2018 (9) TMI 25 - HC - Central Excise

Time limitation for issuance of SCN - the proceedings are pending for the last more than 16 years when fresh notice for date of hearing was issued on 3.5.2017 - Section 11A (1) (4) and (11) of Central Excise Act - Held that - Judgments of different High Courts were referred to and it was summed up that delay in conclusion of proceedings pursuant to show cause notices after a long gap without proper explanation is unlawful and arbitrary. The Court further examined the fact as to whether transfer of proceedings to call book in view of circular dated 14.12.1995 can be said to be a reasonable explanation. The opinion expressed was that the mandate of law cannot be diluted by issuing circular especially when there is no power to issue such directions regarding transfer of cases to call book. Section 11A(11) of the Act provides that Cental Excise Officer shall determine the amount of duty within six months in case notice has been under Sub-section 1 thereof whereas in the case of fraud collusion etc. the period prescribed is one year. No doubt the words where it is possible to do so have been used however that will not stretch the period to decades as is in the cases in hand. The notices in the present cases having been issued more than decade back and the proceedings having not been concluded within reasonable time the same deserves to be quashed - petition disposed off.

Summary

Issues:
1. Challenge to show cause notices dated 27.12.2001, 28.8.2002, 3.1.2003, 2.4.2003, and 4.8.2003 in CWP No. 10530 of 2017.
2. Challenge to show cause notice dated 13.9.2006 in CWP No. 10707 of 2017.
3. Challenge to circular dated 29.9.2016 issued by the Ministry of Finance in both writ petitions.

Analysis:
Issue 1:
The petitioner argued for quashing the proceedings due to an inordinate delay in disposal, citing Section 11A of the Central Excise Act, 1944, which provides time limits for concluding proceedings. The petitioner relied on a Gujarat High Court judgment and subsequent Supreme Court dismissal of an appeal. Another Gujarat High Court judgment was cited to support the argument against delays in proceedings.

Issue 2:
The respondents contended that the show cause notices were based on audit objections and were transferred to the call book due to contested objections. They argued that no prejudice would be caused to the petitioner as they would have a fair opportunity to present their case. The matters were revived following a revised circular, and delays were justified considering the revenue involved.

Issue 3:
The court examined Section 11A(11) of the Act, which sets time limits for determining duty amounts. The court referred to a Supreme Court judgment upholding a Division Bench decision regarding unreasonable delays in issuing notices beyond five years. The court concluded that the notices in the present cases, issued over a decade ago with no conclusion in sight, warranted quashing.

Judgment:
The court ordered the quashing of the proceedings in both writ petitions due to prolonged delays, emphasizing the importance of timely conclusion in adjudicatory proceedings as mandated by the law. The judgments from Gujarat High Court and the Supreme Court were instrumental in highlighting the unlawfulness and arbitrariness of prolonged delays in such cases.