2024 (6) TMI 391 - HC - Central Excise

Interpretation of statute - where it is possible to do so u/s 11A(1) of the Central Excise Act, 1944 - adjudication of the impugned show-cause notice after more than 7 years is barred by time or not. Interpretation of where it is possible to do so u/s 11A(1) of the Central Excise Act, 1944 - HELD THAT - It is pertinent to note that the words where it is possible to do so is elastic only when there are reasonable grounds beyond the control of the Adjudicating Authority to conclude adjudication within the time frame given under Section 11A (11) and not otherwise. If there is no reasonable explanation, the elasticity would not be available. It is fairly well settled that legislature never wastes words or says anything in vain. The insertion of sub-section Section 11A (11) is not without any purpose or it is not a dead letter. The words where it is possible to do so under Section 11A (11) of the Central Excise Act, 1944 must be read reasonably keeping in mind the legislative intent and policies and the mischief sought to be remedied. It cannot be read dehors the same. The provisions of under Section 11A (11) of the Central Excise Act, 1944 is not dead letter and mere surplusage. The outer limits fixed by the Legislature under Section 11A (11) of the Central Excise Act, 1944 of the completed within a reasonable time frame set out under Section 11A (11) unless an extra ordinary situation arises beyond the control of the Adjudicating Authority and it can never be kept pending for an indefinite period or sine die. The period of limitation of 6 months or 2 year under Section 11A of the Central Excise Act, 1944 cannot be extended to more than seven years as is done in the instant case. In the case of K.M Sharma Vs. I.T.O 2002 (4) TMI 7 - SUPREME COURT it has been held by the Hon'ble Apex Court that the provisions of a fiscal statute, more particularly, one regulating the period of limitation must receive a strict construction as the law of limitation is intended to give certainty and finality to legal proceedings. When an application under Section 18 is not entertained on the ground of limitation, the same not fructifying into any reference, then that would not tantamount to an effective application and consequently the rights of such applicant emanating from some other reference being answered to move an application under Section 28-A cannot be denied - the dismissal of an application seeking reference under Section 18 on the ground of delay would tantamount to not filing an application within the meaning of Section 28-A of the Land Acquisition Act, 1894. Delay in adjudication and its impact on Article 14 of the Constitution of India, 1950 - HELD THAT - Where no time limit has been prescribed; the action should be completed within a reasonable time period. The reasonable time period U/s 11A of Central Excise Act, 1944 is 5 years. In the instant case the matter is pending adjudication for more than 7 years - where the statute does not prescribe any period of limitation within which power has to be exercised by the authorities, in such circumstances also the proceedings must be concluded within a reasonable period of time. The maximum period of limitation provided under the special statute should be considered to be the reasonable period within which the adjudication order should be concluded. In the instant case period of more than 7 years from the issuance of impugned Show Cause Notice on 22.09.2014 cannot be said to be reasonable period for taking up/concluding adjudication proceedings. Section 11A (1)/Section 11A (4) of the Central Excise Act, provides 5 years as a maximum period which in any case should be taken as reasonable period within which the adjudication should be completed. The instant application stands allowed.

Summary

Issues Involved:
1. Quashing of Show Cause Notice.
2. Quashing of Order-in-Original.
3. Refund of amount collected during investigation.
4. Payment of interest on the refunded amount.
5. Quashing of Notice for Personal Hearing.

Summary:

1. Quashing of Show Cause Notice:
The petitioners challenged the impugned common Show Cause Notice dated 22.09.2014 issued u/s 11A of the Central Excise Act, 1944. The counsel for the petitioners argued that the delay in adjudication of the show-cause notice for more than 7 years is contrary to Section 11A (11) of the Central Excise Act, 1944, which mandates a time limit for adjudication. The court observed that the words "where it is possible to do so" under Section 11A (11) must be read reasonably and cannot extend the time limit indefinitely unless there are extraordinary situations beyond the control of the adjudicating authority.

2. Quashing of Order-in-Original:
The petitioners sought to quash the impugned common Order-in-Original dated 30.06.2022 passed by the Respondent No. 1. The court noted that the adjudication of the show-cause notice was kept pending for more than 7 years, which violates the reasonable time frame set out under Section 11A (11) of the Central Excise Act, 1944. The court held that the delay in adjudication causes prejudice to parties and is contrary to Article 14 of the Constitution of India.

3. Refund of Amount Collected During Investigation:
The petitioners requested the refund of Rs. 50.00 Lacs collected during the investigation. The court did not specifically address this issue in the judgment, but the quashing of the show-cause notice and Order-in-Original implies that the collection of the amount was without authority of law.

4. Payment of Interest on the Refunded Amount:
The petitioners sought interest on the refunded amount at 12% P.A. The court did not specifically address this issue, but the quashing of the show-cause notice and Order-in-Original implies that the petitioners may be entitled to interest as per applicable laws.

5. Quashing of Notice for Personal Hearing:
The petitioners challenged the impugned Notice dated 09/10.05.2022 issued by the Respondent No. 4 for personal hearing. The court observed that the repeated delays and fixing of personal hearing dates over the years without concluding the adjudication process is unreasonable and arbitrary. The court quashed the notice for personal hearing along with the show-cause notice and Order-in-Original.

Conclusion:
The court quashed the impugned show-cause notice dated 22.09.2014, the impugned Order-in-Original dated 30.06.2022, and the notices issued for personal hearing dated 09/10.05.2022. The court allowed the application with consequential relief(s) and closed any pending I.A.