2019 (1) TMI 1620 - HC - Customs

Maintainability of petition - impugned SCN have been taken out of the call book and personal hearing has already fixed vide communication dated 03.12.2018 - HELD THAT - It is undisputed fact that the issue involved in the impugned Show Cause Notices had earlier raised with respect to the petitioner's operation in Kerala. The said dispute stood resolved in favour of the petitioner by order dated 08.02.2015 passed by the CESTAT, Bangalore. It also emerges that it is undisputed fact that it only after filing of the present petition, the concerned respondent has resurrected the dormant impugned Show Cause Notice from call book and issued communication dated 03.12.2018 to the petitioner for personal hearing in respect of the impugned show cause notice. The respondents after keeping the impugned show cause notices in the call book, have not chosen to follow up it for unduly long period. It is very evident from the affidavit in reply filed by the respondents that it was only after the filing of this petition, the impugned show cause notices have been taken out from the call book and notice for personal hearing was issued to the petitioner. The act on the part of the respondents of keeping the impugned show cause notices in call book for unduly long period, without disclosing any reason for delay is arbitrary in exercise of powers and is also in violation of provisions of Section 11A of the Customs Act. It would vitiate the entire proceedings. Impugned order set aside - appeal allowed.

Summary

Issues:
Challenge to show cause notices under Article 226 of the Constitution of India.

Analysis:
The petitioner, a Public Limited Company engaged in manufacturing pneumatic tyres, filed a petition under Article 226 challenging 25 Show Cause Notices issued between 28.08.2002 and 26.05.2017 regarding the deduction of Government levies from the Net Dealer Price. The petitioner contended that the averaging of Government levies for deduction was permissible based on costing done by its Chartered Accountants. The issue had been previously resolved in favor of the petitioner by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) in Kerala. The petitioner argued that the impugned notices were in breach of the statutory mandate of Section 11A(11) of the Customs Act and should be quashed.

The petitioner's counsel argued that the impugned show cause notices were not maintainable as they were taken out of the call book after the petition was filed. The respondents had not followed up on the notices for an unduly long period until the petition was filed, which was considered arbitrary and a violation of Section 11A of the Customs Act. Citing previous judgments, the counsel emphasized that inordinate delays in adjudication could result in a denial of natural justice. The court found that the issue had been previously resolved in favor of the petitioner by CESTAT and that resurrecting the notices after a long delay was arbitrary and violated natural justice principles.

The court held that the impugned show cause notices could not be permitted to proceed further based on the previous decisions of the court. Consequently, the court quashed and set aside the notices at Annexure B/1 to B/25, making the rule absolute and leaving the parties to bear their own costs.