2023 (2) TMI 893 - HC - Central Excise

Inordinate delay in adjudication of SCN - Clandestine Removal - removal of electronic overhead crane without payment of duty - it is alleged that the growth shop wrongly availed the benefit of exemption notification no. 118/75-CE dated 30.04.1975 as the goods cleared were not parts of crane but a fully functional crane - period from June 1993 to November 1993 - HELD THAT - The facts as borne out from the pleadings on record need no repetition. The impugned show cause is of 9th December 1993 (Annexure-5) issued upon the petitioner asking them to show cause as to why the appropriate excise duty amounting to Rs. 1,67,42,847.30 be not imposed upon him under the provisions of Rules 9(B), 52A, 173(B), 173(F) and 173(G) of Central Excise Rules, 1944 and Section 11A of the CEA, 1944 alleging less payment of duty due to misclassification. The respondents had kept the impugned show cause notice and ten other SCNs as indicated in the chart above in the call book on the ground that the matter was sub-judice. However, from the pleadings on record and also from the averments made in the counter affidavit, it appears that none of the conditions as enumerated in the CBIC circular / guidelines relied upon by the respondents and also by the petitioner stood satisfied for transferring the matter to the call book. Similar issue perused in Punjab and Haryana High Court in the case of M/S GPI TEXTILES LIMITED VERSUS UNION OF INDIA AND OTHERS 2018 (9) TMI 25 - PUNJAB HARYANA HIGH COURT where the show cause notices issued under Section 11 A of the Central Excise Act 1944 were kept pending for 16 years. The present case is a gross one as the impugned show cause notice are kept pending since 9th December 1993 for 29 years and even if some explanation on the part of the respondents relating to pendency of Civil Appeal No. 3793 of 2001 till 05.05.2004 is accepted, there is no justification for not proceeding upon the impugned show cause notice for 18 years thereafter till the impugned notice of personal hearing has been served upon the petitioner. Adjudication of such a show cause notice after 29 years would be contrary to the mandate of Section 11A(11) of the CEA 1944 and would lead to unreasonable and arbitrary results. Such proceedings therefore stands vitiated due to inordinate and unreasonable delay and are accordingly fit to be quashed. The impugned show-cause notice dated 9th December 1993 is quashed. The notices of personal hearing dated 30th November 2022 and 23rd December 2022 are also quashed. Petition allowed.

Summary

Issues Involved:
1. Quashing of the show-cause notice dated 9th December 1993.
2. Prohibition of adjudication on the show-cause notice.
3. Setting aside the personal hearing notices dated 30th November 2022 and 23rd December 2022.

Detailed Analysis:

1. Quashing of the Show-Cause Notice Dated 9th December 1993:
The petitioner, engaged in the manufacture of iron and steel, received a show-cause notice on 9th December 1993 for the period June 1993 to November 1993. The notice alleged that the petitioner's Growth Shop removed electronic overhead cranes (EOC) without paying the appropriate excise duty, misclassifying the cranes to avail a lower duty rate. The petitioner rebutted the allegations but was held liable for excise duty at 20% ad valorem by the adjudicating authority. The petitioner's appeals to higher judicial forums, including the Patna High Court and the Supreme Court, resulted in mixed outcomes, with the Supreme Court eventually ruling that no excise duty was payable on the assembled EOT cranes.

2. Prohibition of Adjudication on the Show-Cause Notice:
The petitioner argued that the impugned show-cause notice was kept in a call book without proper communication or adherence to CBIC guidelines, which stipulate specific conditions under which an SCN can be transferred to a call book. The petitioner contended that none of these conditions were met, and no approval from the Jurisdictional Commissioner was taken. Moreover, the respondents failed to provide any explanation for not reviving the proceedings after the Supreme Court's judgment in 2004. The petitioner argued that such an inordinate delay of 29 years violated Section 11A(11) of the Central Excise Act, 1944, which mandates a reasonable period for adjudication.

3. Setting Aside the Personal Hearing Notices Dated 30th November 2022 and 23rd December 2022:
The respondents defended the revival of the proceedings, stating that the SCNs were kept in a call book due to pending appeals and judicial pronouncements. However, they failed to provide any documentation or justification for the prolonged delay. The court noted that the CBIC circulars required periodic review of call book cases, which was not adhered to in this instance. The court also referenced judgments from the Bombay High Court and Punjab and Haryana High Court, which emphasized the need for timely adjudication to uphold principles of natural justice.

Conclusion:
The court found that the impugned show-cause notice and subsequent personal hearing notices were issued after an unreasonable and unjustifiable delay of 29 years, violating Section 11A(11) of the Central Excise Act, 1944. The court quashed the show-cause notice dated 9th December 1993 and the personal hearing notices dated 30th November 2022 and 23rd December 2022, allowing the writ petition in favor of the petitioner.