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GKEM International Pvt Ltd & Ors. vs. Commissioner of Customs ICD PPG and Others

Writ Petition (Civil) · 2026:DHC:7503-DBDecided 7 Sept 2026New Delhi Bench
W.P.(C) 5796/2025CNR: DLHC010260632025
Justice Anil Kshetarpal · Justice Shail Jain

Background

GKEM International and related petitioners imported duty-free copper rods under Advance Authorisation Licences to manufacture and export copper wire/cables, but an investigation found they had diverted the imported material into the domestic market through paper firms without fulfilling their export obligation. A Show Cause Notice for about Rs. 20.18 crore in differential customs duty was issued in June 2022, and after delays (including the petitioners' own request to defer proceedings pending a separate writ petition), an Order-in-Original confirming the demand was passed in November 2024. The petitioners challenged only the timing of that order, arguing it was passed beyond the statutory limitation period under Section 28(9)/28(9A) of the Customs Act, without disputing the underlying findings of diversion.

Decision Breakdown

The Court held that under Section 28(9A), when adjudication is stalled because of a pending related court case (here, the petitioners' own writ petition, which included an interim order restraining coercive recovery), the limitation clock resets and starts running only once that circumstance ceases: in this case, 8 December 2023, when the related petition was dismissed. Since the petitioners themselves had informed the department of that pending case and used it as the reason for deferring adjudication, the formal-communication requirement was effectively satisfied by their own conduct. Computed from that date, the Order-in-Original passed on 29 November 2024 was well within the permissible one-year period, so the challenge on limitation grounds failed; the Court also noted, as an independent ground, that the petitioners' conduct (not informing the department when their related case was dismissed, while relying on the resulting delay to attack the order) disentitled them to discretionary relief.

Lesson Learnt

If a taxpayer or importer asks the authorities to pause adjudication because of a pending related court case, the statutory limitation clock for that adjudication is paused too and restarts only once that case is actually decided, so parties cannot later use the resulting delay itself as a ground to invalidate the proceeding.

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