Cross-Examination Requests In Show Cause Proceedings Cannot Be Allowed Without A Reply From Noticee: Madras High Court

The Division Bench of Justices R. Suresh Kumar and C. Saravanan observed that “………the question of entertaining an application for cross-examination of the witnesses without any reply on merits by a notice in a show cause proceeding is to be eschewed and should not to be allowed.”

Under Section 28(9) of the Customs Act, 1962, the proper officer must determine the duty or interest amount within Six months from the date of notice for cases under clause (a) of sub-section (1) and one year from the date of notice for cases under sub-section (4).

As per the second proviso to Section 28(9) of the Customs Act, 1962, where the proper Officer fails to determine within such extended period, such proceeding shall be deemed to have concluded as if no notice had been issued.

In this case, Show Cause Notice was challenged on the limitation period specified under Section 28(9) of the Customs Act, 1962. The assessee requested cross- of individuals named in the Show Cause Notice, without submitting a reply to the notice.

The assessee argues that the statutory period for initiating proceedings expired on 27.09.2023 and, as a result, the proceedings initiated by the Principal Commissioner of Customs, Preventive Commissionerate, Chennai-III, through the Show Cause Notice issued on 28.09.2022, have legally lapsed.

The department submitted that although the initial period of limitation had expired on 27.09.2023, however, by virtue of the extension granted by the Chief Commissioner of Customs, Chennai Customs Zone, Custom House, Chennai on 07.05.2024 under first proviso to Section 28(9) of the Customs Act, 1962, the time for completing the assessment was still available till 27.09.2024.

The Madras High Court had directed the department to conclude the proceedings in terms of Section 28(9) of the Customs Act, 1962. The assessee has challenged the order passed by the Madras High Court.

The bench noted that the question of granting extensions under the first proviso to Section 28(9) of the Customs Act, 1962 will arise only after the limitation for passing Order determining duty or interest, as the case may be, within the time stipulated under Section 28(9) of the Customs Act, 1962 had expired.

Further, the bench stated that only after the period of six months or one year, as the case may be, the senior officer could extend the period by another six months or one year specified in Clause (a) and Clause (b) under the first proviso to Section 28(9) of the Customs Act, 1962. The second proviso to Section 28(9) of the Customs Act, 1962, further contemplates abatement of the proceedings if after the extension period under the first proviso to Section 28(9) of the Customs Act, 1962, no Orders are passed.

The bench opined that the question of entertaining an application for cross-examination of the witnesses without any reply on merits by a notice in a show cause proceeding is to be eschewed and should not to be allowed.

The Appeal has become infructuous in the light of communication dated 07.05.2024 of the Chief Commissioner of Customs, Chennai Customs Zone, Custom House, Chennai, extending the period of limitation under the first proviso to section 28(9) of the Customs Act, 1962, added the bench.

In view of the above, the bench dismissed the appeal.

Counsel for Appellant/ Assessee: Sathish Sundar

Counsel for Respondent/ Department: AR.L. Sundaresan

Case Title: Nalin Gupta v. Commissioner of Customs

Citation: 2024 LiveLaw (Mad) 437

Case Number: W.A.No.2542 of 2024

Click Here To Read/Download The Order