estate, Mumbai, within 30 days of the receipt of this notice as to why:-

(a) the total duty amounting to Rs. 58,12,618/- should not be demanded on the goods imported and cleared from Mumbai port, as detailed in Annexure 'A' to this show cause notice and recovered from them in terms of Sec. 28(1) and Section 72 of the Customs Act, 1962, read with the proviso thereof;

(b) interest amount at applicable rate, demanded and should not be recovered from them on duty not paid in terms of Sec. 28AB and Section 72 ibid;

(c) the imported goods as detailed in Annexure 'A' to this show cause notice totally valued at Rs. 99,10,687/- which were imported and cleared from Mumbai port, should not be held liable for confiscation under Section 111(d), 111(m), and 111(o) ibid; independently and without prejudice to each other.

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(d) penalty should not be imposed on them under Sec. 112(a) and Section 112(b) and Section 72 and/or Sec. 114A ibid; independently and without prejudice to each other.

38.3 NOW THEREFORE, M/s. Sanghvi Reconditioners Pvt. Ltd., are also hereby called upon to show cause to the Commissioner of Customs, Kolkatta Custom House, Kolkatta, within 30 days of the receipt of this notice as to why:-

(a) the total duty amounting to Rs. 61,63,952/- should not be demanded on the goods imported and cleared from Kolkatta port, as detailed in Annexure 'A' to this show cause notice and recovered from them in terms of Sec. 28(1) and Section 72 of the Customs Act, 1962, read with the proviso thereof;

(b) interest amount at applicable rate, demanded and should not be recovered from them on duty not paid in terms of Sec. 28AB and Section 72 ibid;

(c) the imported goods as detailed in Annexure 'A' to this show cause notice totally valued at Rs. 1,05,09,721/- which were imported and cleared from Kolkatta port, should not be held liable for confiscation under Section 111(d), 111(m), and 111(o) ibid; independently and without prejudice to each other.

(d) penalty should not be imposed on them under Sec. 112(a) and Section 112(b) and Section 72 and/or Sec. 114A ibid; independently and without prejudice to each other.

38.4 NOW THEREFORE, M/s. Sanghvi Reconditioners Pvt. Ltd., are hereby called upon to show cause to the Commissioner of Customs, Air Cargo Complex, Chennai, within 30 days of the receipt of this notice as to why:-

(a) the total duty amounting of Rs. 7,88,096/- should not be demanded on the goods imported and cleared at Chennai Air Cargo Complex, as detailed in Annexure 'A' to this show cause notice and recovered from them in terms of Sec.28(1)

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and Section 72 of the Customs Act, 1962, read with the proviso thereof;

(b) interest amount at applicable rate, demanded and should not be recovered from them on duty not paid in terms of Sec. 28AB and Section 72 ibid;

(c) the imported goods as detailed in Annexure 'A' to this show cause notice totally valued at Rs. 13,43,727/- which were imported and clear through Chennai Air Cargo Complex, Chennai, should not be held liable for confiscation under Section 111(d), 111(m), and 111(o) ibid; independently and without prejudice to each other.

(d) penalty should not be imposed on them under Sec. 112(a) and Section 112(b) and Section 72 and/or Sec. 114A ibid; independently and without prejudice to each other.

39. M/s. Sanghvi Reconditioners Pvt. Ltd., M/s. The Shipping Corporation of India, M/s. Reliance Industries Ltd., M/s. The Great Eastern Shipping Co. Ltd., are also required to Show Cause to the respective Adjudicating Authorities as mentioned in Para 38.1, 38.2, 38.3 and 38.4 of this SCN against the duty payable by them, as detailed in Annexure A(i) to this SCN, as to why the amount totalling to Rs. 3,33,37,598.92/- collectively deposited by them towards their duty liabilities (as detailed in Para 20 of this notice), should not be appropriated and adjusted towards recovery on account of duty and interest liability or penalty as may be imposed on them for irregular imports of GMDSS equipments as covered in the foregoing paras."

7. The petitioner replied to the show cause notice on 14th

September, 2002.

8. The petitioner has specifically averred in paragraph 4.17 of

this Petition that in the year 2004, the petitioner was called for a

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personal hearing after which there was no communication from

the respondents. It is after more than 15 years of the issuance of

the show cause notice and 13 years after the last hearing that the

impugned communication has been issued. That is how the

request to quash the subject communication and consequently, the

show cause notice and/or a direction to the respondents to

withdraw it.

9. Mr. Raichandani appearing on behalf of the petitioner,

raised two-fold contentions. His first contention was that the duty

liability has been voluntarily paid. All these years, despite the

money being retained by the respondents, the petitioner never

sought any return or refund thereof. Today also, the petitioner has

not sought any such relief. Therefore, there is no prejudice to the

Department. Secondly, lack of vigilance and expediency on the

part of the respondents should not result in causing grave and

serious prejudice to the petitioner, for the petitioner has

absolutely no records available of such an old transaction. The

transaction dates back to 18 years, namely, 1999. For 15 years,

there was no adjudication or a final order made in the show cause

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notice. Therefore, the petitioner no.1 had a reasonable belief that

the proceedings are dropped. They have not maintained any

records save and except the reply to the show cause notice. Today,

there is nothing available so as to disprove or falsify the

allegations in the show cause notice. There could be a reason

enough and bonafide, for the staff working at the relevant time

may not be available with the petitioners and particularly those

officers whose statements were recorded. In absence of all this,

the attempt to adjudicate the show cause notice should not be

countenanced.

10. Amongst others, Mr. Raichandani places reliance upon a

judgment and order of this Court, to which one of us (Shri S. C.

Dharmadhikari, J.) was a party, in the case of Lanvin Synthetics

Private Ltd. Vs Union of India, reported in 2015 (322) Excise

Law Times 429. The counsel would submit that this issue is

squarely covered by this judgment.

11. On the other hand, Mr. Jetly, learned counsel appearing for

the respondents would submit that when this Petition was moved

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before this Court, an opportunity was granted to the respondents

to file affidavits to explain as to how the delay had occurred. Our

attention has been invited to these affidavits by Mr. Jetly, and

particularly the additional affidavit, to submit that in the case at

hand, the matter rested on a view taken by the Customs, Excise

and Service Tax Appellate Tribunal (CESTAT) in the Appeals filed

by one A.S. Moloobhoy & Sons. That view of the Tribunal is

reported in 2003 (162) Excise Law Times 196 [A.S. Moloobhoy

& Sons vs Commissioner of Customs (ADJ.), Mumbai]

12. Aggrieved and dissatisfied with this view, the matter was

carried to the Supreme Court and Civil Appeal Nos. 9691-9693 of

2003 were pending in the Hon'ble Supreme Court. It is only when

the Supreme Court rendered its final judgment on 26 th March,

2015, that the Department/Revenue decided to adjudicate these

notices.

13. It is contended by Mr. Jetly, based on this affidavit, that

there is a practice of maintaining what is called 'call book'. In the

call book, there is a record of the pending proceedings. In the

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instant case, there are 44 such matters in the call book. All the 44

cases would now be taken up for adjudication. A decision was

taken on 18th January, 2017 to take out these matters from the

call book, meaning dormant files, and thereafter to take them to

their logical end. It is in these circumstances that there is no

deliberate or malafide attempt on the part of the respondents in

not adjudicating the show cause notice. The reasons are genuine,

satisfactory and bonafide, and therefore, we must dismiss this

Petition. The view taken in the judgment of the Division Bench, is

therefore distinguishable on facts, according to Mr. Jetly.

14. In rejoinder, Mr. Raichandani would submit that both the

affidavits do not disclose as to how in the case of the 44 persons

including the petitioner, was the Revenue prevented from

adjudicating the show cause notices for more than 15 years.

During pendency of the proceedings before the Supreme Court, in

a distinct litigant's case, there was no restraint on the

Revenue/Department to adjudicate the subject show cause notice.

Therefore, this reason is not enough to enable the respondents to

cause dismissal of the present Petition.

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15. With the assistance of Mr. Raichandani and Mr. Jetly, we

have perused the Petition and the annexures thereto. We have

also perused the consistent view taken by this Court, based on

which the judgment in the case of Lanvin Synthetics Private Ltd.

(supra) was rendered. The obligation on the respondents to

adjudicate the show cause notices with expediency has been

repeatedly emphasized. The decisions in the cases of Shirish

Harshavadan Shah vs. Deputy Director, E.D., Mumbai [2010

(254) Excise Law Times 259] and Cambata Indus. Pvt. Ltd. Vs

Additional Dir. Of Enforcement, Mumbai [2010 (254) Excise

Law Times 269] underline as to how show cause notices issued

decades back cannot be allowed to be adjudicated by the Revenue

merely because there is no period of limitation prescribed in the

statute to complete such proceedings. The adjudication

proceedings serve a definite purpose. The object is to secure and

recover public revenue. The larger public interest therefore

requires that the Revenue and its officials adjudicate the show

cause notices expeditiously and within a reasonable time. The

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term 'reasonable time' is flexible enough and would depend upon

the facts and circumstances of each case. There is no rigidity or

inflexibility, in the sense, a time is prescribed in the judgments of

this Court and that is termed as reasonable. Thus, what would be

a reasonable time depends upon the facts and circumstances of

each case. Surely, a period of 13 years as was found in the case of

Shirish Harshavadan Shah (supra) and equally, long period in

the case of Cambata Indus. Pvt. Ltd. (supra) was not termed as

reasonable. This Court, relying upon the judgment of the Hon'ble

Supreme Court in the case of Government of India vs Citedal

Fine Pharmaceuticals Madras & Ors., reported in AIR 1989 SC

1771, held that in absence of any period of limitation, it is settled

law that every authority should exercise the power within a

reasonable period. What would be the reasonable period would

depend upon the facts of each case and no hard and fast rule can

be laid down in this behalf.

16. In the case of Lanvin Synthetics Private Ltd. as well, the

period of 17 long years was found to be entirely unreasonable.

Concededly in the present case, the show cause notice was issued

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on 28th March 2002. The petitioners forwarded their reply to the

show cause notice after receipt thereof on 14th September, 2002.

Concededly, there was a hearing in the year 2004.

17. The first affidavit-in-reply filed in this Petition by the

Assistant Commissioner of Customs does not dispute this factual

position at all. All that it tries to impress upon the Court is the

seriousness of the allegations and prays for an opportunity to

adjudicate the issue even now. The affidavit emphasizes that the

petitioner has voluntarily deposited a sum of Rs.3,33,37,598.92/-.

That was duty liability calculated in the year 1999 and much

before the issuance of the show cause notice. It may be that the

amount was not received in full and final settlement of the

Department's demand. However, there was an equal obligation,

once the show cause notice was issued on 28 th March, 2002, to

have adjudicated it expeditiously. The reasons assigned from

paragraph 14 onwards would indicate that there were personal

hearings in relation to all the notices. There may be voluminous

records and there may be number of persons who have allegedly

violated the provisions of law. However, the affidavit proceeds to

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state that there was a personal hearing held on 25 th March, 2004.

A written brief was submitted by the petitioners and they relied

upon the order of the CESTAT in the case of A.S. Moloobhoy &

Sons (supra). However, the Revenue found that there were

adjournments sought but in the meanwhile, the

Department/Revenue challenged the judgment of the CESTAT in

the case of A.S. Moloobhoy & Sons in the Supreme Court of India.

Thereupon, all the matters were sent in the dormant list/call

book. It may be a procedural aspect for the Department/Revenue.

Unless and until the Revenue establishes that there is a law

mandating taking cognizance of these procedural requirements or

these procedural requirements have been engrafted into the

applicable legislation so as to enable the Revenue/Department to

seek extension of time, in writ jurisdiction, we are not obliged to

take notice of these procedural delays at the end of the

Revenue/Department. Accepting that case would defeat the rule

of law itself. That would also result into taking cognizance of

extraneous matters and basing our conclusion thereupon would

then mean violating the principles laid down in the binding

judgments of this Court and the Hon'ble Supreme Court. That the

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matters of present nature have to be concluded expeditiously and

within a reasonable time. We do not therefore find the

explanation from paragraphs 14 to 18 of this affidavit to be

enough for granting the Revenue an opportunity to now

adjudicate the subject show cause notice. We have not found from

any of these averments and statements in the affidavit that there

was a bar or embargo, much less in law for adjudicating the show

cause notice. This Court indulged the Revenue enough and by

giving them an opportunity to file an additional affidavit. The

additional affidavit as well, does not indicate as to why the

Revenue took all these years, and after conclusion of the personal

hearing in the year 2004, to pass the final order. Now allowing the

Revenue to pass orders on the subject show cause notice would

mean we ignore the principle of law referred above. Secondly, we

also omit totally from our consideration the complaint of the

petitioner that in a matter as old as of 1999, if now the

adjudication has to be held, it will be impossible for them to trace

out all the records and equally, contact those officials who may

not be in their service any longer. Thus, they would have no

opportunity, much less reasonable and fair, to defend the

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proceedings. That is equally a balancing factor in the facts and

circumstances of the present case.

18. In the light of the above discussion, we are of the firm

opinion that insofar as the petitioner before us is concerned, the

Revenue/Department has not been able to justify its lapse in not

adjudicating the show cause notice issued on 28 th March, 2002 for

more than 15 years. There may be reasons enough for the

Revenue to retain some matters like this in the call book, but

those reasons do not find any support in law insofar as the present

petitioner's case is concerned. Merely because there are number of

such cases in the call book does not mean that we should not

grant any relief to the petitioner before us.

19. Hence, the Writ Petition succeeds. We direct that the subject

show cause notice cannot be adjudicated further and all

proceedings in pursuance thereof are quashed and set aside.

However, we at once clarify that this order and direction is

applicable and restricted only to the case of the petitioners before

us. No benefit of the same can be derived by other parties for they

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are not before us. The Revenue is free to take such steps as are

permissible in law as against the others. Rule is accordingly made

absolute. There will be no order as to costs.

(SMT. BHARATI H. DANGRE, J.) (S. C. DHARMADHIKARI, J.)