Delayed adjudication attributable to the revenue violates procedural fairness and the principles of natural justice.

JUDGMENT :

K.R. Shriram, J.

1. By consent of learned counsel for parties, Petition is taken up for final hearing at admission stage.

2. Petitioner No.1 was engaged in the business of imports and exports at the relevant time. Petitioner No.2 is the director of Petitioner No.1. At the relevant time, Petitioner No.2 was a partner in M/s. Rachana Enterprises, a family Partnership firm. Some time in March 1999, Petitioner No.1 got incorporated and took over the business of M/s. Rachana Enterprises. The shareholders and directors of Petitioner No.1 are also family members of Petitioner No.2. (Petitioner No.1 and Petitioner No.2) are hereinafter referred to as “Petitioners”).

3. Petitioners are challenging a show cause notice dated 27/06/1997 issued by Respondent No.1 on the ground that (a) Respondent No.1 did not have jurisdiction to demand duty under Section 28 of the Customs Act, 1962; and (b) the show cause notice, not having been adjudicated by Respondent No.2 and/or his predecessors for a period of 24 years, although Petitioners have filed replies and attended personal hearing, has become stale and has to be quashed and set aside. Mr. Shroff pressed this second ground only and did not make any submission on the first.

4. M/s. Rachana Enterprises was actively engaged in the business of exports and imports during the period of 1993-1995 and was holding a valid Import Export Code (IEC) issued by the Director General of Foreign Trade (DGFT). M/s. Rachana Enterprises had exported various consignments of Polyester/Viscose Fabrics under Duty Exemption Entitlement Scheme/Advance Licenses. All these shipments and the documents relating to the shipments were scrutinized and examined and after satisfying that the same conform to and were as per declaration made in the documents and were satisfying all the conditions of the DEEC Scheme, were allowed to be exported by the Proper Officers of Customs exercising powers under the Customs Act, 1962 (“the said Act”). The export remittances in full were realized through Banking Channels. Thereafter Petitioner and the transferee imported various inputs against 18 Advance Licenses which were issued by the DGFT against the exports made by Petitioners.

5. On 13/05/1994, the Central Excise Collectorate searched the premises of M/s. Rachana Enterprises and seized certain documents. On 02/08/1995, the Additional Director General of Anti Evasion searched the premises of M/s. Rachana Enterprises and recovered certain documents. In August 1995, the officers of Respondent No.1, i.e., Commissioner of Customs (Preventive) commenced inquiries into the exports imports of M/s. Rachana Enterprises and its transferees. During the course of investigation, Petitioners were made to pay an amount of Rs.30,00,000/- (Rupees Thirty Lakhs only) sometime in August 1995 though there was no demand notice or any other demand pending against Petitioners. According to Petitioners this deposit of Rs.30,00,000/- (Rupees Thirty Lakhs only) made M/s. Rachana Enterprises go out of business since then.

6. Petitioners were served with the show cause notice dated 27/06/1997 under Section 28 of the said Act after about two years of commencement of investigation. In the show cause notice it is alleged that the quantities of Poly Filament Yarn (PFY) were inflated in the export promotion copies of the Shipping Bills. The notice relied upon SASMIRA test report received to the effect that the fabrics exported contained lesser quantity of PFY than that claimed by Petitioners in the exports documents. Therefore the notice demanded duty with interest on imports of PFY and other items. Fines and penalties were also proposed.

7. Petitioners replied to the show cause notice by Reply dated 07/07/1997 disputing the test report of SASMIRA. Petitioners also requested for re-test. Petitioners also applied for certain documents which, we are informed till date has not been supplied.

8. By a letter dated 04/01/2010, i.e., almost 13 years after the show cause not