Order Date – 16 August 2023

Parties: Swatch Group India Pvt Ltd & Ors Vs Union Of India & Ors

Facts –

• The Petitioners, Swatch Group India Pvt Ltd and others, an importer and an exclusive authorised distributor of Swatch products, and distributes various brands of luxury watches, accessories, etc. 
• A search was conducted in the premises of the petitioner and seized certain watches and the investigation culminated in the issuance of show cause notice dated 14.02.2018 alleging that there is mis-declaration of retail prices for imported luxury watches to evade payment of appropriate customs duty. It was alleged that watches were notified for retail sale price-based assessment for payment of CVD less abatement.
• It was admitted that the show cause notice was not adjudicated till the date of the filing of the present writ petition on 15.04.2021.

Issue – 

• Whether the delay in adjudicating the show cause notice is justified under the unamended Section 28(9) of the Customs Act?

Order –

• The Divisional Bench of Hon’ble High Court observed that the unamended Section 28(9) of the Customs Act, specifically provides that the proper officer ‘shall’ determine the amount of duty within six months or within one year, as the case may be, from the date of notice. It only provides certain degree of inbuilt flexibility by incorporating the words ‘where it is possible to do so’.
• The flexibility, at the same time cannot be equated with the lethargy of the Department or its officers. The Legislature has mandated the show cause notices to be adjudicated within six months or one year as the case may be; it has provided flexibility only to the extent that if the same is not practicable/ possible the period can be extended.
• It is apparent from the documents and the timelines reflects by them that no sincere efforts have been made by the Department for adjudicating the impugned SCN. It is, thus, admitted that the Department for almost a period of 17 months slept over the matter despite the specific mandate of even the unamended Section 28(9) of the Customs Act that the duty shall be levied within a period of 12 months from the date of issuance of the notice.
• There is no material to show that it was not possible for the proper Officer to determine the amount of duty within the prescribed period. The mention of the words, “where it is not possible to do so”, does not enable the Department to defer the determination of the notices for an indeterminate period of time.
• In the absence of any ground that it was not possible for the officer to determine the amount of duty within the prescribed period, the impugned SCN has lapsed and cannot be adjudicated. Hence the writ petition is allowed.