Customs Extension Under Sec 28 Does Not Need Communication

In a significant ruling concerning customs procedures, the High Court of Delhi has clarified that the Customs Department is not statutorily mandated to communicate an extension order granted under Section 28(9) of the Customs Act, 1962, to the assessee. The judgment, delivered by a Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain, serves as a major takeaway for importers regarding procedural transparency and the adjudication lifecycle.

Background: Allegations of Non-Authentic Certificates

The dispute originated from imports of Aluminium foil by Pranij Heights India Pvt Ltd between 2018 and 2020. The petitioner had claimed preferential duty exemptions under the ASEAN–India Free Trade Agreement based on Certificates of Origin (COO) from Malaysia and Thailand.

However, following an alert circular from the Directorate of Revenue Intelligence, it was discovered that the MITI (Ministry of International Trade and Industry, Malaysia) had not issued these certificates, deeming them inauthentic. A Show Cause Notice (SCN) was issued in July 2023, seeking to reject these exemptions and impose penalties.

The Procedural Dispute

The petitioner challenged the adjudication process, contending that the SCN had not been adjudicated within the one-year period prescribed by Section 28(9) of the Customs Act. They argued that any extended period was invalid because the extension order had not been formally communicated to them. The petitioner relied on the Punjab and Haryana High Court’s decision in Shri Ram Agro Chemical Pvt. Ltd. v. Union of India , which suggested that authorities might be bound to communicate extension orders to ensure transparency.

Arguments from the Revenue

The respondent (Joint Commissioner of Customs) countered these claims with a detailed chronology of events, demonstrating that the petitioner had repeatedly failed to file a reply or appear for hearings despite multiple notices and opportunities provided since early 2023. The Revenue asserted that the extension under Section 28(9) was correctly granted internally and that the statute does not require formal intimation to the noticee.

The Court’s Reasoning

In examining the legal framework, the Court drew a sharp distinction between Section 28 and Section 110 of the Customs Act. While Section 110(2) specifically mandates informing a person upon the extension of the seizure period, Section 28(9) contains no such stipulation for the adjudication period.

The Court observed: > "In the opinion of this Court, there is a difference in the scheme of the Act in Section 110 of the Customs Act, 1962 and Section 28 of the Customs Act, 1962. Under Section 28(9) of the Customs Act, 1962, an extension can be granted, however, there is no stipulation that the same extension order ought to be communicated."

The Bench further noted that although the Customs Department should ideally intimate parties of extensions, the failure to do so does not render the adjudication proceedings fatal or void, provided the statutory power to extend was exercised according to the law.

Key Observations

The judgment clarifies that an assessee cannot frustrate the adjudication process by failing to respond to notices and then alleging procedural lapses. The court highlighted:

• "The Customs Department gave repeated notices to the Petitioner for filing of the reply to the SCN and for personal hearing, neither of which were responded to by the Petitioner."
• "Though this Court permitted the adjudication of the SCN... no reply on merits has been filed by the Petitioner to the SCN."
• "This would not be a fatal error in the present case as the communication of the same is not mandated in the provision, i.e., Section 28 of the Customs Act, 1962."

Final Decision

The Delhi High Court dismissed the challenge, emphasizing that the petitioner’s remedy lies in the appellate mechanism provided by the Customs Act. The Court permitted the petitioner to file an appeal against the Order-in-Original before the Commissioner of Customs (Appeals) within one month, ensuring that the appeal would be treated as filed within the limitation period, provided it is submitted within the specified timeframe. This ruling solidifies the understanding that while administrative fairness is paramount, the letter of the law overrides expectations of communication if not expressly mandated by the statute.