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TMI Blog2023 (9) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... hern Roadways, Marthandam for quantities not accounted for in the statutory records; * They had collected excess amounts from their buyers in the guise of sales tax, but had not paid such sales tax to the Sales Tax Department; * They had purchased raw rubber from unlicensed agents without the cover of bills/invoices and suppressed the fact with intention to produce tread rubber from such raw rubber and remove it without payment of duty; * They also had operated a benami account in the name of M/s.Galaxy Rubber and issued invoices to different transport corporations; * They had, during both the years, suppressed the value of clearances in the statutory records, thereby evaded payment of central excise duty. 2. It was found that the appellant was liable to pay duty of Rs.17,96,241/-. Accordingly, show cause notice dt. 05.05.1989 was issued to them proposing to demand duty, interest and for imposing penalties. After due process of law, the Collector of Central Excise, Madurai vide order No.19/90 dt. 28.12.1990 confirmed the demand of Rs.16,95,289/- being the duty not paid during the years 1984-85 and 1985-86 and ordered for appropriation of Rs.50,000/- already paid by them. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. Vs Union of India - 2019 (368) ELT 481 (Bom.) was relied by the learned counsel to argue that when there is delay in taking up the adjudication of the show cause notice, in the absence of any fault on the part of the party, it has been held as breach of principles of natural justice. 6.2 The decision in the case of R. Chakravarthy Vs CCE Chennai - 2008 (225) ELT 243 (Tri.-Chennai) was relied by the counsel to argue that when relevant files are not available for passing the order, the adjudication rendered is to be considered as in violation of principles of natural justice. 6.3 In the case of Mentha & Allied Products Ltd. Vs CGST, Chandigarh - 2021 (376) ELT 41 (P&H), the Hon'ble Punjab & Haryana High Court held that when there is a delay of 10 years for adjudication after issuance of the show cause notice, the order is not sustainable in the eyes of law and deserves to be quashed. 6.4 Hon'ble Rajasthan High Court in the case of P.G. Foils Ltd. Vs AC, CGST, Pali - 2022 (381) ELT 215 (Raj.) has held that adjudication taken place after 8 to 13 years and issuing the show cause notice is against the principles of natural justice when the department is not able to explain the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written made by Galaxy Rubber Industries, the Final Order passed by the Hon. Tribunal and the legal provisions at the material period and on the basis of the above, I proceed to decide the issue on merits. Since the Show Cause Notice is not available on file, I proceed with the order based on the original order passed by my ld. Predecessor, referred Supra. Since this is a de nova order, judicial etiquette stimulates me to reproduce the observation of the Hon. Tribunal, while remanding the case. When adjournment has been sought for proper and valid reason, rejection of the same was not just or proper. We are inclined to think in the interests of justice, the impugned order has to be set aside and the matter remanded as the appellants did not have the opportunity to Cross-examine the witness who had been summoned who admittedly did not turn up more than once. Therefore, for the reasons stated above, we are of the view that the request of the consultant for adjournment should have been granted since the same was on grounds of personal illness supported by a medical certificate. In this view of the matter, the impugned order is set aside and the matter remanded to the original authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments and even the show cause notice. It is indeed violation of the principles of natural justice. 13. In the case of Raymond Ltd. Vs UOI (supra), the Hon'ble Bombay High Court has held as under : "8. Further, this Court in the case of M/s. Sanghvi Reconditioners (supra) had occasion to consider an identical submission as made before us by the Revenue i.e. show cause notices had been kept in the call book as an identical challenge in case of another assessee was pending in the Hon'ble Supreme Court. This defence on the part of the Revenue was negatived by the Court. This on the ground that accepting such a stand on behalf of the Revenue would defeat the rule of law itself. In fact, the Court noted as under :- "Secondly, we also omit totally from our consideration the complaint of the petitioner that in a matter as old as of 1999, if now the adjudication has to be held, it will be impossible for them to trace out all the records and equally, contact those officials who may not be in their service any longer. Thus, they would have no opportunity, much less reasonable and fair, to defend the proceedings. That is equally a balancing factor in the facts and circumstances of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en kept in the call book. Thus, bringing it to the notice of the petitioners that the show cause notices are still alive and would be subject to adjudication after the show cause notices are retrieved from the call book on the dispute which led to keeping it in the call book being resolved. This, admittedly has not been done by the Revenue in this case. 11. Therefore, it was reasonable for the petitioners to proceed on the basis that the department was not interested in prosecuting the show cause notices and had abandoned it. These proceedings are now being commenced after such a long gap, after having led the petitioner to reasonably expect that the proceedings are dropped. Therefore, even if, notices can be kept in the call book to avoid multiplicity of the proceedings, yet the principle of natural justice would require that before the notices are kept in the call book, or soon after the petitioners are informed the status of the show cause notices so as to put the parties to notice that the show cause notices are still pending. Giving notices for hearing after gap of 17 years, as in this case, is to catch the parties by surprise and prejudice a fair trial, as the documents rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to analyse the issue with regard to the delay of 10 years in passing the adjudication order. The Hon'ble High Court considered the decision in M/s.GPI Textiles Ltd. Vs Union of India - 2018 (363) ELT 388 (P&H) wherein there was unreasonable delay in passing the order after issuing the show cause notice and held that the order passed with unreasonable delay to be unsustainable. 16. The Hon'ble Rajasthan High Court in the case of P.G. Foils Ltd. (supra) analysed the issue as to when show cause notices were transferred to call book without intimating the assessee and not following due process with prior approval of Commissioner on the periodical review and revival of proceedings; it was held that the inordinate delay was unjustified. Relevant paragraphs of the judgment read as under : "31. As a consequence of the above discussion, we are of the firm view that allowing continuance of the assessment proceedings against the petitioners as a consequence of the impugned show cause notices and the revival notices would be absolutely unjustified. There is no material on the record of the case to satisfy the Court that the original show cause notices were actually transferred to the Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il, 1997, the petitioners were called upon for a hearing in the year 2006. At least, till 2006, it can be inferred that the issue was live. However, why no final order was passed immediately after the hearing was granted to the petitioners is not disclosed in the affidavit-in-reply. The respondents seem to have slipped into deep slumber thereafter. While the respondents' right in law to initiate proceedings for violation of the provisions of the Act can never be disputed, at the same time they do not have the unfettered right to choose a time for its termination and conclude proceedings as per their convenience. Indeed, the words 'reasonable period' call for a flexible rather than a rigid construction having regard to the facts of each case, but the period in excess of two decades without the respondents sufficiently explaining as to what prevented them to conclude the proceedings has to be seen as unreasonable and the reasons assigned in the affidavit-in-reply as mere excuses for not adjudicating the show cause notice according to law. Law is well-settled that when a power is conferred to achieve a particular object, such power has to be exercised reasonably, rationally and with o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entertained by the writ Court. 19. We are once again not persuaded to agree with Mr. Jetly, since the relief for return of Rs. 2 crore is not claimed as the principal relief in the writ petition but as a consequential relief to the principal relief of setting aside the impugned show cause notice. 20. Mr. Shroff has placed before us several decisions to buttress his contention that the Courts have proceeded to award interest @ 12% per annum. Reference in this connection may be made to the decisions of the Supreme Court in Kuil Fireworks Industries v. Collector of Central Excise & Another reported in (1997) 8 SCC 109 = 1997 (95) E.L.T. 3 (S.C.), and Commissioner of Central Excise, Hyderabad v. ITC Ltd. reported in (2005) 13 SCC 689 = 2005 (179) E.L.T. 15 (S.C.), wherein interest @ 12% per annum was awarded. 21. In Alok Shanker Pandey v. Union of India, reported in (2007) 3 SCC 545, it has been observed as follows : "9. It may be mentioned that there is misconception about interest. Interest is not a penalty or punishment at all, but it is the normal accretion on capital. For example, if A had to pay B a certain amount, say 10 years ago, but he offers that amount to him toda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly attributable to the revenue would be in contravention of procedural fairness and thus violative of the principles of natural justice. An action which is unfair and in violation of the principles of natural justice cannot be sustained. Sudden resurrection of the show cause notices after 13 years, therefore, cannot be justified. 24. There is one more aspect which we would like to point out. Respondents had not taken any action pursuant to the show cause notices for long 13 years till issuance of notice for personal hearing on 13-8-2019. After the petitioner approached this Court by filing the present writ petition on 6-9-2019 with due intimation to the respondents, respondent No. 3 went ahead and passed the order-in-original dated 11-11-2019. We fail to understand when the respondents could wait for 13 long years after issuance of the show cause notices, there could not have been any earthly reason to proceed at such great speed and pass the order-in-original before the Court could adjudicate on the correctness of the action of the respondents. Is it open to the respondents to materially alter the subject matter of the writ petition pending before the Court and then contend that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r when the commencement of adjudication proceedings after inordinate delay of 13 years post-issuance of show cause notices and submission of reply is held to be untenable in law, any consequential decision or order based on such delayed adjudication would also be rendered invalid. 28. Thus, having regard to the discussions made above and taking an overall view of the matter we have no hesitation to hold that respondents were not justified in commencing adjudication proceeding 13 years after issuance of the show cause notices dated 1-6-2006 and 28-11-2006. Such adjudication proceeding is therefore, held to be invalid. Consequently, impugned order-in-original dated 11-11-2019 issued by respondent No. 3 would also stand interfered with. It is accordingly set aside and quashed. 29. Writ petition is allowed as above. However, there shall be no order as to costs. 30. This order will be digitally signed by the Private Secretary of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order." 19. In the present case, it is not a situation of the show cause notice transferred to call book. It is a case in which there is delay in taking up ..... X X X X Extracts X X X X X X X X Extracts X X X X
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