2022 (3) TMI 938 - HC - Central Excise

Seeking direction upon the respondent nos.2 and 3 to return non-relied upon documents (Non RUDs) and relied upon documents (RUDs) as mentioned in the seizure list dated 12th September, 2017 - prohibition on respondents from adjudicating the show cause notice - applicability of Rule 24A of the Central Excise Rules, 2002 - extended period of limitation - principles of natural justice - HELD THAT - The challenge to the show cause notice was rightly rejected by the learned Writ Court and therefore, to that extent the order passed in the writ petition stands affirmed. Applicability of Rule 24A of the Rules - HELD THAT - It will be too late for the appellants to now harp upon the 30 days time limit for returning the documents as it is the appellants, who approached this Court not once but thrice for certain reliefs and in W.P. No.9985 of 2021 direction was issued to the authority to pass a speaking order on the request made by the appellants. Thus, the order dated 28th January, 2022 having been passed in accordance with the directions issued by this Court in the writ petition, the question of now invoking the 30 days time limit under Rule 24A does not arise. Whether the department was entitled to invoke the extended period of limitation under Section 11A of the Act? - HELD THAT - It is not purely a question of law but a mixed question of law and fact and it is for the appellants to agitate the same while submitting reply to the show cause notice. It is noted that the submission of the learned counsel for the appellants that if the appellants are not afforded reasonable opportunity to examine the documents, they will not be in a position to submit an effective reply to the show cause notice. However, we wish to add a caveat to this submission that while it may be true that the appellants should have an effective opportunity to submit a reply to the show cause notice, that would not automatically entitle the appellants for return of the documents to them as the adjudication is yet to commence. If the appellants are permitted to examine the documents in the office of the respondents and permitted to take photostat copies of the relevant pages of the documents at the cost of the appellants and thereafter if the appellants are given time to submit reply to the show cause notice, it would fulfill the principles of natural justice. This appeal is partly allowed while affirming the order passed by the learned Single Bench in rejecting the challenge to the show cause notice.

Summary

Issues:
1. Challenge to the order dated 28th January, 2022 and the show cause notice dated 4th September, 2017.
2. Interpretation of Rule 24A of the Central Excise Rules, 2002 regarding return of records.
3. Applicability of the extended period of limitation under Section 11A of the Central Excise Act, 1944.
4. Request for the return of documents seized during search and seizure operations.

Analysis:

Issue 1: Challenge to the order and show cause notice
The appellants filed a writ petition seeking to quash the order dated 28th January, 2022, and the show cause notice dated 4th September, 2017. The Writ Court dismissed the petition, leading to the appeal. The appellants argued that the documents seized during search operations were not returned as per Rule 24A, affecting their ability to respond effectively to the show cause notice. The Court affirmed the rejection of the challenge to the show cause notice.

Issue 2: Interpretation of Rule 24A
Rule 24A of the Central Excise Rules, 2002 requires the return of non-relied upon documents within 30 days of the show cause notice issuance. The appellants contended that the documents were not returned, hindering their response. The Court noted that the order was passed in accordance with previous directions, making the time limit irrelevant. The Court emphasized that the documents need not be returned before adjudication begins.

Issue 3: Extended period of limitation
The question of invoking the extended period of limitation under Section 11A was considered a mixed question of law and fact. The appellants' ability to respond effectively to the show cause notice was highlighted. The Court emphasized the need for the appellants to have an opportunity to examine the documents before responding but clarified that this did not automatically entitle them to the return of the documents.

Issue 4: Request for return of documents
The Court partially allowed the appeal, directing the second respondent to allow the appellants' representative to peruse and take copies of relevant documents mentioned in the show cause notice. The appellants were granted time to respond after perusal. The adjudication process was to be completed within 45 days of receiving the reply, ensuring the principles of natural justice were upheld.

In conclusion, the appeal was partly allowed, affirming the rejection of the challenge to the show cause notice. The Court directed the perusal of documents by the appellants' representative and outlined a timeline for response and adjudication, emphasizing the importance of natural justice in the process.