TaxTMI 
TaxTMI 
2017 (3) TMI 1534
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....he show cause notice have been confirmed. 3. The petitioner is a company set up with the business objectives of manufacturing textile goods. The petitioner was manufacturing polyester filament yarn in its factory at Chhatral in the year 1991. The dispute involved in this case relates to an activity/process known as "Draw Winding" of yarns. According to the petitioner, till February, 1995, Draw Winding was admittedly not "manufacture" and hence, no excise duty was levied or recovered on Draw Wound yarns, though base yarn, namely Partially Oriented Yarn (POY) was excisable; and such base yarns were subjected to Draw Winding not attracting levy of excise duty. Such yarns were covered under subheadings of Chapter 54 of the First Schedule to the Central Excise Tariff Act, 1985. It appears that in the Union Budget of Financial Year 1995-96, an amendment was made in Note 3 of Chapter 54 of the Tariff; and a fiction of manufacture was created for products on various headings of Chapter 54 with reference to processes like dyeing, printing, bleaching etc. including conversion of any form of such product into another form. It is the case of the petitioner that for Draw Winding, it was the ....
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....ted by selling the house in Green Ville Flats, Ahmedabad. Thus, the factory was closed down and all the properties of the company including the factory were sold off. Since there was no work, the Director Shri Pravinchandra Joshi went to USA and worked there for some time and returned to India in January, 2001 and started working in a small textile unit in Ahmedabad in March, 2001 and is presently working in a textile plant at Dahej and stays in a rented house at Bharuch. It is the case of the petitioner that during this entire period there was no intimation about any action that the revenue proposed to take in respect of the above referred show cause notice dated 3.8.1998. According to the petitioner, it appears that the second respondent took up the above referred show cause notice for adjudication and fixed personal hearing of the case of which the petitioner herein did not receive any intimation because the factory was closed down more than a decade ago and all the factory properties and other assets of the company were sold off during the intervening period. The second respondent thereafter passed an adjudication order pursuant to the above referred show cause notice, however,....
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....an inordinately long period is clearly in violation of the principles of natural justice. Secondly, the petitioner has not been afforded adequate opportunity of being heard while taking up adjudication of a case after more than seventeen years and the statutory documents filed by the petitioner company at the relevant time about disclosure of the processes undertaken on base yarn have also not been taken into consideration while upholding invocation of the extended period of limitation. It was argued that the general impression prevailing in the textile trade at the relevant time and also a representation made by the Association to the Government showing that there was a scope of confusion about the duty liability are also kept out of consideration, which was also in violation of the principles of natural justice. 7.1 It was further submitted that the show cause notice was issued by the Commissioner on 3.8.1998 and after conducting hearing in February, 1999, when two Superintendents were cross-examined, no further action was taken by the adjudicating authority; and suddenly more than fifteen years thereafter, the case was taken up for decision. Referring to the impugned order, i....
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.... facts of this case." 7.3 Reliance was also placed upon the decision of the Bombay High Court in the case of Hindustan Lever Limited v. Union of India, (2011) 264 E.L.T. 173 (Bom.), for the proposition that it is well settled that adjudicatory proceedings have to be culminated within a reasonable time and if not done so, they stand vitiated on the said ground. 7.4 Reference was also made to the decision of the Delhi High Court in the case of R. M. Mehrotra v. Enforcement Directorate, (2009) 246 E.L.T. 141 (Del.), wherein the court expressed the opinion that public interest dictates that economic offences are curbed and offenders duly prosecuted. The court, however, noted that the show cause notice in the said case was issued in the year 1994 much before the FERA was repealed and observed that the notice of hearing is a mere continuation of the process and, therefore, it could not be argued that the action was time barred. The court held that however, the revival of the proceedings after a time gap of ten years, without the notice of hearing disclosing any reason for the delay, is not a mere matter of impropriety; the respondents were under a duty to disclose what compulsio....
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....fatal and amounts to re-opening the case. It was submitted that no mala fide or any other default is attributable to the petitioner for the delay in adjudicating the show cause notice and hence, the impugned order which has been passed after a reasonable period of time is required to be quashed and set aside. 8. Opposing the petition, Mr. Sudhir Mehta, learned senior standing counsel for the respondents, at the outset, raised a preliminary objection to the very maintainability of the petition on the ground of availability of an efficacious alternative statutory remedy of appeal. On the merits of the case, the learned counsel placed reliance upon the contents of the affidavit filed on behalf of the respondents, and submitted that firstly, in a similar case, the demand was dropped by the Commissioner, Surat-I and such order was reviewed by the Board; and secondly, the Department had filed an appeal before the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as the "Appellate Tribunal") in the case of M/s. C. K. Textiles, M/s. Siddhartha Petro Products Ltd., M/s. Siddharth Filaments Private Limited and M/s. Shreeram Alkalies and Chemicals. The attention o....
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....-CX dated 14.12.1995, to submit that in view of the said circular, the show cause notice issued to the petitioner was transferred to the call book by the then Commissioner, Central Excise, Ahmedabad-III on 23.3.2000, in view of the fact that in a similar case where the demand was dropped by Commissioner, Surat-I was revived by the Board and secondly, an appeal was pending before the Appellate Tribunal. It was submitted that the respondent authorities, therefore, waited for the outcome of the appeal of the revenue before the Appellate Tribunal and in the process there was a delay. However, such delay is justified in view of the fact that the matter was transferred to the call book. 8.2 As regards the decisions of different High Courts on which reliance has been placed by the learned counsel for the petitioner, it was submitted that the same would not be applicable to the facts of the present case as in none of the cases, the show cause notices were transferred to the call book. It was urged that the only reason why the petitioner has avoided availing of the alternative statutory remedy of appeal and invoked the writ jurisdiction of this court, is to avoid making of pre-deposit wh....
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....gal provision for creating a call book and transferring cases to it. Reference was made to the provisions of section 11A of the Act, to point out that subsection (1) thereof, provides for service of notice where duty has not been levied or paid or which has been short-levied or short-paid or where refund has been erroneously made within a period of one year from the relevant date, and sub-section (4) thereof provides for service of such notice within a period of five years from the relevant date where the extended period of limitation is sought to be invoked. Reference was made to subsection (11) of section 11A which postulates that the Central Excise Officer shall determine the amount of duty of excise under sub-section (10) within a period of six months from the date of notice where it is possible to do so in respect of cases falling under sub-section (1); and within one year from the date of notice, where it is possible to do so, in respect of cases falling under sub-section (4) or sub-section (5). It was submitted that the statute itself provides for timelines for issuance of notice and completion of adjudication and, thus, the law does not contemplate any stagnancy but, on the....
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....not contemplate such a course of action. 9.3 The attention of the court was drawn to the fact that circular No.162/73/-CX dated 14.12.1995, providing for transferring the matters to the call book has been issued by the Central Board of Excise and Customs (CBEC). Reference was made to the provisions of section 37B of the Act which empowers the CBEC to issue instructions of Central Excise officers, to submit that the concept of call book does not fall within any of the categories enumerated thereunder. It was argued that, therefore, issuance of the circular itself is without jurisdiction and authority of law. 9.4 Reliance was placed upon the decision of this court in the case of Larsen and Toubro Limited v. Union of India, 2016 (334) E.L.T. 268 (Guj.) wherein the petitioner therein had succeeded before the Tribunal and had applied for refund to the adjudicating authority, which rejected the refund claim, against which the petitioner preferred an appeal before the Appellate Commissioner. The court observed that it expected the Appellate Commissioner to decide the appeal latest by 28.2.2016; however, the learned counsel for the revenue submitted that the Commissioner had presentl....
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....joinder, Mr. Sudhir Mehta, learned senior standing counsel for the respondents invited the attention of the court to the provisions of section 37B of the Act to submit that the Central Board of Excise and Customs is duly empowered to issue instructions of the Central Excise Officers. Reference was made to rule 31 of the Central Excise Rules, 2002, which provides for power to issue supplementary instructions and lays down that the Board or the Principal Chief Commissioner or Chief Commissioner, as the case may be, or the Principal Commissioner or Commissioner, as the case may be, may issue written instructions providing for any incidental or supplemental matters, consistent with the provisions of the Act and the rules. It was submitted that, therefore, the CBEC is duly empowered under the Act and the rules to issue instructions and in exercise of such powers, has issued the circular dated 14.12.1995, which is binding upon the revenue authorities and, therefore, the second respondent was wholly justified in transferring the matter to the call book and the delay in adjudicating the show cause notice being in consonance with the instructions by the CBEC, stands duly explained. It was, ....
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.... of more than one and a half year even after the show cause notice came to be retrieved from the call book. However, in the interregnum the aforesaid events have taken place on account of which the petitioner could not be served with the notice of hearing and the second respondent has proceeded to decide the matter ex parte. 12. Since the very maintainability of the present writ petition against an order-in-original has been challenged by the respondents, the same would be required to be dealt with at the outset. On behalf of the petitioner, it has been contended that the revival of the show cause notice proceedings, which were lying dormant for about fifteen years, is unreasonable and illegal, and the order, having been made after reviving the proceedings without any reason for explaining the delay, is without jurisdiction. It has also been alleged that the impugned order has been passed in violation of the principles of natural justice, as the same is an ex parte order. In this regard it may be noted that is by now well settled that where there is an alternative statutory remedy available, the High Court ordinarily would not exercise its extraordinary jurisdiction under Articl....
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....ex parte by the impugned order dated 11.03.2016. From the dates fixed for personal hearing, it is evident that insofar as the first three dates are concerned, considering the fact that the dates are in quick succession, different notices could not have been issued for fixing such date of personal hearing. The small gap between the notices is also indicative of the fact that no serious efforts were made to serve the petitioner. It is quite perplexing that when it came to service of notice to the petitioner in a proceeding which had been kept in cold storage by the respondents for a period of more than seventeen years, the respondents did not deem it fit to find the whereabouts of the petitioner with a view to afford due opportunity of hearing to it. Whereas when it came to recovery of dues pursuant to the impugned order-in-original, with a little effort, the address of the Director of the petitioner company was easily traced out by the respondents. Had such an effort been made at the stage of hearing, the entire exercise before this court could have been obviated. Be that as it may, since the notice has been displayed on the notice board in compliance with the provisions of section ....
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....order. 18. In R. M. Mehrotra v. Enforcement Directorate (supra), the Delhi High Court held that the revival of the proceedings after a time gap of ten years, without notice of hearing disclosing any reason for the delay, is not a mere matter of impropriety; the respondents were under a duty to disclose what compulsions held up the adjudicatory process for so long. In the absence of such explanation, revival of the proceedings would be unlawful and arbitrary. 19. Thus, the consistent approach adopted by the different High Courts insofar as the delay in concluding proceedings pursuant to a show cause notice is concerned, is that revival of proceedings after a long time gap without any proper explanation therefor, is unlawful and arbitrary. 20. The question that, therefore, arises for consideration is as to whether the explanation put forth by the respondents for the delay in determining the duty pursuant to the show cause notice issued in 1998 can be said to be reasonable. As noticed hereinabove, it is the case of the respondents that the show cause notice has remained undecided in view of the fact that it had been consigned to the call book in view of the Circular No.162/73....
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.... power to issue supplementary instructions and lays down that the Board or the Principal Chief Commissioner or Chief Commissioner, as the case may be, or the Principal Commissioner or Commissioner, as the case may be, may issue written instructions providing for any incidental or supplemental matters, consistent with the provisions of the Act and the rules. In view of the provisions of rule 31 of the rules, any instructions issued by the Board thereunder have to be either incidental or supplemental and consistent with the provisions of the Act and the rules. In the opinion of this court, instructions to consign a case to the call book are relatable to the adjudicatory process, and do not provide for any incidental or supplemental matters, consistent with the Act or the rules. Neither the Act nor the rules, in any manner empower the CBEC to issue instructions to any adjudicatory authority in relation to matters pending for adjudication before it. 23. Insofar as the show cause notice in the instant case is concerned, the same has been issued under section 11A of the Act. Proceedings under section 11A of the Act are adjudicatory proceedings and the authority which decides the same ....
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....s for not being able to determine the amount of duty within the stipulated time frame. However, when a matter is consigned to the call book and kept in cold storage for years together, it is not on account of it not being possible for the authority to decide the case, but on grounds which are extraneous to the proceedings. In the opinion of this court, when the legislature in its wisdom has prescribed a particular time limit, the CBEC has no power or authority to extend such time limit for years on end merely to await a decision in another case. The adjudicatory authority is required to decide each case as it comes, unless restrained by an order of a higher forum. This court is of the view that the concept of call book created by the CBEC, which provides for transferring pending cases to the call book, is contrary to the statutory mandate, namely, that the adjudicating authority is required to determine the duty within the time frame specified by the legislature as far as possible. Moreover, as discussed hereinabove, there is no power vested in the CBEC to issue such instructions under any statutory provision, inasmuch as, neither section 37B of the Central Excise Act nor rule 31 o....