2024 (12) TMI 269 - AT - Central Excise

Determination of amount of duty under sub-section (10) of section 11A of the Central Excise Act beyond the period prescribed under sub-section (11) of section 11A of the Central Excise Act - admissibility of electronic evidence - section 36B of the Central Excise Act - provisions of section 9D of the Central Excise Act relating to relevance of statements under certain circumstances were not complied with - Violation of principles of natural justice. HELD THAT - The show cause notice, in the present case, was issued on 28.04.2015. It called upon the noticees to show cause within thirty days from the date of receipt of notice, failing which it was specifically provided that the matter would be adjudicated ex-parte without any further communication. It is seen that the period one year from 28.04.2015 expired on 27.04.2016. Even if cause was not shown by the noticees to the said notice, the Adjudicating Authority should have proceeded to decide the matter ex-parte, but what is seen is that the Adjudicating Authority even let this statutory time limit of one year pass without even adhering to the stipulation contained in the show cause notice that the matter would be decided ex-parte even if no cause is shown within thirty days. It appears that it is only on 07.09.2016 i.e. almost after a period of five months after the expiry of one year that the first hearing was fixed by the Adjudicating Authority on 07.09.2016 - There is absolutely no reason assigned in the written submissions or in the date and event chart as to why the cross-examination process continued for almost three years from 2018 upto 2021, when the adjudication itself was required to be completed within one year. Three dates for personal hearing were fixed in 2021 at an interval of almost one month and thereafter the show cause notice was adjudicated after nine months from the last date of personal hearing on 14.06.2022. A clear statutory time limit of one year is provided in sub-section (11) of section 11A for the Adjudicating Authority to adjudicate the show cause notice but no reason has been given in the impugned order as to why it was not feasible or practicable for the Adjudicating Authority to adjudicate the show cause notice - The Adjudicating Authority has to record reasons in the order adjudicating the show cause notice and not leave it to the department to speculate why the Adjudicating Authority could not adhere to the time limit provided to it under a Statute to adjudicate the show cause notice. The principles of natural justice do not admit of such delayed adjudication where time limit is fixed under a Statute to adjudicate the matter. The Adjudicating Authority cannot endlessly wait and has to utilize its discretion in a fair and reasonable manner so as to balance between the principles of natural justice and the time set out in the Statute for adjudication of the show cause notice. The show cause notice required the noticees to file a reply within thirty days, failing which it was mentioned that the matter would be adjudicated ex-parte. The impugned order would have to be set aside only for the reason that the adjudication was not completed within the time limit prescribed under sub-section (11) of section 11A of the Central Excise Act. The impugned orders would have to be set aside and are set aside - The appeals are, accordingly, allowed with consequential relief(s), if any to the appellant.

Issues Involved:

1. Whether the determination of duty by the Central Excise Officer was made beyond the prescribed period under section 11A of the Central Excise Act.
2. Whether the provisions of section 36B regarding electronic evidence were adhered to.
3. Whether the provisions of section 9D concerning the relevance of statements were complied with.

Issue-Wise Analysis:

1. Determination of Duty Beyond Prescribed Period:

The primary issue was whether the Central Excise Officer determined the amount of duty within the period stipulated under sub-section (11) of section 11A of the Central Excise Act. The appellants contended that the adjudication was not completed within the statutory time limit, which was either six months or one year from the date of the show cause notice, depending on the circumstances. The Tribunal examined the timeline of events and concluded that the adjudication process extended far beyond the prescribed period without any plausible justification. The Tribunal emphasized that the phrase "where it is possible to do so" provides flexibility only in cases of insurmountable exigencies, which were not demonstrated in this case. The Tribunal referred to various judgments, including those from the Delhi High Court and Bombay High Court, which highlighted that the statutory time limit is not merely directory but carries an obligation to adhere to it unless justified by compelling circumstances. Consequently, the Tribunal set aside the impugned orders due to the failure to adjudicate within the statutory period.

2. Admissibility of Electronic Evidence:

Although the second issue raised concerned the adherence to section 36B of the Central Excise Act regarding electronic evidence, the Tribunal did not delve into this issue. Since the first issue was decided in favor of the appellants, leading to the setting aside of the impugned orders, it was deemed unnecessary to examine the compliance with section 36B.

3. Relevance of Statements Under Section 9D:

Similarly, the third issue pertained to the compliance with section 9D of the Central Excise Act, which relates to the relevance of statements under certain circumstances. As with the second issue, the Tribunal refrained from examining this issue due to the resolution of the primary issue regarding the time limit for adjudication.

Conclusion:

The Tribunal allowed the appeals, setting aside the impugned orders due to the failure to complete the adjudication within the statutory time limit prescribed under section 11A of the Central Excise Act. The decision was based on the lack of any plausible justification for the delay, as the statutory time limit is intended to prevent uncertainty and ensure timely adjudication. Consequently, it was unnecessary to address the other two issues related to electronic evidence and the relevance of statements.

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