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2025 (3) TMI 738 - AT - Central ExciseDelay in adjudicating the Show Cause Notice (SCN) issued to the appellant - Clandestine manufacture and removal - demand based on the electricity consumption - HELD THAT - The SCN was issued in this case on 3.12.2009 and the appellants filed replies on 1.1.2010 and 7.1.2010. Thereafter the personal hearing was held nine years later on 29.1.2019 and in connection with the personal hearing the appellant made some additional submissions dated 23.1.2019. The impugned order was passed on 22.2.2019 after the personal hearing. From these dates it is evident that the appellants had been prompt and vigilant in replying to the SCN and no reason whatsoever is given in the impugned order for not adjudicating the matter immediately and to have waited for over nine years just to fix the personal hearing. The SCN was issued under section 11A in 2009 before the time limit for deciding the SCNs was introduced in 2011. Even if no limitation is prescribed under the law then too the adjudicating has to be done within a reasonable period. Whether the limitation would also apply to cases where the SCN had already been issued? - HELD THAT - The Statute of Limitation being a procedural law would apply to pending cases as well with the rider that if something had already expired under the previous law the new limitation would not revive it. So long as the issue is alive the new limitation would apply. The date of cause of action is irrelevant to the limitation - Even if the limitation is counted reckoning the date of amendment of section 11A on 8.4.2011 the date of the impugned order 22.2.2019 is clearly time barred and there is no explanation in the order for the inordinate delay. If we consider that there was no limitation at all even then the delay of almost ten years is passing the order with no reasons whatsoever recorded for the delay cannot be sustained. Conclusion - The impugned order set aside due to the unreasonable delay in adjudication granting consequential relief to the appellant. The impugned order cannot therefore be sustained and needs to be set aside on this ground alone regardless of the merits of the case - appeal allowed.
ISSUES PRESENTED and CONSIDERED
The primary issue considered in this judgment was whether the delay in adjudicating the Show Cause Notice (SCN) issued to the appellant, M/s. Sharma Steel Rolling Mills, and the subsequent order confirming a portion of the demand was legally sustainable. Additionally, the Tribunal considered the sufficiency of evidence presented by the Revenue to substantiate the allegations of clandestine manufacture and removal of goods by the appellant. ISSUE-WISE DETAILED ANALYSIS 1. Delay in Adjudication of the SCN Relevant Legal Framework and Precedents: The Tribunal examined Section 11A of the Central Excise Act, 1944, which outlines the time limits for adjudicating SCNs. The section was amended in 2011 to introduce specific time limits for deciding SCNs. The Tribunal also referenced its own decision in Excise Appeal No. 52178 OF 2022, which emphasized the necessity of adhering to these statutory time limits. Court's Interpretation and Reasoning: The Tribunal noted that even before the statutory time limits were introduced, adjudication needed to occur within a reasonable period. The Tribunal underscored that the statutory time limits are intended to prevent uncertainty and ensure timely adjudication, reflecting the legislative intent to avoid indefinite delays. Key Evidence and Findings: The SCN was issued on 3.12.2009, and the impugned order was passed on 22.2.2019, nearly ten years later. The Tribunal found no justification for this delay, as the appellant had promptly responded to the SCN and participated in the proceedings. Application of Law to Facts: The Tribunal applied the principles of statutory interpretation to conclude that the delay in adjudication was unreasonable and that the statutory time limits should apply to pending cases as well. The Tribunal emphasized that the delay itself vitiated the order. Treatment of Competing Arguments: The Revenue did not provide a plausible explanation for the delay in adjudication. The Tribunal rejected any argument suggesting that the absence of a statutory time limit at the time of SCN issuance justified the delay. Conclusions: The Tribunal concluded that the impugned order must be set aside due to the unreasonable delay in adjudication, rendering it unnecessary to examine the merits of the case. 2. Sufficiency of Evidence for Allegations of Clandestine Manufacture and Removal Relevant Legal Framework and Precedents: The Tribunal considered the principle that demands cannot be based solely on third-party evidence without corroborative evidence. The Tribunal referred to previous cases, including the decision in Siva Prasad Mills Private Ltd, which underscored the necessity of substantive evidence to support allegations of clandestine removal. Court's Interpretation and Reasoning: The Tribunal noted that the Revenue's case relied heavily on records from third parties (SSSRM and Nirmal) and statements from individuals who were not cross-examined. The Tribunal emphasized the importance of cross-examination in establishing the reliability of such evidence. Key Evidence and Findings: The Tribunal found that the Revenue's case lacked corroborative evidence to support the allegations against the appellant. The absence of cross-examination of key witnesses further weakened the Revenue's position. Application of Law to Facts: The Tribunal applied the principle that allegations of clandestine removal must be substantiated by concrete evidence, not merely assumptions or third-party records. The lack of direct evidence against the appellant led the Tribunal to question the validity of the confirmed demand. Treatment of Competing Arguments: The Tribunal acknowledged the Revenue's argument that proving clandestine removal with mathematical accuracy is challenging. However, it reiterated the necessity of substantive evidence to support such allegations. Conclusions: Although the Tribunal did not need to decide on the merits due to the procedural delay, the lack of substantive evidence would have been a significant hurdle for the Revenue in sustaining the demand. SIGNIFICANT HOLDINGS Core Principles Established: The Tribunal reaffirmed the principle that adjudication must occur within a reasonable time, emphasizing the legislative intent behind statutory time limits. The Tribunal also reinforced the requirement for substantive evidence in cases of clandestine removal. Final Determinations on Each Issue: The Tribunal set aside the impugned order due to the unreasonable delay in adjudication, granting consequential relief to the appellant. The Tribunal did not delve into the merits of the case, as the procedural delay itself was sufficient to vitiate the order. Verbatim Quotes of Crucial Legal Reasoning: The Tribunal highlighted, "The indifference of the Adjudicating Authority to complete the adjudicating process within the statutory time limit cannot be condoned to the detriment of the assessee or detrimental to the interest of the exchequer." This statement encapsulates the Tribunal's stance on the importance of adhering to statutory time limits.
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