Delhi High Court Declines Common Adjudication Of Three Customs SCNs Despite Overlapping Evidence

The Delhi High Court has refused to order common adjudication of three show cause notices arising out of a single Directorate of Revenue Intelligence (DRI) investigation, holding that although there was substantial overlap in the material relied upon by the Department, the notices had distinct subject matters and arose at different stages of the alleged transactions.

The Division Bench of Justices Anil Kshetarpal and Shail Jain also declined to entertain challenges to the customs adjudication orders in writ jurisdiction, leaving the Petitioners to avail the statutory appellate remedy.

The petitioner-company had sought the appointment of a single Common Adjudicating Authority (CAA) to adjudicate all three show cause notices issued pursuant to the DRI investigation. It contended that the notices arose from the same investigation and involved common facts, allegations and evidence, with substantial overlap in the documents relied upon.

While the Court noted that the request for common adjudication was “not without basis” however, it distinguished the nature of the three proceedings.

One SCN concerned live consignments intercepted at the time of import and proposed confiscation of goods and recovery of differential customs duty. Another concerned 74 Bills of Entry relating to consignments already cleared and proposed recovery of differential duty under Section 28(4) of the Customs Act. The third concerned networking equipment found at different data centres for which, according to the Department, lawful import documentation or evidence of customs clearance could not be produced.

“The three SCNs have distinct subject matters and arise at different stages of the alleged transactions,” it remarked.

The Court observed that the principle favouring common adjudication where connected notices arise from substantially common material could not be understood to mean that every show cause notice emanating from a common investigation must, irrespective of the nature of the allegations and reliefs proposed therein, necessarily be adjudicated by one authority.

It further noted that during the pendency of petition, two of the three SCNs had already been adjudicated.

The Court also declined to exercise writ jurisdiction over challenge to alleged denial of an effective opportunity of hearing. It observed,

“The question whether those principles were violated in the individual cases, however, depends upon examination of the disputed factual record relating to the respective Noticees. Such examination can appropriately be undertaken by the statutory appellate authority.”

As such, the Court dismissed all four writ petitions.

For Petitioners: Advocates Gajendra Maheshwari, Siddharth Punj and Priyamwada Sinha

For Respondents: Babita Saini, SPC for UOI. Aditya Singla, SSC along with Arya, Shreya, Dhananjay Gautam, Akhil and Sakshi Chandna, Anurag Ojha, SSC along Dipak Raj, Aryaman Singh Chouhan and Mr Aditya Chaudhary, Advs. for R-3.