Safiya Malik

The Gujarat High Court Division Bench comprising Justice Bhargav D. Karia and Justice D.N. Ray quashed two Show Cause Notices issued by the Directorate of Revenue Intelligence (DRI) after finding that they remained unadjudicated for over a decade. The Court categorically held that such prolonged delay renders further adjudication impermissible. The Court issued a direction quashing the impugned notices while observing that the Customs Department failed to proceed despite personal hearings held in 2012, thereby violating the principles of timely adjudication and administrative fairness.

The Petitioners are a company engaged in the manufacture and export of synthetic organic dyes and chemicals. On 14.09.2009, the Petitioners exported “Acid Black-210” under two shipping bills from the Inland Container Depot, Ahmedabad, availing the Duty Entitlement Pass Book Scheme (DEPB). On 15.09.2009, the Directorate of Revenue Intelligence (DRI) conducted a search at the factory and office premises of the Petitioners, based on a suspicion of mis-declaration in the exported goods. Samples were taken and sent for chemical examination.

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A report dated 29.09.2009 by the Chemical Examiner indicated that the sample under shipping bill No. 1393015 was “Acid Black 234” and not “Acid Black 210” as declared, while the other shipping bill was found to be consistent with the declared product. Based on this finding, the DRI issued a Show Cause Notice dated 08.03.2010, alleging wrongful availing of DEPB benefits and proposing confiscation under Section 111(o) read with Section 28 of the Customs Act, 1962.

The Petitioners deposited Rs.75,00,000/- as a pre-deposit during the course of investigation. Subsequently, a second Show Cause Notice was issued on 03.11.2011, alleging mis-declaration in exports conducted over the period from April 2005 to April 2010 and seeking recovery of Rs.1,23,31,774/- in DEPB benefits along with interest and penalties.

In addition, the Joint Director General of Foreign Trade (JDGF) issued a separate Show Cause Notice dated 13.04.2010, seeking to initiate proceedings under the Foreign Trade Development and Regulation Act for similar allegations. The Petitioners filed a reply dated 15.06.2012, submitting that both “Acid Black 210” and “Acid Black 234” are chemically similar and indistinguishable in structure and properties. The Petitioners also submitted additional written arguments on 14.03.2013.

In the order dated 10.07.2013, the Joint Director General of Foreign Trade accepted the Petitioners’ submissions in part, finding the DEPB benefits to have been correctly availed for most of the products, including “Acid Black 210.” It was held that wrongful availment pertained only to “Acid Black 234” and “Orange 6,” resulting in an order for recovery of Rs.11,68,682/- and interest of Rs.96,316/-, which was paid immediately. A token penalty of Rs.11,686/- was imposed.

The Petitioners contended that following the JDGF's adjudication and their own representation enclosing a copy of the order, the Customs Department did not proceed further with adjudication of the impugned Show Cause Notices despite having granted personal hearings in 2012. On 14.10.2024, the Petitioners submitted a formal request to the Principal Commissioner of Customs seeking quashing of the notices and refund of the pre-deposit, but no response was received, prompting the filing of the present writ petition.

The Court recorded that the Show Cause Notices issued by the Customs Department had not been adjudicated even after 13 to 15 years from their issuance, despite the fact that personal hearings had already been conducted in 2012. It was observed that “the notice issued by the Joint Director General Foreign Trade, Ahmedabad is substantially similar to the impugned show cause notices issued by the Customs Authority.”

The Bench referred to its prior judgment in M/s. Dhultawala Exim Private Ltd. vs. Union of India & Anr., decided on 30.01.2025, where it had held that excessive delay in adjudication, without adequate justification, rendered the proceedings liable to be quashed. The Court cited multiple precedents in support of its finding:

In Siddhi Vinayak Syntex Pvt. Ltd. v. Union of India [2017 (352) ELT 455 (Guj.)], the Gujarat High Court held that revival of proceedings after 17 years without appropriate justification was unsustainable.

In Shirish Harshavadan Shah v. Deputy Director, Enforcement Directorate, Mumbai [(2010) 254 ELT 259 (Bom)], the Bombay High Court held that the reopening of matters after undue delay, without explaining the cause, causes serious prejudice.

In R.M. Malhotra v. Enforcement Directorate [(2009) 246 ELT 141 (Del)], the Delhi High Court held that “revival of the proceedings after a time gap of ten years, without notice of hearing disclosing any reason for the delay, is not merely a matter of impropriety; the respondents were under the duty to disclose what compulsions held up the adjudicatory process for so long.”

In Maxcare Laboratories Ltd. v. Joint Commissioner, CGST, Central Excise, Customs, Bhubaneswar and others [W.P(C) 2845 of 2020 dated 24.06.2021], the Orissa High Court held that revival of proceedings after an inordinate delay, without justification, contravenes the principle of speedy disposal.

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Based on the above, the Gujarat High Court held: “The impugned SCNs have remained pending for more than 15 years and 13 years respectively... this Court has no hesitation in holding that due to an inordinately long lapse of time, the impugned show cause notices dated 08.03.2010 and 03.11.2011 can no longer remain pending for adjudication and must be quashed and set aside on that score alone.”

The Court allowed the petition and passed the following directions:

“The impugned Show Cause Notices F No.DRI/AZU/INV-45/2009 dated 08.03.2010 and 03.11.2011 are hereby quashed and set aside. Rule is made absolute to the aforesaid extent. No order as to costs.”

Advocates Representing the Parties

For the Petitioners: Ms. Himanshi Patwa, Advocate
For the Respondents: Mr. Ankit Shah, Advocate, Mr. C.B. Gupta, Advocate

Case Title: Rohan Dyes and Intermediates Limited & Anr. Versus Union of India & Ors.
Neutral Citation: 2025:GUJHC:18078-DB
Case Number: R/Special Civil Application No. 10826 of 2020
Bench: Justice Bhargav D. Karia and Justice D.N. Ray

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