Bombay High Court orders Customs Department to refund ₹2 crores due to 23-year delay in proceedings

The Bombay High Court recently ordered that an amount of ₹2 crores deposited under protest by a company with the Commissioner of Customs should be refunded since there was a delay of 23 years in giving a final order in the proceedings initiated by the Customs Department against the company [Sushitex Exports (India) Ltd. & Ors. v. Union of India & Anr.]..A Bench of Chief Justice Dipankar Datta and Justice MS Karnik noted that while the officials were right to initiate proceedings for violation of law, they do not have unfettered right to choose a time for its termination and conclude proceedings as per their convenience.."The period in excess of two decades without the respondents sufficiently explaining as to what prevented them to conclude the proceedings has to be seen as unreasonable and the reasons assigned in the affidavit-in-reply as mere excuses for not adjudicating the show-cause notice according to law,” the order said..The Court added that “it would amount to an arbitrary exercise of power if proceedings initiated in 1997 are not taken to their logical conclusion for over two decades and then a prayer is made for its early conclusion, no sooner than the matter enters the portals of this Court”..Having observed this, the Bench directed the Commissioner to return the amount of ₹2 crores with interest @ 12% per annum..The factual matrix was that a show cause notice was issued on April 30, 1997 on the ground that the company had indulged in fraudulent export of polyester fabrics and duty free import in contravention of the Customs Act.During the course of investigation, a raid had been conducted at the premises of the company.The directors of the company were arrested and they alleged that they were compelled to pay an amount of ₹68 lakh on August 10, 1995 after which the customs department officials agreed not to oppose bail. On subsequent occasions too, the directors were forced to cough up ₹32 lakh and ₹1 crore.The show-cause notice sought to recover a sum of ₹2 crores, which the company alleged they were compelled to deposit and adjust the same against the total demand of ₹4,99,53,772 mentioned in the show cause notice..The company filed the present petition before the High Court raising grievance that the show-cause notice had not been adjudicated during 23 years since its issuance. It, therefore, sought quashing and setting aside of the notice.The company also sought refund of the ₹2 crores which had been deposited under protest during investigation..Senior Advocate DB Shroff for the company stated that since the proceedings have not been taken to its logical conclusion within a reasonable period of time, the petitioners are entitled to relief as claimed.The Commissioner of Customs in its affidavit stated that nothing was found on record to show why the show cause notice remained pending for adjudication.However, one of the reason was want of verification from the Directorate General of Foreign Trade (DGFT), Mumbai with regard to cancellation of the licenses..The Bench noted that no reason had been disclosed in the affidavit for not passing the final order immediately after the hearing was granted.“The respondents seem to have slipped into deep slumber thereafter,” the Court said..When Senior Advocate Pradeep Jetly for the Commissioner requested for liberty to conclude the proceedings, the Bench declined since it was the company which had approached the Court..“Had the petitioners not invoked the writ jurisdiction of this Court, the show-cause notice would have continued to gather dust. The petitioners, in such circumstances, cannot possibly be worse off for seeking a Constitutional remedy and thereby suffer an order to facilitate conclusion of the proceedings which, because of the inordinate delay in its conclusion, is most likely to work out prejudice to them,” the Bench reasoned..[Read Judgment]