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2021 (2) TMI 910 - HC - Central ExcisePrinciples of Natural Justice - after long 15 years of the remand by the Appellate Tribunal, respondent No.2 scheduled personal hearing of the show cause notice - petitioners not put to notice of transfer of call book at any juncture in the interregnum is permissible under the law - grievance on the part of the petitioner is that the inordinate delay of 15 years in purported adjudication of the said show cause notice in the post remand period of the order of the appellate Tribunal is ex facie without jurisdiction, without authority of law and in clear breach of the principles of natural justice and such action is liable to be set aside on the various grounds raised before this Court. HELD THAT - In the case of SIDDHI VINAYAK SYNTEX PVT LTD. VERSUS VERSUS UNION OF INDIA 2 2017 (3) TMI 1534 - GUJARAT HIGH COURT , this Court extensively examined the maintainability of writ petition in wake of the existence of alternative remedy, where there was a delay of adjudication of show cause notice after 17 years. The department's contention was that the show cause notice remained undecided as it had been consigned to call book in view of CBEC Circular 162/73/95-CX dated 14.12.1995 to await outcome of a similar case. The Court held that consistent approach adopted by different High Courts is that the revival of the proceedings after long time gap without any proper explanation is unlawful and arbitrary. The Court also held that the said circular cannot be said to have issued in exercise of powers under section 37B of the Central Excise Act as concept of call book did not relate to uniformity in classification of excisable goods, or to levy of excise duties on such goods. Instructions to consign a case to call book relatable to adjudicatory process, and do not provide for any incidental or supplemental matters, consistent with the Act or Rules thereunder. The Court held that the CBEC is not empowered to issue instructions to any adjudicatory authority in relation to matters pending for adjudication before it. Consignment of matter to call book were on grounds extraneous to proceedings and not due to impossibility of authority to decide the case and hence the Court held that transferring the matter to call book is contrary to the provisions of law and explanation put forth by Department for delay is not plausible explanation for not adjudicating upon show cause notice within reasonable time. It is, therefore, held that the revival of the proceedings after long gap without discussing any reason for delay is unlawful and arbitrary. This very issue came up for hearing in the case of MESSRS MEGHMANI ORGANICS LTD. VERSUS UNION OF INDIA 2019 (7) TMI 1409 - GUJARAT HIGH COURT , where there was a 13 years of delay in deciding the show cause notice. Following the decision of Siddhi Vinayak Syntex Pvt. Ltd. and other decisions, the Court did not find explanation offered by the respondent as convincing and hence, allowed the writ application and the order of Commissioner GST Central Excise (Appeal) was quashed and set aside. It is, thus, quite clear that the Courts have not approved transfer to the call book for number of years and pendency of adjudication for a protracted period. The Courts have always given primacy to the public interest and also have heavily curbed the attempts to economic offence and dealt with the offenders in stringent manner. At the same time, it has also struck a balance by upholding the cause of litigant that if there is unexplained delay in proceeding with the adjudication of the show cause notice without any cause attributable to the petitioner for such tiring delay and inaction on the part of the respondent. In absence of any kind of malice on the part of the petitioners, there is no justification for enormous delay to have a march over the principles of natural justice on permitting such belated adjudication of the show cause notice. The Courts have, in no unclear terms, held that this results into deep prejudice to the assessee, inasmuch as in the interregnum period the position of the assessee would have changed substantially and therefore, hearing that takes place may affect its right adversely. Adverting to the facts of the instant case, it is not the case of the respondent that the petitioner had been, in any manner, formally communicated by way of the notices or otherwise of the matter being transferred to the call book. There is nothing to indicate of the petitioner having been made aware of such transfer or the reason of such move in all these years. The show cause notice issued in the year 2004 had been decided ex parte on 08.08.2005 and the challenge to the same was made by the petitioner by two separate appeals before the CESTAT. The same resulted in favour of the petitioner on 02.12.2005, whereby the Tribunal waived the pre-deposit of the amount demanded and set aside the impugned order and remanded the matter to the Commissioner for once again deciding by clearly holding that it was in breach of the principles of natural justice - The transfer to the call book was on the ground that there was yet another matter on the very legal issue, which was pending before this Court, being Special Civil Application No. 537 of 2007, which came to be decided by this Court in the year 2017. However, from 26.06.2006 till the issuance of notice in the month of November, 2020, at no stage, there had been any intimation given to the petitioner on the part of the respondent. Least that could be expected from the authorities, more particularly, in wake of the circular of CBEC Circular No.1053/2/2017-CX dated 10.03.2017 as provided in paragraphs 9.4 of the said circular is to formally communicate to the party about transferring the matter to the call book. The Court also notices that not only the factory of the petitioner had been closed, but the registration also had been surrendered with the permission of the respondent authority and the factory has been sold off in the year 2012. It is virtually impossible for anyone to then defend as the respondent itself does not have the papers and it was asking for the reply of the respondent. Even if that aspect is not considered, expecting the petitioner to adduce the evidence of the closed factory after 15 years is virtually impossible. This would amount to serious prejudice and breach of principles of natural justice and, therefore, also this petition deserves to be allowed - petition allowed.
Issues Involved:
1. Validity of the Show Cause Notice issued by the Commissioner of Central Excise and Customs, Surat-II. 2. Delay in adjudication of the Show Cause Notice. 3. Principles of natural justice in the context of delayed adjudication. 4. Legality of transferring cases to the call book and subsequent revival of proceedings. Detailed Analysis: 1. Validity of the Show Cause Notice: The petitioner challenged the Show Cause Notice F.No.V(Ch.54)0310/Dem/2004 dated 16.04.2004 issued by the Commissioner of Central Excise and Customs, Surat-II. The notice demanded Central Excise duty and custom duty on finished goods and imported POY, respectively. The petitioner argued that the notice was issued without proper jurisdiction and authority. 2. Delay in Adjudication of the Show Cause Notice: The petitioner argued that there was an inordinate delay of 15 years in the adjudication of the Show Cause Notice, which was initially issued in 2004 and only pursued again in 2020. The petitioner contended that such a delay was without any proper explanation and was unlawful and arbitrary. The delay caused significant prejudice to the petitioner, who had closed and sold the factory in 2012 and surrendered the registration, making it impossible to defend against the notice effectively. 3. Principles of Natural Justice: The Court examined whether the delay in adjudication breached the principles of natural justice. The petitioner argued that the delay deprived them of the opportunity to defend themselves adequately as relevant documents were no longer available, and key personnel were no longer employed. The Court cited several precedents, including Siddhi Vinayak Syntex Pvt. Ltd. vs. Union of India, where it was held that revival of proceedings after a long gap without proper explanation is unlawful and arbitrary. The Court emphasized that such delays cause immense prejudice to the assessee and violate the principles of natural justice. 4. Legality of Transferring Cases to the Call Book and Subsequent Revival: The Court scrutinized the legality of transferring the matter to the call book, which was done without informing the petitioner. The Court found that the concept of the call book, as per CBEC Circular 162/73/95-CX dated 14.12.1995, was not in conformity with the statutory mandate under section 37B of the Central Excise Act. The Court ruled that the CBEC had no authority to issue such instructions that delay adjudication proceedings indefinitely. The Court also noted that the petitioner was never informed about the transfer to the call book, leading to a reasonable belief that the proceedings had been dropped. Conclusion: The Court quashed the Show Cause Notice and the subsequent communication dated 20.11.2020, holding that the inordinate delay in adjudication without proper explanation and failure to inform the petitioner about the transfer to the call book violated the principles of natural justice. The Court emphasized that such delays cause significant prejudice to the assessee and are unlawful and arbitrary. The petition was allowed, and the Show Cause Notice was set aside.
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