M/S Durga Apparels Pvt Ltd v. Commissioner of Customs

1. This hearing has been done through hybrid mode.

2. The present appeal has been filed by the Appellant– M/s Durga Apparels Pvt. Ltd. challenging the Defect Miscellaneous Order No. 50133- 50134/ 2025 dated 10th February, 2025 (hereinafter, ‘the impugned order’) passed by the Customs, Excise & Service Tax Appellate Tribunal (hereinafter, ‘the CESTAT’).

3. Vide the impugned order, the CESTAT has dismissed the appeal filed by the Appellant i.e., Defect Appeal Diary No. 50237 of 2024 on the ground of delay.

4. The brief background of this case is that an investigation was conducted against the Appellant Company and its Directors on the grounds of allegations that certain goods were exported by them which were highly over-valued, only with the intention to earn duty drawbacks.

5. Pursuant to the investigation, a Show Cause Notice was issued upon the Appellant Company on 14th August, 2013 by the Additional Commissioner, Customs & Central Excise, Delhi-IV, Faridabad and a detailed reply dated 27th June, 2016 was filed. Thereafter, the Order-in- Original was passed on 26th September, 2016 and was further challenged by the Appellant along with the Department before the Commissioner of Customs (Appeals).

6. Vide order dated 28th May, 2019, the Commissioner of Customs (Appeal) upheld the Order-in-Original dated 26th September, 2016. It was further held that the goods were exported by the Appellant company under fraudulent duty drawback claims, rejecting 365 shipping bills and rendering them liable for confiscation under Section 113 of the Customs Act, 1962. The matter was partially remanded to the adjudicating authority for a fresh determination of penalties under Section 114(iii) of the Customs Act, 1962.

7. In the meantime, the Enforcement Directorate (ED) also initiated an investigation against the Appellant along with the ongoing investigation by the Directorate of Revenue Intelligence (DRI).

8. The case of the Appellant herein is that the Director of the Appellant Company- Mr. Sajjan Kumar, was arrested on 25th September, 2021 and he subsequently faced various medical issues due to which his health condition is stated to have deteriorated.

9. The Order-in-Appeal No. dated 28th May, 2019, passed by the Commissioner of Customs (Appeal) was challenged by the Appellant before the CESTAT. The said appeal was filed after the COVID-19 pandemic, only on 29th January, 2024. Thus, there was a substantial delay in the filing of the appeal of more than 1610 days. The said timeline is captured in brief hereinbelow: Date of Order in Appeal 28.05.2019 Date on which the Appellant received the Order in Appeal 03.06.2019 Date on which limitation period of three months for filing appeal under Section 129 of Customs Act, 1962 expired 02.09.2019 Appeal filed on 29.01.2024 Total Days of Delay 1610 days

10. On 10th February, 2025, CESTAT dismissed the appeal filed by the Appellant holding that the Appellant had failed to satisfactorily explain the delay of 1617 days.

11. The case of the Appellant is that the medical condition of the Appellant’s Director, coupled with the period of COVID-19 pandemic would completely justify the delay in filing the appeal and thus, sufficient cause has been shown.

12. It is, further, submitted that in fact, the Appellant Company’s Director was in custody due to the proceedings before the ED and during such period he could not take any steps to avail of legal remedies. This position is refuted by ld. counsel for the Respondent who submits that no medical records have been filed prior to 2020 which shows the deteriorating mental health of the Appellant Company’s Director.

13. Additionally, it is submitted that the Appellant has availed of more than Rs.13 crores in duty drawbacks due to the alleged transactions and the said amount lies with the Appellant.

14. This Court has considered the matter. The limitation period for filing an appeal under Section 129A of the Customs Act, 1962 is a period of three months. However, Section 129A(5) also provides that if sufficient cause is shown, the delay in filing the appeal can be condoned.

15. After hearing the above stated submissions made by the parties, there are three factors which persuade this Court to consider the issue of condonation of delay: i. The investigation by the Directorate of Revenue Intelligence as also by the Enforcement Directorate against the Appellant which commenced in 2019 and culminated into the arrest of the Appellant on 25th September, 2021; ii. The outbreak of the COVID-19 pandemic between 2020 to 2022 which has also been dealt with by the Supreme Court in Re: Cognizance for extension of Limitation having Misc. Application No. 21 of 2022 in M.A. No. 665 of 2021 in Suo Moto Writ Appeal (C) No. 3 of 2020. iii. The medical condition of the Appellant Company’s Director in respect of which some records have been placed along with the present appeal.