Madras High Court Quashes Customs Adjudication Order Passed Nearly 14 Years After Show Cause Notice

Overview of the Dispute

The Madras High Court, in WP No.19019 of 2024, adjudicated upon a writ petition filed by T. T. Enterprises challenging Order-in-Original No.105165/2024 dated 19.02.2024 issued by the Principal Commissioner of Customs (Preventive), Chennai-III. The court ultimately set aside the impugned order, holding it to be barred by limitation and tainted by unreasonable delay amounting to arbitrariness under Article 14 of the Constitution of India.

The judgment, delivered on 28.04.2026, addresses three significant legal questions concerning the relationship between limitation and jurisdiction, the proper construction of the phrase "where it is possible to do so" as it appeared in Section 28(9) of the Customs Act, 1962, and the extent to which the Finance Act, 2018 amendments to that provision could apply retrospectively to proceedings already initiated.

Background and Factual Matrix

T. T. Enterprises, a proprietary concern, was engaged in importing apples from M/s. Evans Fruit Company, USA. Consignments were brought into India through Chennai and Tuticorin Ports during 2006 and 2008.

The Directorate of Revenue Intelligence (DRI) launched an investigation premised on allegations that the assessee had deliberately undervalued its imported goods, purportedly by remitting the differential amount in value outside regular banking channels. As part of the investigation, the hard disk of the petitioner's office computer was seized. Forensic examination of this device allegedly uncovered email correspondence, invoices, and payment records indicating that two separate sets of invoices had been generated — one reflecting the actual transaction value and another showing a lower figure for customs assessment purposes.

Upon conclusion of the investigation, a Show Cause Notice dated 05.08.2009 was issued, proposing:

  • Rejection of the declared transaction value
  • Re-determination of the assessable value
  • Confiscation of goods
  • Recovery of differential customs duty along with applicable interest
  • Imposition of penalties under the Customs Act, 1962

Despite the notice being issued in August 2009, the adjudication proceedings dragged on across successive administrative transfers, restructuring of Commissionerates, and periods during which the file was placed in the Call Book — reportedly on account of pending litigation before the Supreme Court regarding the jurisdiction of DRI officers. Eventually, Order-in-Original No.105165/2024 dated 19.02.2024 was passed, confirming the duty demand along with consequential liabilities — nearly fourteen years after the show cause notice.

Grounds of Challenge by the Assessee

The assessee raised the following primary objections:

  1. Unreasonable and unexplained delay of approximately fifteen years in concluding the adjudication of the Show Cause Notice dated 05.08.2009
  2. Failure of the adjudicating authority to address the specific objection regarding delay, despite the assessee's reliance on the decision in J. Sheik Parith Vs. Commissioner of Customs and another, 2020 (374) E.L.T. 15 (Mad.)
  3. Denial of relied-upon documents and refusal of permission for cross-examination of persons connected with overseas documents, amounting to a violation of principles of natural justice
  4. Non-furnishing of records relating to several Bills of Entry that had already attained finality

On the question of limitation, the assessee argued that when the Show Cause Notice was issued on 05.08.2009, Section 28(9) of the Customs Act, 1962 mandated adjudication of notices issued under Section 28(4) within one year from the date of notice, subject to the qualification "where it is possible to do so". Even assuming the Finance Act, 2018 amendments applied retrospectively, adjudication ought to have been completed by 28.03.2020 at the latest. The impugned order, however, was passed on 19.02.2024 — nearly four years beyond even that outer limit.

Respondents' Position

The revenue authorities resisted the writ petition on the following grounds: