Lack of adjudication of show cause notices for an extended period may lead to the court upholding the refund of the deposited amounts and directing the appellant to proceed with the adjudication as per the advice of the competent authority.

ORDER

Civil Appeal No. 2176/2009, Civil Appeal No. 2099/2009 and Civil Appeal No. 4352/2009 : Having regard to the nature of the order which we propose to pass in these appeals, it is not necessary to state the factual matrix of these cases in detail. Suffice is to state that according to the Directorate of Revenue Intelligence (hereinafter referred to as "the Revenue"), the respondents in these appeals are the exporters of leather goods. They had been exporting unfinished leather but had been showing in their invoices that the leather goods were finished goods and on that basis seeking exemption from payment of export duty. In this manner, according to the Revenue, the respondents avoided to pay huge amounts of duty. The premises of these respondents were raided by the D.R.I. and again, according to the Revenue, the aforesaid practice adopted by the respondents was accepted and they also deposited the duty in the sum of Rs. seventy lakh, Rs. one crore and Rs. one crore respectively.

2. Show cause notices were issued by Proper Officers, except in the case of M/s. Prime Leathers. At that stage, the respondents filed their writ petitions in the High Court. The High Court while allowing the writ petitions has inter alia come to the finding that the deposits were not made by them voluntarily and the confessions were also not voluntary. It is also mentioned that in some of the cases even the show cause notices have not been issued. In these circumstances, the High Court directed refund of the aforesaid amounts deposited by these respondents subject to furnishing of some appropriate security. At the same time, the Revenue was also given opportunity to issue appropriate show cause notices and conclude the proceedings within one year.

3. It is pointed out by learned Additional Solicitor General that this Court had held that Proper Officer was not empowered to issue such show cause notices. In order to overcome the aforesaid embargo, there was an amendment in Section 28 of the Customs Act, 1962 by incorporating sub-section (11) vide Act, 14 of 2011. According to the Revenue, the effect of the said section is to validate all the notices issued earlier even by the Proper Officers. However, the issue about the interpretation of the provision was raised before the High Court of Delhi in the case of M/s. Mangali Impex Ltd. v. Union of India and Ors., 2016 SCC Online Del 2597 = 2016 (335) E.L.T. 605 (Del.) , and the High Court has held that the aforesaid provision would operate prospectively and the effect of that would be that the notices issued earlier would not be validated. Against that judgment of the Delhi High Court, the Revenue has preferred special leave petition in which notice has been issued and Order dated 1-8-2016 [2016 (339) E.L.T. A49 (S.C.)] has been passed staying the operation of the aforesaid judgment.

4. Notwithstanding the above, the Revenue has not proceeded with the adjudication of the said show cause notices. It is stated by the Learned Additional Solicitor General that it has happened because of the Circular(s) issued by the C.B.D.T. to award the decision in the special leave petition filed in this Court. However, in the case of M/s. Prime Leathers proceedings in the show cause notice are continuing. Because of the aforesaid reasons, insofar as these three appeals are concerned, no adjudication has taken place.

5. Having regard to the above, when these matters are pending for the last almost 10 years and no adjudication has taken place, it may not be appropriate to interfere with the directions of the High Court to refund the amount to the respondents. We may note that insofar as M/s. Prime Leather is concerned, the amount has already been refunded and the respondent has also furnished security in terms of the directions contained in the impugned judgment. In the other two appeals, the amount of Rs. 1 crore each collected by the respondent shall also be refunded by the appellant to the respondent, subject to furnish