2023 (12) TMI 846 - HC - Central Excise

Proceedings are barred by time limitation or not - main grievance of the petitioner is that after a period of 12 years, the respondents have no locus standi to proceed against the petitioner. HELD THAT - The petitioner falls under Section 11(b) of CEA. Therefore, the respondents are supposed to have determined the amount of duty within a period of two years. Merely because the words where it is possible to do so are provided in the Act, it does not mean that they can take their own time to determine the excise duty. It must be done within a reasonable time i.e. within one or two years. In the present case, the delay is more than 12 years, which is an inordinate one - In the circular dated 21.12.1992, it is clearly stated that the Board's D.O.F.No.223/8/85-CX.6, dated 21-3-1985 had already stipulated a maximum period of 6 months from the date of issue of show cause notice within which the case is to be decided and as far as possible, this limit is to be adhered to. The said circular is in force as on today. In the present case, admittedly no intimation was provided to the petitioner with regard to keeping the call book and even in that case also, the Act provides time limit of six months to pass orders. However, in the present case, citing the internal circular issued by the respondents to keep the matters in the call book, the respondents have failed to adhere to the time limit provided in the statute. The circular is beyond the scope of the provisions of the Act and notifications provided therein. Therefore, keeping the call book without intimation to the petitioner and beyond the scope of the Act is unacceptable - the respondent department cannot keep the matter pending for a period of 12 years and thus, the present proceedings is clearly barred by limitation. This Court is of the considered view that present proceedings could not be allowed to continue after a period of 12 years, particularly, when there is no mistake on the part of the petitioner. Adjudication of proceedings after a long period would cause serious prejudice to the parties. Hence, this Court holds that the present proceedings is barred by limitation and is unjustifiable. The Show Cause Notice dated 09.03.2011 issued by the first respondent, is hereby quashed - Petition allowed.

Summary

Issues Involved:
1. Whether the proceedings are barred by limitation.
2. Whether the delay in adjudication is justified.

Summary:

Issue 1: Whether the proceedings are barred by limitation.

The petitioner, a manufacturer of Cold Rolled Stainless Steel (CRSS) Sheets and Coils, was issued a Show Cause Notice (SCN) on 09.03.2011 by the first respondent, proposing to demand excise duty of Rs. 11,29,864/- on milk cans cleared from 2005-06 to May 2008, along with interest and penalty. The petitioner replied on 25.04.2011, asserting that milk cans are subject to Nil rate of duty as per Notification No.10/2003 - CE 01.03.2003. After a lapse of 12 years, a personal hearing notice was issued on 11.03.2023. The petitioner contended that the delay in adjudication is unreasonable and violates Section 11A(2A) of the Central Excise Act, 1944, which prescribes a time limit for determining the amount of duty. The court examined Section 11A(11) of the Act, which mandates that the Central Excise Officer should determine the amount of duty within two years where it is possible to do so. The court concluded that the delay of more than 12 years is inordinate and violates the principle of timely adjudication as stipulated in various circulars and judicial precedents.

Issue 2: Whether the delay in adjudication is justified.

The respondents argued that the delay occurred because the matter was kept in the Call Book pursuant to a departmental circular and that there was no statutory obligation to inform the petitioner about this transfer. The court noted that no intimation was provided to the petitioner regarding the transfer to the Call Book. The court referred to the judgment of the Bombay High Court in Raymond Ltd. v. Union of India [2019 (368) ELT 481 (Bom.)], which held that long delays in adjudication without informing the concerned party are unjustifiable and violate principles of natural justice. The court emphasized that the internal circulars of the department cannot override the statutory provisions and that the delay in this case is unacceptable.

Conclusion:

The court held that the proceedings are barred by limitation and unjustifiable due to the inordinate delay of 12 years. Consequently, the Show Cause Notice dated 09.03.2011 was quashed.