2024 (9) TMI 3 - AT - Central Excise

Delayed adjudication of SCN without a reasonable cause - Delay in finalization of assessments and issuance of demand - Classification of goods - Sodium Carboxy Methyl Cellulose - to be classified under TI 68 or under Tariff Item 15 - finalisation of provisional assessment made earlier under Rule 9B - period of dispute is for the period 28.02.1892 to 27.02.1986 - HELD THAT - There is absolutely no justification for the Department to wait for nearly one year after the Tribunal s Final Order to start the proceedings belated by issuing the show cause notice on 04.04.2008 against the express direction of the Tribunal to conclude the Denovo proceedings itself within 4 months from the date of receipt of the Order dated 18.04.2007. From the Final Order dated 18.4.2007 of the Tribunal it gets clarified that the time frame of 4 months given was not only for issue of SCN, but also to complete the entire proceedings for determination of duty payable as a consequence to such finalization. Since for the second time the Revenue has failed to adhere to the time frame to finalize the assessment, as mandated by the Tribunal, it is held that the confirmed demand is legally not sustainable. The Revenue failed to finalize the assessment within the normal period. Then Tribunal intervened and saved the Revenue by directing them to complete the de-novo proceedings within Four months. Thus, a lenient view was taken by the Tribunal, which in the normal course could have set aside the impugned order confirming the demand which was made without actual finalization of the assessment. This lenient view came with a caveat that the process of determination has to be completed within four months. Finally, the proceedings were completed in about 14 months, violating the time frame condition specified by the Tribunal. There is catena of judgments of Hon ble Supreme Court, High Courts where delayed adjudication of SCN without a reasonable cause has been considered as a ground for setting aside the Order passed pursuant to the said SCN. In the present case there was clear direction in 14.10.1986 Order of the Assistant Commissioner for finalizing the assessment which should have been finalized within reasonable period of six months, at best. Even if the SCN was to be issued in time for finalizing, it should have been issued within some reasonable period. Admittedly, both these actions were not done and in fact appears to have been done by issuing show cause notice on 04.04.2008 and passing the OIO on 22.10.2008. The delayed finalization of the assessment taking 14 months to do so, as against the direction to finalise within 4 months period given by the Tribunal vide its Final Order No. 462/2007 dated 18.04.2007 is fatal to the present proceedings and we set aside the impugned order and hence we allow the appeal - Once the classification issue was decided vide OIO dated 14.10.1986 with clear Order, no further action was taken for the next 22 years to finalize the assessment as per the demand made under Section 11A and that the assessee appellant is required to pay the differential duty,. The demand which was raised after 14 years vide letter dated 19.09.2000 was also without finalizing the provisional assessment. Appeal allowed.

Summary

Issues Involved:
1. Classification of Sodium Carboxy Methyl Cellulose (SCMC).
2. Finalization of provisional assessments.
3. Issuance of demand under Section 11A.
4. Compliance with Tribunal's directives.
5. Delay in finalization of assessments and issuance of demand.

Detailed Analysis:

1. Classification of Sodium Carboxy Methyl Cellulose (SCMC):
The appellant classified SCMC under TI 68, while the Department argued it should be under TI 15(A). The Hon'ble Supreme Court settled this matter, confirming the classification under TI 15(A).

2. Finalization of Provisional Assessments:
The Assistant Commissioner's Order dated 14.10.1986 confirmed the classification under TI 15(A) and directed the finalization of provisional assessments. However, no subsequent action was taken to finalize these assessments, leading to a prolonged delay.

3. Issuance of Demand under Section 11A:
The Order dated 14.10.1986 required the issuance of a demand under Section 11A after finalizing the provisional assessments. Despite this, no such demand was issued for many years. The Tribunal noted that without finalizing the provisional assessments, the demand could not be quantified or enforced.

4. Compliance with Tribunal's Directives:
The Tribunal's Final Order No. 462/2007 dated 18.04.2007 directed the Original Authority to finalize the provisional assessments within four months. This directive was not followed, as the show cause notice was issued almost a year later on 04.04.2008, and the Order-in-Original was passed on 22.10.2008.

5. Delay in Finalization of Assessments and Issuance of Demand:
The Tribunal observed that the Department failed to finalize the assessments and issue the demand within a reasonable time. The delay of over 22 years from the initial Order dated 14.10.1986 was deemed excessive and unjustified. The Tribunal emphasized that the Revenue had ample opportunity to complete the process but failed to act promptly.

Conclusion:
The Tribunal set aside the impugned Order and allowed the appeal on the grounds of:
1. The failure to finalize the provisional assessments and issue the demand within the stipulated four months as directed by the Tribunal.
2. The excessive delay of over 22 years in completing the assessment process, which was considered fatal to the Revenue's case.
3. The Tribunal held that the demand raised without finalizing the provisional assessment was void ab initio and lacked legal sanctity.

The appeal was allowed with consequential relief, if any, as per law.