2025 (5) TMI 1629 - HC - Customs

Condonation of delay - limitation period prescribed under Section 129A - period of COVID-19 pandemic - sufficient cause - Fraudulent duty drawback - HELD THAT - This Court is of the opinion that there is sufficient cause shown by the Appellant to justify the delay in filing the appeal. However the said delay is being condoned subject to stringent terms and conditions. It is further directed that no unnecessary adjournments shall be taken before CESTAT. The impugned order is set aside on the above terms and the appeal is restored to its original position before CESTAT and shall now be adjudicated on merits. The said amount of Rs. 5 lakhs shall be deposited by 10th July 2025. The appeal is disposed of in these terms.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this matter include:

Whether the delay of 1607 days in filing the appeal under Section 129A of the Customs Act, 1962, can be condoned on the grounds of sufficient cause.
The applicability and interpretation of the limitation period prescribed under Section 129A of the Customs Act, 1962, and the scope for condonation of delay under Section 129A(5).
The sufficiency of the reasons put forth by the Appellant, including the impact of the COVID-19 pandemic and the medical condition of the Appellant's partner, to justify the delay.
The evidentiary weight and credibility of the Appellant's claims regarding the partner's health and custody affecting the ability to file the appeal timely.
The imposition of costs and conditions upon condonation of delay as a measure to balance the interests of justice and prevent abuse of process.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Whether the delay of 1607 days in filing the appeal can be condoned.

Relevant legal framework and precedents: Section 129A of the Customs Act, 1962 prescribes a limitation period of three months for filing an appeal against an order under the Act. However, sub-section (5) of Section 129A allows the appellate authority to condone delay if sufficient cause is shown. The Supreme Court's pronouncements on extension of limitation during the COVID-19 pandemic, particularly in the suo moto writ proceedings concerning limitation extensions, are also relevant.

Court's interpretation and reasoning: The Court acknowledged the statutory limitation period but emphasized the discretionary power to condone delay upon showing sufficient cause. It recognized that the COVID-19 pandemic and its resultant restrictions have been judicially accepted as grounds for extension of limitation. The Court also considered the ongoing investigations by the Directorate of Revenue Intelligence (DRI) and Enforcement Directorate (ED), including the arrest and medical condition of the Appellant's partner, as factors affecting the ability to file the appeal within time.

Key evidence and findings: The Appellant filed the appeal on 29th January 2024 against an order dated 28th May 2019, resulting in a delay of 1607 days. The Appellant cited the partner's deteriorating health and custody during the investigation as reasons for delay. Medical records were submitted, albeit with some dispute on their adequacy and timing. The Respondent challenged the sufficiency of these records and the explanation for delay.

Application of law to facts: The Court balanced the statutory mandate with equitable considerations. It found that the pandemic and the partner's health issues, combined with the legal complications arising from investigations, constituted sufficient cause to condone the delay. The Court referred to the Supreme Court's recognition of pandemic-related limitations in extending filing periods.

Treatment of competing arguments: The Respondent's argument that no adequate medical evidence was produced prior to 2020 was noted but did not outweigh the totality of circumstances. The Court gave weight to the overall context of investigations, pandemic disruptions, and medical conditions.

Conclusion: The Court held that sufficient cause was shown to justify condonation of the 1607-day delay in filing the appeal.

Issue 2: Conditions and costs imposed upon condonation of delay.

Relevant legal framework and precedents: While the statutory provision allows condonation of delay, courts have often imposed costs and conditions to deter misuse of the condonation provision and to ensure fairness to the opposing party.

Court's interpretation and reasoning: The Court exercised its discretion to impose stringent terms as a condition for condonation. This included a monetary cost of Rs. 5 lakhs, split equally between the Delhi High Court Bar Association and the Respondent Department. The Court also directed that no unnecessary adjournments be sought before the CESTAT to prevent further delay.

Key evidence and findings: The Appellant had availed of more than Rs. 5.2 crores in duty drawbacks, which was a relevant consideration in imposing costs to balance equities.

Application of law to facts: The Court's imposition of costs reflects the principle that condonation of delay is a privilege, not a right, and must be granted with safeguards against abuse. The conditions aim to ensure expeditious adjudication henceforth.

Treatment of competing arguments: The Court did not accept any arguments opposing the imposition of costs, viewing them as necessary for justice and deterrence.

Conclusion: The delay was condoned subject to the payment of Rs. 5 lakhs in costs and a direction against unnecessary adjournments.

Issue 3: Restoration of appeal and further proceedings.

Relevant legal framework and precedents: Upon condonation of delay, the appeal is restored to its original position for adjudication on merits before the appellate authority.

Court's interpretation and reasoning: The Court set aside the impugned order dismissing the appeal for delay and restored the appeal before the CESTAT for adjudication on merits. The Court emphasized timely compliance with the cost deposit and furnishing proof thereof.

Key evidence and findings: The Court noted the procedural history, including the initial investigation, show cause notice, original order, appeal, and the delayed filing.

Application of law to facts: The restoration ensures that the substantive issues raised in the appeal are adjudicated, preserving the Appellant's right to be heard on merits.

Treatment of competing arguments: The Respondent's opposition to condonation and restoration was overruled based on sufficient cause and equitable considerations.

Conclusion: The appeal was restored before the CESTAT to be adjudicated on merits after compliance with conditions.

3. SIGNIFICANT HOLDINGS

The Court held: "In view of these facts, this Court is of the opinion that there is sufficient cause shown by the Appellant to justify the delay in filing the appeal."

It further stated: "The impugned order is set aside on the above terms and the appeal is restored to its original position before CESTAT and shall now be adjudicated on merits."

Core principles established include:

The discretionary power under Section 129A(5) to condone delay must be exercised considering all relevant circumstances, including pandemic-related disruptions and health issues of key persons involved.
Delay condonation is subject to stringent conditions and costs to prevent abuse and ensure fairness.
Restoration of appeal after condonation ensures the substantive rights of parties are preserved and adjudicated on merits.

Final determinations:

The 1607-day delay in filing the appeal was condoned on grounds of sufficient cause.
The Appellant was directed to deposit Rs. 5 lakhs as costs, split equally between the Bar Association and the Respondent Department.
The appeal was restored before the CESTAT for adjudication on merits, subject to compliance with the cost deposit and directions against unnecessary adjournments.

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