Delhi High Court Allows Customs Adjudication to Continue; Holds Connected Show Cause Notices Remain Independent and Directs Natural Justice Compliance Before Final Order
Delhi High Court Allows Customs Proceedings to Continue; Holds Two Show Cause Notices From Same DRI Investigation Retain Separate Legal Identity
Facts
The Delhi High Court decided two connected writ petitions filed by A V International and another arising from a common investigation conducted by the Directorate of Revenue Intelligence (DRI) concerning imports made by the petitioners. The investigation commenced in 2016 over allegations of mis-declaration and undervaluation of imported signage materials, principally sourced from China and Taiwan.
The investigation resulted in two separate Show Cause Notices. The First SCN dated 27 March 2017 concerned goods seized during the investigation and proposed confiscation and consequential penalties. The Second SCN dated 11 May 2020 concerned the petitioners’ earlier imports and proposed recovery of customs duty, interest and penalty under Section 28 of the Customs Act, 1962.
Both notices were assigned to the same adjudicating authority and were taken up together. The petitioners claimed that relied-upon documents were not supplied despite repeated requests and that adjournments had been sought because of the proprietor’s serious medical condition and the COVID-19 pandemic.
Following the Supreme Court’s decision in Canon India Pvt. Ltd. v. Commissioner of Customs, CBIC issued an instruction dated 17 March 2021 pursuant to which the proceedings were placed in the Call Book. They were subsequently revived following amendments introduced by the Finance Act, 2022.
The petitioners filed W.P.(C) 16149/2023 challenging continuation of proceedings under the Second SCN. On 14 December 2023, the High Court stayed further proceedings pursuant to that notice.
While that stay remained operative, the adjudicating authority proceeded with the First SCN and passed an Order-in-Original dated 1 February 2024. The petitioners therefore filed W.P.(C) 5024/2024, arguing that the First SCN could not have been independently adjudicated while the connected Second SCN remained stayed.
Issues
- Whether two Show Cause Notices arising from the same DRI investigation, assigned to the same authority and heard together, constituted one composite adjudication.
- Whether the High Court’s stay against proceedings under the Second SCN also prevented adjudication of the First SCN.
- Whether the Order-in-Original concerning the First SCN should be interfered with under Article 226 because of alleged non-supply of relied-upon documents and denial of adequate hearing.
- Whether the petitioners should instead pursue their statutory appeal before CESTAT.
- Whether adjudication of the Second SCN had become time-barred under Section 28(9) of the Customs Act.
- What effect the Call Book mechanism, Section 28(9A), the extension dated 6 March 2023 and its alleged non-communication had upon the pending proceedings.
Petitioners’ Arguments
The petitioners argued that both SCNs arose from the same investigation, contained substantially overlapping allegations, were assigned to the same adjudicating authority and had been heard together. Therefore, once the High Court stayed the Second SCN, the authority could not separately adjudicate the First SCN.
They alleged a serious violation of natural justice because relied-upon documents had not been furnished despite repeated requests. They also contended that their requests for adjournments, arising from the proprietor’s medical condition and the COVID-19 pandemic, were not properly considered.
Regarding the Second SCN, they argued that the statutory adjudication period under Section 28(9) had expired. According to them, the subsequent extension was invalid and, in any event, had never been communicated to them.
They further contended that executive instructions placing proceedings in the Call Book could not override statutory limitation periods.
Respondents’ Arguments
The Customs authorities argued that the petitioners themselves were responsible for much of the delay because they repeatedly sought adjournments despite being given multiple opportunities for personal hearing.
On limitation, the respondents contended that after the proceedings were transferred to the Call Book and subsequently withdrawn following the Finance Act, 2022 amendments, the period for adjudication recommenced under Section 28(9A).
They submitted that the competent authority validly granted an extension on 6 March 2023 and that Section 28(9) did not require the extension order to be communicated to the noticee. They relied upon Pranij Heights India Pvt. Ltd. v. Joint Commissioner of Customs and Shri Ram Agro Chemicals Pvt. Ltd. v. Union of India.
Regarding the First SCN, the respondents argued that the High Court’s interim order expressly stayed only proceedings under the Second SCN. Therefore, there was no legal restraint preventing the authority from adjudicating the First SCN.
Analysis of the Law
The High Court drew a clear distinction between administrative consolidation and legal merger of adjudicatory proceedings.
Although both notices arose from the same DRI investigation and were assigned to the same authority, their subject matters were different. The First SCN concerned seized goods and proposed confiscation and penalties, while the Second concerned earlier imports and recovery of customs duty, interest and penalty under Section 28.
The Court therefore held that each notice had an independent statutory foundation and created a separate adjudicatory proceeding.
Merely assigning both notices to the same authority or conducting common hearings for administrative convenience did not destroy their separate legal identities. The Court found no provision in the Customs Act requiring both notices to culminate in a single composite order.
Scope of an Interim Stay
The Court emphasised that an interim judicial order must be construed according to its express terms and cannot be enlarged by implication.
The order dated 14 December 2023 specifically stayed proceedings under the Second SCN. It did not stay the First SCN or prohibit the adjudicating authority from deciding it.
Alternative Statutory Remedy
The Court held that disputes regarding supply of documents, adequacy of opportunity, adjournments and prejudice involved examination of the adjudication record.
These were matters appropriately examined by CESTAT in statutory appeal, rather than through extraordinary writ jurisdiction.
The Court reiterated that where an effective and efficacious statutory remedy exists, Article 226 jurisdiction is ordinarily not exercised unless exceptional circumstances are established. No such circumstances were demonstrated concerning the First SCN’s final order.
Precedent Analysis
Canon India Pvt. Ltd. v. Commissioner of Customs
The petitioners relied upon the developments following the Supreme Court’s decision in Canon India, pursuant to which CBIC issued its 17 March 2021 instruction and relevant proceedings were transferred to the Call Book.
Pranij Heights India Pvt. Ltd. v. Joint Commissioner of Customs
The respondents relied upon the Delhi High Court’s decision in Pranij Heights India Pvt. Ltd. v. Joint Commissioner of Customs, 2025:DHC:11343-DB, for the proposition that mere non-communication of an order extending the adjudication period does not invalidate the Show Cause Notice or adjudication proceedings.
Shri Ram Agro Chemicals Pvt. Ltd. v. Union of India
The respondents also relied upon the Punjab and Haryana High Court’s decision in Shri Ram Agro Chemicals Pvt. Ltd. v. Union of India & Ors., 2019 SCC OnLine P&H 4918, which had been followed by the Delhi High Court on the issue of non-communication of extension.
GMR Airport Infrastructure and Vos Technologies
The petitioners relied upon the pending proceedings before the Supreme Court in Union of India v. GMR Airport Infrastructure Ltd. and upon Vos Technologies India Pvt. Ltd. v. Principal Additional Director General.
The respondents sought to distinguish those matters on the basis that they concerned the statutory framework existing before amendments introduced by the Finance Act, 2018.
Importantly, the High Court did not finally decide these competing precedent-based arguments concerning the Second SCN. It expressly left the questions open for adjudication before the appropriate forum.
Court’s Reasoning
The Court rejected the petitioners’ principal argument that the two notices constituted one inseparable adjudication.
Although they shared a factual origin, each notice addressed a different subject matter and possessed its own statutory foundation. A common adjudicating authority and common hearing were matters of administrative convenience and did not create a legal requirement that both proceedings must be decided together.
The Court similarly rejected the contention that its stay against the Second SCN prevented adjudication of the First. The interim order had to be applied according to its actual wording; its scope could not be expanded merely because the proceedings were connected.
As regards the completed adjudication of the First SCN, the Court declined to examine factual disputes concerning non-supply of documents and denial of hearing because CESTAT provided a complete appellate mechanism capable of considering those grounds.
Regarding the Second SCN, however, the Court deliberately refrained from deciding whether the proceedings were barred by limitation.
Questions concerning Section 28(9), Section 28(9A), transfer to and withdrawal from the Call Book, validity of the 6 March 2023 extension and consequences of its non-communication were all left open because the adjudication itself had not yet attained finality.
Conclusion
The Delhi High Court disposed of both writ petitions.
In W.P.(C) 5024/2024, it refused to interfere with the Order-in-Original dated 1 February 2024 concerning the First SCN. The petitioners were granted liberty to challenge that order before CESTAT, including on grounds of natural justice, non-supply of documents and other objections raised before the High Court.
In W.P.(C) 16149/2023, the Court vacated its interim stay dated 14 December 2023 and permitted the Customs authorities to resume adjudication of the Second SCN dated 11 May 2020.
However, before passing a final order, the adjudicating authority was directed to provide the petitioners an effective opportunity of hearing and ensure compliance with principles of natural justice.
All objections concerning limitation under Section 28, the Call Book, extension of time, non-communication of extension and non-supply of relied-upon documents were expressly kept open for independent consideration.
Case Details
Case: A V International & Anr. v. Additional Director General, Directorate of Revenue Intelligence & Ors.; connected with A V International & Anr. v. Principal Commissioner of Customs Import & Anr.
Court: Delhi High Court
Case Numbers: W.P.(C) 16149/2023 and W.P.(C) 5024/2024 with CM APPL. 20542/2024
Judges: Justice Anil Kshetarpal and Justice Shail Jain
Date: 07 August 2026
Result: Both writ petitions disposed of; challenge to First SCN adjudication order left to CESTAT; stay on Second SCN vacated and adjudication permitted to continue subject to effective hearing and natural justice compliance.
