2020 (11) TMI 842 - HC - Central Excise

13-year delay in adjudicating show-cause notices violates natural justice principles and renders proceedings invalid

Parle International Limited Versus Union of India and others

Parle International Limited Versus Union of India and others - 2021 (375) E.L.T. 633 (Bom.) Issues Involved:1. Legality of adjudication of show-cause notices after a 13-year delay.2. Validity of the order-in-original dated 11.11.2019.3. Compliance with principles of natural justice.4. Procedural fairness and transparency in revenue administration.5. Impact of delayed adjudication on the petitioner's ability to defend.Detailed Analysis:1. Legality of Adjudication of Show-Cause Notices After a 13-Year Delay:The petition challenged the adjudication of show-cause notices issued on 01.06.2006 and 28.11.2006 after a 13-year delay, asserting it was illegal, void, and bad in law. The court noted that the petitioner had responded to the notices in 2006 and 2007 and received no further communication from the respondents until 2019. The respondents argued that the delay was due to the show-cause notices being kept in the call book pending related litigation. The court held that such a long delay in adjudicating show-cause notices was unreasonable and contrary to procedural fairness, emphasizing that a period of 13 years cannot be considered reasonable.2. Validity of the Order-in-Original Dated 11.11.2019:The petitioner argued that the order-in-original dated 11.11.2019, which confirmed the demand of central excise duty as per the show-cause notice dated 01.06.2006, was issued to frustrate the writ petition. The court found that the respondents proceeded with undue haste to pass the order-in-original after the petitioner had filed the writ petition, which was an attempt to circumvent the court's proceedings. Consequently, the court declared the order-in-original invalid and set it aside.3. Compliance with Principles of Natural Justice:The petitioner contended that the delayed adjudication violated the principles of natural justice. The court agreed, stating that the petitioner was not informed that the show-cause notices were kept in abeyance and would be revived later. This lack of communication deprived the petitioner of the opportunity to safeguard evidence and defend the proceedings effectively. The court held that such delayed adjudication was unfair and violated natural justice principles.4. Procedural Fairness and Transparency in Revenue Administration:The court emphasized the importance of procedural fairness and transparency in revenue administration. It noted that the respondents' practice of keeping show-cause notices in the call book without informing the petitioner was not acceptable. The court referred to previous judgments, including Sanghavi Reconditioners Private Limited and Raymond Limited, which highlighted that revenue authorities must adjudicate show-cause notices within a reasonable time and inform the parties if the notices are kept in abeyance.5. Impact of Delayed Adjudication on the Petitioner's Ability to Defend:The court recognized that the 13-year delay in adjudication severely hampered the petitioner's ability to defend the proceedings. The petitioner argued that relevant records and personnel might no longer be available, making it impossible to mount an effective defense. The court found this argument compelling, noting that such a long delay without any fault on the petitioner's part was prejudicial and violated procedural fairness.Conclusion:The court held that the respondents were not justified in commencing adjudication proceedings 13 years after issuing the show-cause notices. The delayed adjudication was deemed invalid, and the order-in-original dated 11.11.2019 was set aside and quashed. The writ petition was allowed, and the court emphasized the need for timely and transparent adjudication by revenue authorities to uphold procedural fairness and natural justice.