2023 (10) TMI 1390 - HC - Central Excise

Jurisdiction - Powers of the Revenue Department to resume inquiry into the show cause cum demand notices issued in the matters of proposed reversal under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944, after lapse of more than 10 years - HELD THAT - Since the proposed action regarding reversal was contemplated, the provisions of Section 11A of the Central Excise Act, 1944 are sought to be invoked for raising the demand and recovery. The provision of Section 11A inter alia provides for a period of limitation within which the notices are supposed to be issued to make the recoveries and provides that the action of recovery has to be initiated within six months/2 years from the date of notice depending upon the facts whether it is a case falling under Sub-Section 1 or Sub-Section 2 respectively. It is, therefore, abundantly clear that contrary to this statutory time limit, the respondents have now revived the inquiries after more than a decade and the action would apparently be illegal. In respect of similar proceedings under the service tax matters under Section 73 of the Finance Act, coordinate benches of this Court in the matters of Reliance Transport and Travel Pvt. Ltd. 2022 (3) TMI 1169 - BOMBAY HIGH COURT , ATA Freight Line (I) Pvt. Ltd. 2022 (3) TMI 1162 - BOMBAY HIGH COURT and Coventry Estate Pvt. Ltd. 2023 (8) TMI 352 - BOMBAY HIGH COURT , the actions initiated after prolonged period have been struck down. The impugned actions of reviving the inquiries which were in cold storage for more than a decade are clearly contrary to the law and is liable to be struck down - Petition allowed.

Summary

Issues Involved:
The judgment addresses the issue of the Revenue Department's powers to resume inquiry into show cause cum demand notices after a lapse of more than 10 years, specifically in the context of Cenvat Credit Rules and Central Excise Act.

Details of the Judgment:

1. The petitioner, a public limited company engaged in manufacturing excisable goods, had filed excise returns audited by the Assistant Commissioner of Goods and Service Tax. The respondent issued show cause notices regarding the reversal of Cenvat Credit availed by the petitioner, leading to the petitioner's grievance over the resumed inquiries after a significant delay.

2. The petitioner argued that the respondent was not entitled to resume the inquiries due to the unreasonable delay of 10 to 13 years in adjudicating the matters post the issuance of show cause notices. Citing various judgments, the petitioner sought relief from being kept under prolonged uncertainty and requested a mandamus to drop the proceedings.

3. The respondent explained that the delay was due to the department's appeal before the Supreme Court regarding the petitioner's inadmissible Cenvat Credit. Following the withdrawal of the appeal and subsequent revival of cases, the respondent justified the delay from the date of Supreme Court's decision and highlighted the impact of the pandemic on the proceedings.

4. The court analyzed the statutory provisions of Section 11A of the Central Excise Act, emphasizing the limitation period for initiating recovery actions. It noted the illegal revival of inquiries after a decade, contrary to the statutory time limits, and referenced previous judgments that struck down similar belated actions.

5. Despite the respondent's explanation regarding the Call Book maintenance and circulars, the court found the delay unjustified, emphasizing the necessity of informing the petitioner about any delays or pending actions. It referenced past judgments to support its conclusion that the revived inquiries were arbitrary and contrary to the law.

6. Ultimately, the court allowed the writ petitions, making the Rule absolute in favor of the petitioners in accordance with the prayer clauses, thereby striking down the revived inquiries that had been dormant for an extended period.