Corrigendum Cannot Expand Show Cause Notice After Hearing Concludes: Gujarat High Court

On 22 June, the Gujarat High Court held that Customs authorities cannot introduce fresh allegations or evidence through a corrigendum after adjudication proceedings have concluded and the matter has been reserved for final orders.

A Division Bench of Justices A.S. Supehia and Vaibhavi D. Nanavati allowed a writ petition filed by Vidres India Ceramics Pvt. Ltd. and directed the authorities to pass final orders within six weeks.They emphasised that the department could not improve its case after conclusion of hearing, observing:

“The Corrigendum introduces something new or fresh evidence with fresh allegations into the show cause notice, which has travelled to the final stage of passing the final order.”

The petitioner had imported pigments between December 2012 and July 2013. In 2014, the Directorate of Revenue Intelligence issued a show cause notice proposing to reclassify the goods as “printing ink” and demand higher customs duty.

During adjudication, the petitioners cross-examined departmental experts, who admitted that the tested samples belonged to another entity, Krishna Colour Chem, and not to the petitioners.

After final arguments concluded on 11 July 2016 and the matter was reserved for orders, the department issued a corrigendum on 22 August 2016 seeking to introduce fresh allegations and documents linking the petitioners to Krishna Colour Chem.

The petitioners contended that the corrigendum could not be used to build an entirely new case after adjudication had concluded, while the department argued that it could supplement the show cause notice based on additional material.

Rejecting the department's stand, the Court held that statutory provisions permitting supplementary notices introduced in 2018 could not apply retrospectively to notices issued before 29 March 2018, and that a corrigendum introducing fresh allegations could not be treated as a permissible supplementary notice. The Bench further observed:

“On the overall analysis of facts and the statutory scheme governing the issue raised before us, we are of the opinion that the action of the respondent-department in issuing the impugned Corrigendum was uncalled for.”

Accordingly, the High Court directed the authorities to adjudicate the original show cause notice dated 10 April 2014 without taking into account the corrigendum dated 22 August 2016.

For Petitioners: Mr. Paresh M. Dave

For Respondents: Ms. Hetvi H. Sancheti and Mr. Viral K. Shah