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TMI Blog2024 (5) TMI 933X X X X Extracts X X X X X X X X Extracts X X X X ..... r a lapse of more than 9 (nine) years from the date of show cause notice. The petitioner filed its reply indicating therein that the show cause notice was sought to be adjudicated after a considerable lapse of time, without any justification and without any communication to the petitioner during the intervening period and, thereby, the delay in adjudication of the show cause notice dated 10.09.2008 is fatal to the proceedings and subsequent issuance of notices for personal hearing after a lapse of about 10 years from the date of issuance of the show cause notice is contrary to the mandate of Sub-section (11) of Section 11A of the Central Excise Act, 1944. It is made clear Section 11A (11) of the Central Excise Act, 1944 envisages that the Central Excise Officer shall determine the amount of duty of excise under Sub-section (10) within six months from the date of notice where it is possible to do so, in respect of cases falling under Sub-section (1), i.e., where no suppression of facts etc. are alleged) and within one year (substituted by two years by the Finance Act, 2016 w.e.f. 14.05.2016) from the date of notice, where it is possible to do so, in respect of cases falling under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Central Excise Tariff Act, 1985, has filed this writ petition seeking to quash the demand-cum-show cause notice dated 10.09.2008 under Annexure-2 issued by the opposite party no. 2; the consequential notices dated 05.12.2017 and 05.01.2018 issued under Annexure-3 (Colly.); and also the Order-in-Original dated 04.09.2023 under Annexure-9, whereby the demand made in the show cause notice dated 10.09.2008 has been confirmed. 2. The factual matrix of the case, in a nutshell, is that the petitioner, being a Public Limited Company, is primarily engaged in the manufacturing of 'Pig Iron' and 'Billet' falling under Chapter-72 and 'Coke & Crude Tar' falling under Chapter-27 of the First Schedule to the Central Excise Tariff Act, 1985 in its factory located in Kalinga Nagar Industrial Complex, Jajpur. Another company, namely, M/s. Konark Met Coke Limited (KMCL), also situated in the same complex, has set up a Metallurgical Coke Plant along with a Captive Power Plant. The electricity generated was captively used by M/s. KMCL as well as by the Petitioner. M/s. KMCL is the manufacturer of Metallurgical Coke, Pearl Coke, Breeze Coke falling under Chapter-27 and Ammonium Sulphate falling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amalgamated company as on that date. The company took possession of the assets and necessary entries in the asset register/bin card were made. After hearing both sides, i.e., Creditors and Shareholders, this Court had given its verdict for merger of both the companies as mentioned above. Therefore, with the necessary permission of the Jurisdictional Assistant Commissioner, Central Excise, Customs & Service Tax, Balasore Division, Balasore and as per the order of this Court, the petitioner has taken the Cenvat Credit lawfully. But, on the alleged contravention of the provisions of Rule 10 (1) and (3) of the Cenvat Credit Rules, 2004, as the petitioner had never disclosed this fact to the Department by any communication and it is only during verification of relevant documents of the petitioner by AG, Audit the matter came to the knowledge of the Department, it was thus presumed that the petitioner knowingly/ intentionally suppressed all the information in respect of their wrong availment of Cenvat Credit from the Department. It was also observed that the aforesaid credit of Rs. 39,17,30,118/- availed by the petitioner is recoverable from it, along with interest due thereon, under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,30,118/- lying un-utilized in the account of erstwhile M/s KMCL in terms of Rule 10 (1) of the Cenvat Credit Rules, 2004, consequent upon its amalgamation with the petitioner and pursuant to order of this Court dated 05.11.2004 in CO. PET No. 26 of 2004. 2.6. Therefore, on the basis of a show cause notice issued on 10.09.2008 and after lapse of about 10 years from the date of issuance of show cause notice, notice for personal hearing was issued and the final Order-in-Original was passed on 04.09.2023, after a period of 15 years and, therefore, the present writ petition. 3. Mr. Tarun Gulati, learned Senior Advocate appearing along with Mr. Jnanesh Mohanty and Ms. Gumansingh, learned counsel for the petitioner contended that even though a show cause notice was issued on 10.09.2008, the same was not served on the petitioner and for the first time, on 05.12.2017, the same was served on the petitioner. In compliance of the show cause notice, the petitioner gave its reply, but no action was taken thereon nor the same was decided and, as such, it was kept pending and after lapse of six years, the order dated 04.09.2023 was passed, whereas the matter should have been decided within a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales Tax Officer, (W.P.(C) No. 13195 of 2010 disposed of on 15.12.2021); and also ATA Freight Line (I) Ltd v. Union of India & Ors., 2022 SCC OnLine Bom 648 (Bombay High Court), which has been confirmed by the apex Court in S.L.P. (C) No. 828 of 2023 disposed of on 10.02.2023; M/s. Siemens Ltd. v. Union of India and Anr, W.P.(C) No. 6757 of 2022 decided on 03.10.2023 (Bombay High Court); Duncans Agro Industries Ltd v. CCE, (2006) 7 SCC 642; Anand Nishikawa Co. Ltd v. Comm. Of Central Excise, (2005) 7 SCC 749; Honda Siel Power Products v. Union of India and another, 2019 SCC OnLine All 5341; Parle International Limited v. Union of India and Others, Writ Petition No. 12904 of 2019 disposed of 26.11.2020 (Bombay High Court); Eveready Industry India Limited v. Customs, Excise and Service Tax Appellate Tribunal and others, 2016 SCC OnLine MAD 6066 (Madras High Court) ; Tata Steel Limited v Union of India and others, W.P.(T) No. 826 of 2023 disposed of on 13.06.2023 (Jharkhand High Court); BT (India) Pvt. Ltd v. Union of India and another, 2023 SCC OnLine DEL 7143 (Delhi High Court). 4. Mr. T.K. Satapathy, learned Sr. Standing Counsel appearing along with Mr. A. Kedia, learned Jr. Stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is contended that the show cause notice and the resultant Order-in-Original deal with transfer of Cenvat Credit from M/s KMCL to the petitioner not related to availment of credit by M/s KMCL. The cause of action against the Order-in-Original lies with the Central Excise & Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata under Section 35-B of the Central Excise Act, 1944, therefore, the writ petition before this Court is liable to be dismissed. To substantiate his contention, learned Senior Standing has placed reliance on Whirlpool v. Registrar of Trade Marks, (1998) 8 SCC 1; State of Maharashtra and others v Greatship (India) Limited, MANU/ SC/ 1206/2022; United Bank of India v. Satyawati Tondon, MANU/SC/0541/2010 : (2010) 8 SCC 110; and Jindal Steel & Power Ltd. Vs Union of India (W.P.(C) No. 810 of 2016 decided on 02.05.2016) 5. This Court heard Mr. Tarun Gulati, learned Senior Advocate appearing along with Mr. Jnanesh Mohanty and Ms. Gumansingh, learned counsel for the petitioner; and Mr. T.K. Satapathy, learned Sr. Standing Counsel along with Mr. A. Kedia, learned Jr. Standing Counsel for Revenue in hybrid mode and perused the records. Pleadings have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty. by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant date, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 11AA and a penalty equivalent to the duty specified in the notice. (5) Where, during the course of any audit, investigation or verification, it is found that any duty [has not been levied or paid or has been] short-levied or short-paid or erroneously refunded for the reason mentioned in clause (a) or clause (b) or clause (c) or clause (d) or clause (e) of sub-clause (4) but the details relating to the transactions are available in the specified records, then in such cases, the Central Excise Officer shall within a period of five years from the relevant date, serve a notice on the person chargeable with the duty requiring him to show cause why he should not pay the amount specified in the notice along with interest under section 11AA and penalty equivalent to fifty per cent of such duty, xxx xxx xxx (11) The Central Excise Officer shall determine the amount of duty of excise under sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in his accounts to such transferred, sold, merged, leased or amalgamated factory. (2) If a provider of output service shifts or transfers his business on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the business to a joint venture with the specific provision for transfer of liabilities of such business, then, the provider of output service shall be allowed to transfer the CENVAT credit lying unutilized in his accounts to such transferred, sold, merged, leased or amalgamated business. (3) The transfer of the CENVAT credit under sub-rules (1) and (2) shall be allowed only if the stock of inputs as such or in process, or the capital goods is also transferred along with the factory or business premises to the new site or ownership and the inputs, or capital goods, on which credit has been availed of are duly accounted for to the satisfaction of the Deputy Commissioner of Central Excise or, as the case may be, the Assistant Commissioner of Central Excise." The application of the petitioner was allowed vide letter of the authority dated 24.12.2004. Therefore, if the amount has been transferred with the knowledge of the competent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the appellants might not have disclosed the post-forming process in detail but from the correspondence and other materials on record, it cannot be conceived that the authorities were not aware of the facts as, we gather from the materials on record, admittedly, samples were collected by the Department and even after the samples were collected and inspected, classification as supplied by the appellant in respect of the products in question was approved by them. 24. Furthermore, it is also evident from the record that the flow-chart of manufacturing process which was submitted to the Superintendent of Central Excise, Rampur on 17.5.1990 clearly mentioned the fact of post forming process on the rubber [See page 15 of the Order of CEGAT]. The CEGAT in its order has also recognized the fact of collection of some relevant samples by the excise authorities on 25.9.1985 and 22.1.1988. [See paragraphs 7.1 & Page 14 of the Order of CEGAT]. 25. In this view of the matter, we are unable to persuade ourselves to agree with the finding of the CEGAT as admittedly, the products of the appellant were inspected from time to time and the department was aware of the manufacturing process of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. It is settled law that mere failure to declare does not amount to willful suppression. There must be some positive act from the side of the assessee to find willful suppression. Therefore, in view of our findings made herein above that there was no deliberate intention on the part of the appellant not to disclose the correct information or to evade payment of duty, it was not open to the Central Excise Officer to proceed to recover duties in the manner indicated in proviso to section 11A of the Act. We are, therefore, of the firm opinion that where facts were known to both the parties, as in the instant case, it was not open to the CEGAT to come to a conclusion that the appellant was guilty of "suppression of facts". In Densons Pultretaknik vs. Collector of Central Excise [2003 (11) SCC 390], this Court held that mere classification under a different sub-heading by the manufacturer cannot be said to be willful misstatement or "suppression of facts". This view was also reiterated by this Court in Collector of Central Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that no time limit has been prescribed for section 11A (2) of the Central Excise Act, 1944. The said case has been transferred to Call Book on 28.04.1999 and kept in Call Book as the matter was arose out of objection by the office of the Accountant General, Odisha (AG(O)) and the central Excise Department (Opposite Party) contested the matter with it. However. since no decision has been taken by the Office of the Accountant General, Odisha (AG(O)), even after several letters from the Opposite Parties to settle the issue, the said Show Cause Notice was retrieved from the Call Book on 15.07.2016 based on the Board's Circular No. 1023/11/2016-CX dated 08.04.2016 and initiated the process of Adjudication. A copy of the Board's Circular No. 1023/11/2016-CX dated 08.04.2016 is annexed herewith as ANNEXURE-A/1." xxx xxx xxx 8. In Maxcare Laboratories Ltd. (supra), in more or less identical circumstances, this Court quashed the SCN and the further notice fixing the date of hearing. In the presence case also the Court is unable to find any valid explanation offered by the Department in delaying in issuing the initial SCN under Section 11A of the CE Act, 4 years after the period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion of fact depending upon the facts and circumstances of a particular case." 10. Other High Courts too have invalidated SCNs where attempts were made by the Department to revive a matter sent to the Call Book several years later. These decisions include Siddhi Vinayak Syntex Pvt. Ltd. v. Union of India 2017 (352) ELT 455 (Guj.) and Meghamani Organics Ltd. v. Union of India 2019 (368) ELT 433 (Guj.)" 12. It is well settled in law that inordinate delay in adjudication of a show cause notice is fatal to its validity since it causes prejudice. In Kamaladitya Construction (supra), the Jharkhand High Court at paragraphs-21, 22, 25, 30, 31, 32 and 44 held as follows:- "21. At this stage 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 73(4B) and not otherwise. 22. 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 (4B) by Finance (No. 2) Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and other documentary evidence on which the petitioner may place reliance. It was submitted that in case of indirect taxation, the sooner the decision is taken, the assessee can recover its dues from the Revenue or the Revenue from the assessee, as the case may be. It was submitted that if transferring of a matter to the call book to await adjudication by the higher authority is taken to its logical end, in a given case, if the Appellate Tribunal comes to a particular view and the aggrieved party approaches the High Court and thereafter the Supreme Court, the matters would remain in the call book for years together. It was submitted that the statute does not contemplate such a course of action." 32. In the case of GPI Textiles Ltd. Vs. UOI reported in 2018 (362) E.L.T. 388 (P&H) [Para 17] the Hon'ble Punjab & Haryana High Court has held that although the words 'where it is possible to do' has been used, that will not stretch the period to decades." In the aforesaid judgment, the Jharkhand High Court also referred to the decision of Punjab and Haryana High Court in case of M/s. Shree Baba Exports (supra), which has been confirmed by the apex Court in S.L.P.(C) No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew in the matter. xxx xxx xxx 29. In our view, since the respondents were totally responsible for gross delay in adjudicating the show cause notices issued by the respondents causing prejudice and hardship to the petitioner and have transferred the show cause notices to call book and kept in abeyance without communication to the petitioner for more than 7 to 11 years, the respondents cannot be allowed to raise alternate remedy at this stage. Be that as it may, no order has been passed by the respondents on the said show cause notices. The question of filing any appeal by the petitioner therefore did not arise." The said judgment of the Bombay High Court has been confirmed by the apex Court in S.L.P (C) No. 828 of 2023 disposed of on 10.02.2023. 14. A serious contention was raised by learned Senior Standing Counsel for Revenue that due to availability of alternative remedy, i.e., filing of appeal under Section 35-B of the Act, the present proceeding is not maintainable. 15. In Whirlpool (supra), the apex Court held "However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution is plenary in nature and is not limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Article 226 of the Constitution. But then the Court must have good and sufficient reason to bypass the alternative remedy provided by statute. Surely matters involving the revenue where statutory remedies are available are not such matters. We can also take judicial notice of the fact that the vast majority of the petitions under Article 226 of the Constitution are filed solely for the purpose of obtaining interim orders and thereafter prolong the proceedings by one device or the other. The practice certainly needs to be strongly discouraged." 50. In Punjab National Bank v. O.C. Krishnan (2001) 6 SCC 569 this Court considered the question whether a petition under Article 227 of the Constitution was maintainable against an order passed by the Tribunal under Section 19 of the DRT Act and observed: (SCC p. 570, paras 5-6) "5. In our opinion, the order which was passed by the Tribunal directing sale of mortgaged property was appealable under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntalities as to whether any case at all is made out requiring its interference on the basis of the material made available on record. There is nothing like issuing an ex parte writ of mandamus, order or direction in a public law remedy. Further, while considering the validity of impugned action or inaction the Court will not consider itself restricted to the pleadings of the State but would be free to satisfy itself whether any case as such is made out by a person invoking its extraordinary jurisdiction under Article 226 of the Constitution. 30. The Court while exercising its jurisdiction under Article 226 is duty-bound to consider whether: (a) adjudication of writ petition involves any complex and disputed questions of facts and whether they can be satisfactorily resolved; (b) the petition reveals all material facts; (c) the petitioner has any alternative or effective remedy for the resolution of the dispute; (d) person invoking the jurisdiction is guilty of unexplained delay and laches; (e) ex facie barred by any laws of limitation; (f) grant of relief is against public policy or barred by any valid law; and host of other factors. The Court in appropriate cases in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he part of an Adjudicating Authority. This power is available only for directing the Competent Authority to take the matter to the Commissioner (Appeals). xxx xxx xxx 50. The very same argument now advanced by the Department to the effect that Sections 11A and 35E operate in two different independent fields was raised by them. After considering the issue elaborately and also after taking note of the decision in Asian Paints (India) Limited approved by the Supreme Court, this Court came to the conclusion in paragraph 23 as follows: "In our opinion, there is no nexus between Section 11A and Section 35E. Section 11A does not indicate that the legislature intended to override Section 35E. Both sections have to be read harmoniously. In the present case, Annexure-I certificate has been issued in favour of the petitioners from time to time on executing B-8 security bond and on furnishing a bank guarantee. The Department has to follow the procedure under Section 35E for setting aside the Annexure-I certificate. Unless, the Annexure-I certificate is cancelled or rejected by the competent Authority, by following the procedure under Section 35E, it is not permissible for the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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