2020 (2) TMI 1115 - HC - Central Excise

Principles of natural justice - SCN in call book for more than 13 years and without informing the petitioner, the SCN has been recalled - petitioner submitted that the SCN impugned in this petition is dated 19.03.2004 and thereafter no adjudication proceedings were conducted or concluded by the respondent no.2 authority within reasonable period and after a long delay of more than 13 years, the case was taken up for its adjudication by respondent no.2. HELD THAT - It would be appropriate to refer to the show- cause notice dated 19.03.2004 impugned in this petition. It is an admitted position that the impugned notice is not adjudicated till date. The show- cause notice itself shows that the petitioner Company was registered as 100% EOU with Development Commissioner, KFTZ Gandhidham and the same relates to predominantly the goods cleared by the petitioner in DTA between July 1999 to March 2000. The show- cause notice also indicates that 30 days time was given to the petitioner Company and the petitioner Company had replied to the same, however the respondent authorities did not adjudicate the show- cause notice. The record clearly indicates that the authorities kept the show- cause notice in call book for more than 13 years and without informing the petitioner and as averred by the petitioner, which is not controverted by the respondent authorities and on the contrary on inquiry made by the petitioner, the petitioner was informed that the impugned show- cause notice has been recalled from the call book and was kept again for its adjudication which is against the principles of natural justice and beyond reasonable period. The impugned notice dated 19.03.2004 deserves to be quashed and set aside and is hereby quashed and set aside - Petition allowed - decided in favor of petitioner.

Summary

Issues Involved:
1. Delay in adjudication of the show-cause notice.
2. Principles of natural justice.
3. Validity of the show-cause notice after an unreasonable delay.
4. Authority of the Central Board of Excise and Customs (CBEC) regarding the call book concept.

Detailed Analysis:

1. Delay in Adjudication of the Show-Cause Notice:
The petitioner challenged the show-cause notice dated 19.03.2004, which had not been adjudicated for over 13 years. The petitioner argued that this delay was arbitrary, unreasonable, and contrary to established legal principles. The court noted that the show-cause notice was transferred to the call book and remained unadjudicated for an extended period, which was not justified by the respondent authorities.

2. Principles of Natural Justice:
The petitioner contended that the prolonged delay in adjudication violated the principles of natural justice. The court referenced multiple precedents, including Siddhi Vijayak Syntex Pvt. Ltd. vs. Union of India and Parimal Textiles vs. Union of India, which emphasized that inordinate delays in adjudication result in a denial of natural justice. The court agreed that the delay in this case was prejudicial to the petitioner.

3. Validity of the Show-Cause Notice After an Unreasonable Delay:
The court examined whether the show-cause notice, issued in 2004 for transactions that occurred between July 1999 and March 2000, could be validly adjudicated after such a long delay. The court cited the legislative intent behind Section 11A of the Central Excise Act, which prescribes time limits for adjudication. The court held that the revival of proceedings after a long gap without any plausible explanation is unlawful and arbitrary, thus vitiating the entire proceedings.

4. Authority of the CBEC Regarding the Call Book Concept:
The court scrutinized the practice of transferring cases to the call book, as directed by the CBEC. It concluded that this practice is contrary to the statutory mandate of the Central Excise Act, which requires adjudicating authorities to determine duty within specified time frames. The court found that the CBEC had no authority to extend these time limits indefinitely through the call book concept, rendering such instructions beyond the scope of the CBEC's authority.

Judgment:
The court quashed and set aside the impugned show-cause notice dated 19.03.2004, citing the unreasonable delay and violation of natural justice principles. The court emphasized that the authorities failed to adjudicate the notice within a reasonable period and acted contrary to established legal principles. The petition was allowed, and the rule was made absolute to the extent of quashing the show-cause notice. No order as to costs was made.