2018 (12) TMI 1727 - HC - Central Excise

Condonation of delay in filing appeal - though the show cause notice is issued in the year 2004 and the response/reply to the same was filed by the petitioners in the year 2005, it has not been adjudicated upon for pretty long 13 years - Short payment of Central Excise Duty - DTA clearances of waste and rejects of fabrics - demand of short paid duty with interest and penalty - HELD THAT - Since inordinate delay in adjudication proceedings pursuant to the show cause notice for nearly about 14 years is unreasonable, without any explanation, without there being any fault on the part of the petitioners. Petition allowed.

Summary

Issues:
Challenge to Order-in-Original and show cause notice dated 15-7-2004.

Analysis:
The petitioners challenged the Order-in-Original and show cause notice dated 15-7-2004 issued by the Assistant Commissioner of CGST and Central Excise, Surat. The petitioners contended that the department invoked a larger period of limitation in the show cause notice demanding customs duties of ?7.66 lakhs with interest and penalties. The petitioners had responded to the notice in 2005, but no further progress occurred for years. The petitioners had ceased their EOU operations and manufacturing activities, changed their correspondence address, and did not receive any further notice or personal hearing. The petitioners argued that the order suffered from breaches of natural justice and could not have been passed after deactivating proceedings for over a decade. They cited the judgment in Siddhi Vinayak Syntex Pvt. Ltd. v. Union of India to support their case.

The petitioners also claimed that the impugned order was arbitrary, illegal, and unreasonable as there was a significant delay of 13 years in adjudicating the matter after their response to the show cause notice in 2005. They highlighted that notices for personal hearings in 2017 were not served, leading to a breach of natural justice principles. The petitioners referenced various cases to strengthen their argument, including Siddhi Vinayak Syntex Pvt. Ltd. v. Union of India, Pooja Tex Prints Private Limited v. Union of India, and GPI Textiles Limited v. Union of India. They emphasized that the prolonged delay without intimation and reactivation of proceedings after 14 years had resulted in a miscarriage of justice.

In response, the department contended that the decision in Siddhi Vinayak Syntex Pvt. Ltd. had been taken to the Supreme Court, but they failed to demonstrate any stay on the judgment. After careful consideration, the Court found the delay of nearly 14 years in the adjudication proceedings unreasonable and unjustified, especially without any fault on the part of the petitioners. Given that the issue was covered by the judgments cited by the petitioners, the Court allowed the petition, quashed the Order-in-Original and the show cause notice, and made the rule absolute without any costs.