Delhi High Court Upholds ₹20.18-Crore Customs Demand; Holds Adjudication Within Section 28 Limitation After Excluding Period Covered by Pending Writ and Interim Protection
Delhi High Court Upholds Customs Adjudication Against Copper Importers; Says Period Covered by Pending Writ and Interim Protection Excluded Under Section 28(9A)
Facts
GKEM International Pvt. Ltd. and connected petitioners were engaged in importing duty-free electrolytic copper rods under Advance Authorisation Licences and exporting finished products such as copper wire and power cables after value addition. The licences required the imported raw material to be used for the authorised export purpose and the export obligation to be completed within the stipulated period.
Customs authorities alleged that instead of using the duty-free copper for manufacturing export goods, the petitioners diverted the imported raw material into the domestic market under the guise of job work. The investigation also allegedly revealed that some of the job-work firms existed only on paper and that statements recorded under Section 108 indicated non-fulfilment of the export obligation.
A show-cause notice dated 24 June 2022 was issued under Sections 28(4) and 28AAA of the Customs Act proposing differential duty of approximately ₹11.11 crore against Petitioner No. 1 and ₹9.06 crore against Petitioner No. 2, aggregating about ₹20.18 crore, besides interest and other consequences.
Meanwhile, the petitioners had separately approached the Delhi High Court seeking extension of their export obligation period because of the COVID-19 pandemic and permission to procure replacement copper from the domestic market. An interim order dated 3 June 2021 restrained coercive action pending those proceedings. That writ petition was ultimately dismissed on 8 December 2023.
During the customs adjudication, the petitioners themselves sought deferment because that writ petition and interim order were pending. The customs proceedings were consequently transferred to the Call Book on 18 August 2023. After revival, the Order-in-Original dated 29 November 2024 confirmed the differential duty demand of approximately ₹20.18 crore with interest.
The petitioners challenged the order before the Delhi High Court solely on limitation, arguing that the show-cause notice had become non-est under Sections 28(9) and 28(9A).
Issues
The principal issue was whether the Order-in-Original dated 29 November 2024 had been passed beyond the statutory time limit under Section 28(9) of the Customs Act.
This required the Court to determine:
- whether Section 28(9A) applied because of the earlier pending writ petition and interim order;
- whether the period of limitation should restart when that impediment ceased;
- whether transfer to the Call Book itself extended limitation;
- whether lack of separate formal communication regarding the Call Book transfer defeated the exclusion; and
- whether the petitioners could invoke writ jurisdiction despite having a statutory appellate remedy.
Petitioners’ Arguments
The petitioners argued that since the show-cause notice was issued on 24 June 2022 under Section 28(4), adjudication was required within one year, i.e. by 24 June 2023.
They challenged the eight-month extension granted by the competent authority and contended that even assuming it was valid, the extended period had expired well before the Order-in-Original was passed on 29 November 2024.
They further argued that transfer of the case to the Call Book did not automatically suspend limitation because they had not been separately informed of the transfer or furnished reasons for non-determination as required by Section 28(9A).
Reliance was placed on State of Punjab v. Bhatinda District Coop. Milk Producers Union Ltd., Shri Ram Agro Chemical Pvt. Ltd. and Vos Technologies Pvt. Ltd. to contend that limitation is jurisdictional and that delayed adjudication could be examined in writ proceedings.
Respondents’ Arguments
Customs raised a preliminary objection based on the availability of an efficacious statutory appeal.
On limitation, the Department argued that the pending writ petition and interim order attracted Section 28(9A), meaning the adjudication timeline did not run while that disabling circumstance existed.
According to Customs, the relevant circumstance ceased only on 8 December 2023, when the earlier writ petition was dismissed. Therefore, the one-year statutory period ran from that date, making the Order-in-Original dated 29 November 2024 timely.
Analysis of the Law
1. Section 28(9) Prescribes a Specific Timeline
For notices issued under Section 28(4), Section 28(9)(b) requires adjudication within one year, subject to the statutory provisions permitting extension.
The Court noted that ordinarily, absent Section 28(9A), the proceedings here would have had to conclude within the extended statutory period.
2. Section 28(9A) Was Squarely Attracted
The decisive factor was that the petitioners themselves had sought deferment because of the pending writ petition and interim protection.
The Court held that Section 28(9A)(b) squarely applied because the earlier judicial proceeding directly concerned matters relevant to the petitioners’ customs liability and prevented final adjudication.
The Court clarified an important distinction:
The Call Book transfer does not itself create the statutory exclusion.
The exclusion flows from the existence of the circumstance identified in Section 28(9A), such as a relevant pending case or interim stay.
The Call Book entry was merely the administrative consequence of that statutory circumstance.
3. Formal Intimation Requirement Was Substantially Satisfied
Section 28(9A) requires the proper officer to inform the noticee of the reason why determination cannot be completed.
Ordinarily, formal communication would be required.
However, the Court held that in this case the purpose of that requirement was fully satisfied because the petitioners themselves had informed the Department about the pending writ and interim order and had expressly relied upon them to seek deferment.
Therefore, they could not later contend that they were unaware of the very circumstance they themselves invoked.
4. Limitation Restarted on 8 December 2023
The earlier writ petition was dismissed on 8 December 2023. That was the date on which the statutory impediment under Section 28(9A) ceased.
The Court therefore held that the one-year period under Section 28(9)(b) had to be reckoned afresh from 8 December 2023.
The fresh one-year period would expire on 8 December 2024. Since the Order-in-Original was passed on 29 November 2024, it was within time.
Precedent Analysis
Vos Technologies Pvt. Ltd. v. Principal Additional Director General
The petitioners relied heavily on Vos Technologies, where delayed customs adjudications pending for approximately 15–18 years had been quashed.
The Court distinguished that decision.
Those notices were governed by the pre-2018 version of Section 28, and the case primarily involved the judicially developed “reasonable period” principle and repeated mechanical Call Book transfers.
The present notice was issued after the 2018 amendments, when Section 28(9) and Section 28(9A) expressly prescribed the relevant timeline and statutory exclusions.
Accordingly, Vos Technologies did not govern the present case.
State of Punjab v. Bhatinda District Coop. Milk Producers Union Ltd.
The petitioners relied on this case for the proposition that limitation affects jurisdiction and may justify writ interference.
The High Court did not dispute that principle in the abstract, but found on calculation that there was no limitation breach at all.
Collector of Central Excise v. Bhagsons Paint Industry and related cases
The Department relied on authorities supporting the proposition that delay alone does not automatically invalidate adjudication, particularly where statutory or factual circumstances explain the lapse of time.
Court’s Reasoning
The Court found that the petitioners’ limitation argument fundamentally ignored their own conduct.
They had themselves requested that adjudication be deferred until disposal of their earlier writ petition. That very proceeding prevented the proper officer from completing the determination.
Once the writ was dismissed, the statutory clock resumed from 8 December 2023, and the final order was passed before expiry of the one-year period.
The Court further observed that the petitioners had not challenged the substantive findings regarding diversion of duty-free goods, breach of Advance Authorisation conditions or alleged fraudulent evasion of duty in the writ petition.
As an independent equitable consideration, the Court noted that after seeking deferment, the petitioners did not inform the adjudicating authority when their earlier writ was dismissed, even though they had represented that a substantive reply would follow thereafter.
The Court invoked the principle of approbate and reprobate, holding that a litigant cannot seek suspension of proceedings and later derive an equitable advantage from the resulting passage of time.
Conclusion
The Delhi High Court held that the Order-in-Original dated 29 November 2024 was within the limitation period prescribed under Sections 28(9) and 28(9A).
The Court therefore declined to interfere with either the show-cause notice or the Order-in-Original.
The writ petition was dismissed, while the petitioners were granted liberty to pursue the statutory appellate remedy and raise all available contentions on the merits before the appellate authority.
Case Details
Case: GKEM International Pvt. Ltd. & Ors. v. Commissioner of Customs ICD PPG and Others
Court: High Court of Delhi at New Delhi.
Case Number: W.P.(C) No. 5796 of 2025 & CM Application No. 26401 of 2025.
Bench: Justice Anil Kshetarpal and Justice Shail Jain.
Judgment by: Justice Anil Kshetarpal.
Judgment Reserved: 19 August 2026.
Judgment Pronounced: 7 September 2026.
Subject: Customs Act, Sections 28(9) and 28(9A), Advance Authorisation, export obligation, Call Book proceedings, limitation, alternative remedy and Article 226.
Result: Writ petition dismissed. The ₹20.18-crore customs adjudication was held to be within limitation. Petitioners were granted liberty to challenge the merits through the statutory appellate remedy.
