2021 (7) TMI 28 - HC - Central Excise

Adjudication of SCN after 18 years - transfer of the case to the call book - Clandestine removal - Recovery of taxes and duties - Department has gone in appeal to the appropriate authority - injunction issued by Supreme Court/High Court/CEGAT, etc. - audit objections are contested - HELD THAT - In the present case, there is no indication as to which of the categories stands attracted. From the facts narrated neither clauses (i), nor (ii) nor (iii) stands attracted. The present case has certainly not reached the stage of appeal and there is no order of the Supreme Court or the High Court or the CEGAT. This is not a case where the audit objections are contested by any one. Further, nothing is indicated in the counter affidavit about the Board specifically ordering this case kept pending by entry in the 'call book'. In effect, the attempt to revive the proceeding after 18 years appears to contrary to the circulars issued generally by the Department for expeditious disposal of the SCNs. No convincing explanation is offered as to why the Department sat over the matter for 18 years. Except saying that they decided on 13th June, 2016 to revive the case in terms of the Board s Circular dated 8th April 2016, there is no convincing answer for the inordinate delay in seeking to revive the proceedings - Also, the Petitioner cannot be expected to preserve its records for these many years and to be able to answer a SCN after 18 years. No effective opportunity of defence can be afforded to the Petitioner in such proceedings. In the present case nothing is indicated in the initial SCN issued on 29th March 2000 to justify the Department invoking the proviso to Section 11-A (1) of the CE Act - the Court finds no justification for the Opposite Parties to revive the adjudication proceedings against the Petitioner 18 years after the issuance of the SCN. Accordingly, the impugned SCN and the notices are hereby quashed. Petition allowed.

Summary

Issues:
Challenge to show cause notices issued by the Commissioner, Central Excise and Customs; Time-barred proceedings after a gap of 18 years; Transfer of case to 'call book' and subsequent revival after a long delay.

Analysis:
The writ petition challenges show cause notices issued by the Commissioner, Central Excise and Customs, proposing a demand of excise duty for alleged suppression of production and removal of goods without payment. The petitioner, a company manufacturing perfumed hair oil and red tooth powder, argued that the notices were time-barred after 18 years, citing various legal precedents to support their claim of illegality and arbitrariness due to the extended delay in proceedings.

The petitioner contended that no further communication was received after their response to the initial notice in 2000, assuming the matter concluded. However, in 2017, a fresh notice was issued, leading to subsequent requests for adjournments due to the old period in question and unavailability of relevant personnel. The court noted the lack of justification for the lengthy delay, emphasizing the importance of timely action and reasonable periods for proceedings in tax recovery matters.

Regarding the transfer of the case to the 'call book' and its revival after 18 years, the court found the actions of the Opposite Parties unreasonable and contrary to established circulars for expeditious disposal of show cause notices. The court highlighted the need for a positive demonstration of fraud or suppression of facts to sustain demands beyond the standard limitation periods under Section 11-A of the Central Excise Act, which was not evident in this case.

Citing relevant legal precedents, the court quashed the impugned show cause notices and subsequent actions, emphasizing that the revival of adjudication proceedings after such a prolonged delay lacked justification. The writ petition was allowed, with no order as to costs, based on the unreasonable delay and lack of legal grounds for the revival of proceedings after 18 years.

In conclusion, the court's decision was based on the principles of timeliness, legal justifications for reviving proceedings, and the need for a positive demonstration of fraudulent intent or suppression of facts to sustain demands beyond standard limitation periods in tax recovery matters. The court's ruling emphasized the importance of adherence to legal procedures and timely actions in such cases to ensure fairness and effective defense opportunities for the parties involved.