2026-VIL-794-CESTAT-MUM-CU
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CUSTOMS CESTAT Cases

Customs - Issuance of show cause notice under Section 28 of Customs Act, 1962 - Demand notice for recovery of an alleged excess refund, without issuing a show cause notice as mandated under Section 28 of the Customs Act, 1962 - Whether the initiation of recovery proceedings without issuing a show cause notice in the form and manner prescribed under Section 28 is legally sustainable - HELD - The issuance of a show cause notice in the prescribed form and manner is a mandatory requirement under Section 28 of the Customs Act, 1962. The SCN serves a dual and indispensable purpose - it informs the noticee of the precise case that the Revenue seeks to establish against him, and it affords him an opportunity to be heard in his defence before any adverse order is passed. A bare demand notice that calls upon a person to deposit a sum of money, without expressly inviting the noticee to show cause against the proposed recovery, cannot be treated as a valid show cause notice. The absence of a proper show cause notice vitiates the entire proceeding at the root. The adjudication conducted without a valid show cause notice is unsustainable in law - The impugned order is set aside and the appeal is allowed - Inordinate delay in adjudication - The demand notice was issued in 1995, but the first notice of personal hearing was issued only in 2014, and the Order-in-Original was eventually passed in 2018, approximately 23 years after the demand notice - Whether the adjudication conducted after an inordinate delay of approximately twenty-three years can be sustained in law - HELD - The consequences of such delay are severe and tangible. The Appellant was prejudiced as most of the employees who had handled the relevant import transaction had since retired, and the existing staff was entirely unaware of the proceedings. Documents and records pertaining to the import transaction were no longer available. The Tribunal held that the right of a party to a fair hearing necessarily encompasses the right to have the proceeding concluded within a reasonable time, such that the party retains the ability to effectively exercise its right of defence. Adjudication after a delay of two decades irreparably erodes this right, and no party can be reasonably expected to preserve business records, maintain institutional memory of routine import transactions, or produce witnesses after the passage of nearly a quarter century. The department's inaction for approximately twenty-three years amounts to a constructive abandonment of the proceeding, and the Revenue cannot be permitted to revive and complete a proceeding that causes grave and irreparable prejudice to the Appellant - The impugned order is set aside and the appeal is allowed on the ground of inordinate delay in adjudication.
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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