Customs Dept Cannot Run Parallel Proceedings By Passing Penalty Order While Challenge To SCN Is Pending Before Court: Delhi HC

The Delhi High Court has set aside a final order of penalty passed by the Customs Department against a paper trader for alleged undervaluation of imported goods, stating that the same was passed during pendency of challenge to the show cause notice issued to the trader. A division bench of Justices Prathiba M. Singh and Dharmesh Sharma observed, “passing of the impugned Order-in-Original while the impugned SCN was under challenge before this Court would amount to initiation of parallel proceedings rendering the scrutiny of the Court as infructuous.” Suspecting misdeclaration of imported goods, the Directorate of Revenue Intelligence had issued the impugned SCN to the Petitioner, holding it liable for payment of differential duty under Section 28. The High Court observed it is well settled that a SCN as also the final order becomes liable to be quashed if there is unjustified delay in adjudication. So far as passing of final order during pendency of challenge to the SCN is concerned, the bench cited Parle International Ltd. v. Union of India where also the SCN was not adjudicated for over 13 years and after the same was assailed before the Bombay High Court, the concerned authority passed the order in-original.