2019 (6) TMI 947 - HC - Central Excise

Delayed adjudication of show cause notice - SSI Exemption - clearance of Medicaments on payment of duty for loan licensees - branded goods or not - period 2001-02 to 2005-06 - time limitation - HELD THAT - though the show cause notice came to be issued in the present case in the year 2006 and it remained dormant for pretty long years without any adjudication, even after retrieving the case from the Call Book in the year 2009 the adjudication into the case did not conclude till 24-5-2018, the petitioner cannot be blamed for non-adjudication of the show cause notice as he had never requested to transfer it to the Call Book or he has never delayed any proceedings pending adjudication. The Department has failed to put forth any justification or show any explanation for delay in adjudicating the show cause notice even after it had retrieved the case from the Call Book on 28-9-2009 till the passing of the order impugned in this petition. As such, it has to be adjudicated within reasonable time and in absence of any proper explanation thereof, it is unlawful and arbitrary - SCN cannot be sustained. Alternative remedy of appeal - HELD THAT - Since the impugned order is quashed and set aside on the ground of delay in adjudication proceedings, the argument of alternative remedy raised by the respondent is rejected as the proceedings itself is vitiated for delay in adjudication proceedings. There is no need to relegate the petitioner to the alternative remedy as the order impugned is held to be unreasonable and arbitrary. Petition allowed - decided in favor of petitioner.

Summary

Issues: Delay in adjudication of show cause notice, Breach of principles of natural justice, Quashing of Order-in-Original

Delay in Adjudication of Show Cause Notice:
The petitioner challenged the Order-in-Original issued after a significant delay of nearly eleven years from the issuance of the show cause notice. The Department contended that the alternative remedy was available and there was no breach of principles of natural justice. However, the Court noted that the show cause notice was issued in 2006 but remained dormant for several years without conclusion. The Department failed to explain the delay in adjudication, and the petitioner was not responsible for the delay. The Court emphasized that adjudication proceedings must conclude within a reasonable time, and the delay without justification rendered the proceedings unlawful and arbitrary. Citing previous decisions, the Court held that the delay in adjudication vitiated the show cause notice and the subsequent Order-in-Original.

Breach of Principles of Natural Justice:
The petitioner argued that there was a breach of principles of natural justice as notices for personal hearings were not served as prescribed under the Central Excise Act. The Department claimed to have issued notices, but the petitioner disputed their service. The Court found that the order impugned was vitiated due to the lack of adherence to procedural requirements, specifically in issuing notices for personal hearings. The Court held that the absence of proper notice and procedural irregularities further supported the quashing of the Order-in-Original.

Quashing of Order-in-Original:
Considering the delay in adjudication and the procedural lapses in serving notices for personal hearings, the Court allowed the petition and quashed the Order-in-Original along with the show cause notice. The Court emphasized that the delay in adjudication proceedings, without proper justification, rendered the impugned order unreasonable and arbitrary. Consequently, the Court ruled in favor of the petitioner, setting aside the Order-in-Original and the show cause notice, with no order as to costs.