By TIOL News Service

MUMBAI, JULY 24, 2015: THE first petitioner procured yarn and grey fabric from the local market and sent the same to different dyeing firms for processing. After processing, the fabrics were cut and packed for export under the DEEC scheme or the Drawback scheme. These exports were handled by M/s.Amol Shipping Agency. The first petitioner obtained 33 advance licences on the condition that the fabrics would be exported. The claim of the petitioners is that this obligation was completed and fulfilled. The licences were made freely transferable. The licences were, then, sold to various independent parties in the market. The parties obtaining the licences utilized them by importing materials without payment of duty. An investigation was carried out in August 1995 when the second petitioner was arrested but directed to be released on bail on 4.9.1995. During this period, many accused in similar cases were detained vide detention orders under the COFEPOSA. Since the petitioners were apprehending arrest of the second petitioner, they deposited a sum of Rs.2,07,57,074/- under protest between 13.5.1996 to 27.5.1996.

The second respondent eventually issued a SCN dated 13.3.1997 alleging that the first petitioner had been issued advance licences with the condition that they would export polyester / viscose blended fabrics. It was alleged that the second petitioner in collusion with Ashok Pokharkar of M/s.Amol Shipping Agency furnished copies showing incorrect/manipulated or false information regarding quantities, weight, composition of export goods. Thus, they wrongfully availed of the benefits of the licences by claiming fulfillment of export obligation. They secured a bond waiver and further obtained endorsement in respect of 33 advance licences making them freely transferable. Since these advance licenses were sold to various parties who imported goods from several countries without payment of duty, there was a loss caused to the exchequer and that is why a show cause notice was issued demanding a sum of Rs.2,83,59,851/- and to be adjusted against the deposit.

The complaint of the petitioners is that this SCN was never adjudicated although the petitioners approached the department between April 1997 and January 2000. The petitioners complained that finally by a letter dated 7.4.2014 the second respondent was requested to adjudicate upon the show cause notice. There was no reply to this letter nor is any compliance made with the requisitions contained therein. Finally, the petitioners relied upon the information obtained under the Right to Information Act,2005, wherein it was disclosed that the office of the second respondent could not trace any document or file and, therefore, nothing can be intimated to the petitioners.

The petitioners, therefore, complained that if for seventeen long years the matter has remained un-adjudicated, then, retention of money paid under protest or deposited without prejudice, would violate the mandate of Articles 14, 19(1)(g), 265 and 300A of the Constitution of India.

And it is in such circumstances that the Writ Petition has been filed.

On the earlier occasion, the Court had indicated to the respondents as to why an explanation should not be demanded from them for having kept the matter pending for adjudication for 17 long years. The second respondent was also called upon to inform the Court as to why such proceedings are kept pending and if there are any more complaints of this nature, then, remedial and corrective steps should also be indicated.

An affidavit was filed and wherein inter alia it is indicated that there had been reorganization of Customs Commissionerate in the year 1997, 2002 and 2014 and even after a thorough search by a special Team, the records of this case could not be located and traced. Furthermore, the Commissionerate learnt about the subject SCN only on receipt of copy of the writ petition and that the copy of SCN alongwith the relied upon documents was never received in the Commissionerate of Customs (Preventive).

It is also submitted that the Department is ready and willing to adjudicate the matter provided the petitioners and who have copies of the documents in support of the allegations, co-operate and produce the same and with their assistance the show cause notice can still be adjudicated. A request is also made that as there is a fraud perpetrated on public revenue, this liberty be given.

The Petitioner relied upon the decisions in the case of Cambata Industries Pvt.Ltd. Vs. Additional Director of Enforcement, Mumbai, 2010-TIOL-133-HC-MUM-FEMA, Government of India vs. Citedal Fine Pharmaceuticals, Madras & Ors, 2002-TIOL-680-SC-CX where it was held that though there is no period of limitation prescribed in the statute to complete the adjudication proceedings, 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; no hard and fast rule can be laid down in this behalf.

The High Court observed -

+ If the investigations were carried out in August,1995, the show cause notice came to be issued on the conclusion thereof in March,1997, then, we do not see any reason for the Revenue / Department not passing an adjudication order for 17 long years.

+ In the present case, it is the petitioners who brought to the notice of the department and repeatedly that the show cause notice is pending adjudication and that the department has retained the sum deposited. It is the petitioners who sought information by making an application under the Right to Information Act,2005. The records were not available and there was no information available with regard to this show cause notice.

+ The admitted position today is that the concerned Commissionerate is unable to trace the file and locate the record. It has given no explanation as to why show cause notice was not adjudicated for 17 long years. The explanation now placed on affidavit does not inspire confidence.

+ We do not countenance the submission and as made belatedly that the department with the assistance of the petitioners will pass an adjudication order within a time frame and it deserves that opportunity.

+ If the law postulates early end to such proceedings and there is no period of limitation prescribed, does not mean that the proceedings initiated could be concluded at the sweet will and fancies of the department.

+ The department should not have blamed the petitioners for having approached this Court belatedly, but the department must appreciate that the petitioners are seeking two reliefs one is for quashing of proceedings and secondly, a direction to the department forthwith refund the deposit and with interest.

+ The period that has been taken in this case for adjudication of the show cause notice cannot be said to be reasonable. If within a reasonable time the proceedings have to be concluded then in the present case 17 years can never be said to be a reasonable period or time. The department and going by the settled legal principles cannot pass an adjudication order on the show cause notice and as requested by Mr. Jetly.

Held:

++ We quash the show cause notice and we prohibit the respondents from passing any adjudication order in furtherance thereof.

++ We grant liberty to the petitioners to institute such proceedings as are permissible in law for recovery of sums deposited with accrued interest.

Parting directions:

We conclude this matter with some pain and anguish. If delay on the part of the department results in loss to the exchequer and as directed presently no recovery can be made of the sums demanded, then, it is for the Superiors to initiate all steps and measures. Our order should not be taken as relieving officials concerned of their duties and obligations in terms of the law including the departmental rules and circulars. We would highly appreciate if the Secretary in the Ministry of Finance, Government of India directs initiation of departmental and other legal proceedings so that all guilty of causing loss to public exchequer are brought to book. A copy of this order be forwarded to the Secretary in the said department by the Registry.

(See 2015-TIOL-1668-HC-MUM-CUS)