2023 (1) TMI 105 - HC - Central Excise

Seeking retrieval of matter from call book after several years - HELD THAT - In reply to the writ petition, there is no valid explanation offered by the Department as to what prompted it to shift the case to the Call Book on 7th February, 2011 and then retrieve it from the said Call Book 5 years later, all of a sudden. In M/S. MAXCARE LABORATORIES LTD. VERSUS JOINT COMMISSIONER, CGST, CENTRAL EXCISE AND CUSTOMS, BHUBANESWAR AND OTHERS 2021 (7) TMI 28 - ORISSA HIGH COURT , in more or less similar circumstances, this Court quashed the SCN and the further notice fixing the date of hearing. In the presence case as well, the Court is unable to find any valid explanation offered by the Department in delaying the initial SCN under Section 11A of the CE Act, 3 years after the period of demand and then, more importantly, taking 5 years to retrieve the matter from the Call Book. This Court quashes the impugned SCN dated 3rd February, 2010 and all proceedings consequent thereto including the impugned notice dated 26th May, 2017 - Petition allowed.

Summary

Issues:
Challenge to Show-Cause Notice (SCN) dated 3rd February, 2010 for alleged violations of Central Excise Rules, 2002 and Central Excise Act, 1944.

Analysis:
The petitioner sought the quashing of a Show-Cause Notice (SCN) issued by the Department regarding alleged violations of Central Excise Rules and the Central Excise Act. The period under scrutiny was 2004-05 to 2006-07. The case was inexplicably transferred to the 'Call Book' in 2011, and after a delay of 5 years, the matter was revived in 2016. The petitioner responded to the SCN in 2010, and subsequently, a notice for a personal hearing was issued in 2017. The petitioner requested an adjournment, and the proceedings were stayed by the Court in 2017.

The Department failed to provide a valid explanation for the delay in transferring the case to the Call Book and reviving it after 5 years. The Department cited issues with the Accountant General as the reason for the delay. The Department alleged that the petitioner had not accounted for finished products correctly, leading to a violation of Central Excise Rules. The Department invoked provisions of the Central Excise Act for clandestine removal and extended the period of limitation based on these allegations.

The petitioner relied on previous court decisions to support their case, highlighting instances where similar delays led to the quashing of SCNs. The Court referenced relevant judgments emphasizing the need for authorities to act within a reasonable period and establish specific grounds for demanding duty beyond the usual time limits. The Court also cited cases from other High Courts where delayed revival of matters from the Call Book resulted in SCNs being invalidated.

Based on the lack of a valid explanation for the delay and the precedents cited, the Court quashed the SCN dated 3rd February, 2010, along with all subsequent proceedings. The writ petition was allowed without any costs being imposed.