Delhi HC Directs Customs, DRI, DGGI & CGST to Develop Unified SOP for Timely Counsel Instructions

Vishal Video And Appliances Pvt Ltd Vs Commissioner of Customs ACC (Import) (Delhi High Court)

Delhi High Court addressed appeals filed by Vishal Video and Appliances Pvt Ltd against a Customs Excise & Service Tax Appellate Tribunal (CESTAT) order concerning the recovery of a previously granted customs duty refund. The company, engaged in electronic product trading, had imported mobile handsets and initially been denied tax benefits under Notification No. 12/2012-CE due to restrictive circulars. Following the Supreme Court’s decision in SRF Ltd. vs. Commissioner of Customs, Chennai, the company successfully claimed the benefit and received a refund.

However, the Customs Department, while its appeal against the refund was pending before the Supreme Court, issued protective show cause notices for recovery of the refunded amount. After the Supreme Court’s decision in ITC Ltd. v. Commissioner of Central Excise, Kolkata-IV, the department confirmed the demand for the reclaimed refund. Vishal Video challenged this before the CESTAT, arguing that the show cause notices were not adjudicated within the six-month limitation period stipulated by Section 28 of the Customs Act, 1962.

The CESTAT, after reviewing the timeline of events, including the Supreme Court’s judgment and the relaxation period due to the COVID-19 pandemic, concluded that the adjudication had occurred within the permissible timeframe. Consequently, the CESTAT dismissed Vishal Video’s appeals. The High Court, in these present appeals, acknowledged the company’s argument regarding the limitation period and the validity of the show cause notices. Recognizing the complexity of the case, the High Court separated these appeals from other related appeals filed by the same company.

The Delhi High Court also expressed strong concerns about the persistent delays caused by the Customs Department in providing timely instructions to their standing counsels. To address this systemic issue, the Court directed the Commissioner of Customs to formulate a Standard Operating Procedure (SOP) outlining the process for ensuring prompt instructions are given to counsels when advance copies of case files are served. Furthermore, the Court mandated that the Directorate of Revenue Intelligence (DRI), Directorate of General GST Intelligence (DGGI), Customs Department, and Central GST (CGST) collaborate to create a unified SOP to prevent future delays and ensure smooth court proceedings. The matter is scheduled for further hearing in March 2025.

FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT

1. This hearing has been done through hybrid mode.

2. These appeals have been filed by the Appellant under Section 130 of the Customs Act, 1962 challenging the impugned Final Order No. 55859­55891/2024 dated 4^th June, 2024 passed by the Customs Excise & Service Tax Appellate Tribunal (hereinafter ‘CESTAT’ or ‘Tribunal’). In order to appreciate the contentions raised, the background in these appeals deserves to be captured.

3. The Appellant is a Company, incorporated under the Companies Act, 1956, engaged in trading of electronic products such as mobile phones etc,. As a part of business activities, the Appellant had imported mobile handsets/cellular phones for which various bills of entry were filed during the years 2014-15 and 2015-16.

4. The Appellant’s case is that it was deprived from claiming the tax benefit in respect of the above said imports in terms of Notification No. 12/2012-CE dated 17 March, 2012, due to restrictions imposed by Circular No. 37/2001-Cus. dated 18th June 2001.

5. However, the issue of applicability of the Notification No. 06/2002-CE dated 01 March, 2002 (similar notification) on importers was settled by the Hon’ble Supreme Court in the matter of SRF Ltd. vs. Commissioner of Customs, Chennai [2015 (318) E.L.T. 607 (S.C.)], which allowed the Appellant to claim the benefit under the said Notification dated 17 March, 2012.

6. Accordingly, the Appellant had sought refund of excess custom duty paid with respect to thirty-one bills of entry. The Appellant, for this purpose, had filed two refund applications before the Deputy Commissioner(Refunds) on 25th September, 2015 categorizing the thirty-one bills of entry into two batches consisting of 14 and 17 bills, respectively.

7. The said refund applications were rejected by Deputy Commissioner (Refunds) vide Order dated 30th June, 2016 on the ground that the Appellant has not provided re-assessed bills of entry in respect of said refund claims.

8 The Appellant had preferred an appeal against the said Order dated 30th June, 2016 to the Coordinate Bench of this Court in P.(C) 7851/2016. The Division Bench of this Court had followed the decision in Micromax Informatics Ltd. v. Union of India, [2016 (335) ELT 446 (Del)] and Yu Televentures v. Union of India, [W.P.(C) 6750/82016, decided on 3rd August, 2016] and had, accordingly, allowed the refund on 5^th September, 2016 in the following terms.

“Since the facts are identical, we are of the opinion that the operative portion of the order should be identical to the one in Yu Televentures (supra). It is hereby directed consequently that the petitioner’s refund claim is, therefore, allowed. The respondents are directed to pay to the petitioner, the claimed amount together with interest due thereof upto the date of refund – which shall be done within three weeks from today.”

9. Pursuant to the order of the Delhi High Court dated 5th September, 2016 in P.(C) 7851/2016, the Deputy Commissioner (Refund) passed two separate orders to refund the amount and the same was credited to the Appellant’s account on 29th September, 2016.

10. The Department had filed SLP(C) No. 2865/2017 against the said judgment passed by the High Court on 3rd January, 2017. During the pendency of the proceedings before the Supreme Court, the Department issued two protective Demand/Show Cause Notices, both dated 26th September, 2018, to the Appellant for recovery of erroneously granted refund along with interest under Section 28 and 28AA of the Customs Act, 1962. In the said Show Cause Notices, it was stated that the same were being issued to cover the period of limitation and its adjudication would be subject to the outcome of the decision of the Supreme Court. The Supreme Court disposed of the above said SLP i.e., SLP(C) No. 2865/2017 vide a common judgment in a batch of appeals with lead appeal-C.A.No. 293-294/2009 titled as ‘ITC Ltd. v. Commissioner of Central Excise, Kolkata-IV on 18th September 2019.

11. The Appellant had participated in the protective Demand/Show Cause Notice proceedings and Respondent-Commissioner Of Customs, ACC (Imports) had passed two orders dated 24th May, 2021 confirming the Demand Notices re-claiming the refund credited to the Appellant.

12. This order was again challenged before the CESTAT in Customs Appeal No 50091 of 2022 & 50286 of 2022 on the ground that the limitation period of 6 months, mandated under Section 28 of the Customs Act, 1962, for concluding the Show Cause Notice proceeding has lapsed. The CESTAT tagged these two appeals along with another set of appeals e., Customs Appeal No. 50510 – 50540 of 2021, preferred by the same Appellant against the order of The Commissioner (Appeals) dated 17th December 2020 in the cases which were preferred by the Appellant seeking re-assessment pursuant to the decision in ITC Ltd. v. Commissioner of Central Excise, Kolkata-IV dated 18th September, 2019.

13. In these two appeals e., Customs Appeal No 50091 of 2022 & 50286 of 2022, the CESTAT referred to Section 28, subclause (1), (8), (9) & (9A) of Customs Act, 1962 and observed that as per the legislation, the proper officer ought to conclude the Show Cause Notice proceeding within 6 months which is extendible only for the reasons mentioned in Section 28(9A) of the Act. The observation in the said order reads as under:

“28. It is seen that after the notice has been issued under sub­section (1) of section 28, the proper officer has to determine the amount of duty under sub-section (8), but this has to be done within six months from the date of notice as contemplated under sub-section (9) ofsection 28 of the Customs Act. Further, where the proper officer is unable to determine the amount of duty under sub-section (8) for the reason that an appeal in a similar matter of the same person is pending before the Supreme Court, the proper officer shall inform the person concerned the reason for non-determination of the amount of duty and in such case, the time specified in sub-section (9) shall apply not from the date of notice, but from the date when such reason ceases to exist.”

14. Thereafter, the Tribunal had drawn a clear time line to show that the prescribed period of 6 months was not over. The timeline reads are under: “

”

15. Considering the date of judgment in ITC(Supra) i.e., 18th September 2019 and the relaxation period between 15 March, 2020 and 2nd October, 2021, the Tribunal observed, the time lapsed between the Show Cause Notice and the Order shall be 2 days less than the required period of 6 months. Accordingly, the Tribunal dismissed these Appeals. The Tribunal had also dismissed Customs Appeal No. 50510 – 50540 of 2021 on grounds of delay.

16. Thus, the Appellant has preferred 33 present appeals (31+2 Appeals) challenging the final order dated 4^th June, 2024. These appeals each stemming from related yet separate events, can be classified into two distinct categories, i.e.,

i. Appeals from Customs Appeal No 50091 of 2022 & 50286 of 2022,

ii. Appeals from Customs Appeal No 50510-50540 of 2021.

17. The case of the Appellant with respect to the former category is that the show cause notices, both dated 26th September, 2018, which sought to recover the refund credited to the Appellant, are not adjudicated within the time limit prescribed in the Act. These questions deserve consideration. Therefore, these matters are de-tagged from the other batch of 31 appeals and are accordingly listed for hearing separately.

18. No coercive measures shall be taken against the Appellant in the meantime. Mr. Rajeev Ranjan, Deputy Commissioner, (Legal) ACC Imports is present and has given instructions regarding the same to Mr. Singla, the ld. Standing Counsel.

19. This Court vide order dated 22nd January, 2025 had raised concerns with regard to the unnecessary delay caused by Customs Department in instructing their Standing Counsels appearing upon the advance copies being served. Insofar as this issue is concerned, Mr. Singla has sought instructions. He submits that as of 30th September, 2024, specific email addresses to which advance copies are to be served have been provided by the Respondent- Department which was published by the Delhi High Court Registry as well. The same are set out below:

20. In view thereof, the Registry shall ensure that whenever cases relating to Customs and GST are filed before the Court, the advance copies are served at the relevant email addresses as mentioned in the table above.

21. In addition, the Commissioner of Customs shall prepare an SOP as to the manner in which the Department shall ensure that the instructions are given to the nominated Counsels in the matter when advance copies are served.

22. Further, the respective Departments e., Directorate of Revenue Intelligence (DRI), Directorate of General GST Intelligence (DGGI), Customs Department and Central GST (CGST); shall prepare a common SOP to ensure that whenever advance copies are served and Counsels are appearing before the Courts, proper instructions are given for the hearings and matters do not go in default.

23. List on 20th March, 2025.