w w w . L a w y e r S e r v i c e s . i n


Yangir Properties & Trading Ltd. v/s Union of India

    Special Civil Application No. 16615 of 2020
    Decided On, 12 February 2021
    At, High Court of Gujarat At Ahmedabad
    By, THE HONOURABLE MS. JUSTICE SONIA GOKANI & THE HONOURABLE MS. JUSTICE SANGEETA K. VISHEN
    For the Appearing Parties: Dhaval Shah, Nikunt K. Raval, Advocates.


Judgment Text
Sonia Gokani, J.

1. This is a petition preferred under Article 226 of the Constitution of India questioning and challenging the action of respondent authority with the following reliefs:

"20. The petitioner, therefore, most humbly and respectfully prays that:-

(a) Your Lordships be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioners' case and quash and set aside the impugned Show Cause Notice F.No.V(Ch.54)03- 10/Dem/2004 dated 16.04.2004, the then Commissioner of Central Excise and Customs, Surat-II;

(b) That this Hon'ble Court be pleased to issue writ of prohibition or any other appropriate writ in the nature of prohibition under Article 226 of the Constitution of India prohibiting the Respondents their subordinates, servant and agents from in any manner proceeding further with the adjudication of F.no.V(ch.54) 03-10/Dem/2004 dated 16.04.2004, the then Commissioner of Central Excise and Customs, Surat-II.

(c) that pending the hearing and final disposal of this petition, this Hon'ble Court be pleased to restrain the Respondents by themselves, their officers, subordinates, servants and agents to refrain from acting upon or taking any further steps or proceedings in pursuance of and/or in implementation and/or in furtherance of the impugned show cause notice F.No.V/Ch.54)03=-10/Dem/2004 dated 16.04.2004, the then Commissioner of Central Excise and Customs, Surat-II.

(d) An ex-parte ad-interim relief in terms of prayer (d) above may kindly be granted;

(e) Such other and further order or orders as may be deemed just and proper in the facts and circumstance of the present case may kindly be granted."

2. The facts, in a capsulized form, are as follows:

2.1 The petitioner is a company incorporated under the Companies Act, 1956, which manufactures Polyester Texturized Yarn (PTY) of Chapter 54 of the First Schedule to the Central Excise Tariff Act, 1985. During the period of dispute, it was 100% Export Oriented Unit (EOU).

2.2 Petitioner No.2 was a Director of petitioner No.1 company. The petitioner company was granted licence under section 58 of the Customs Act to operate as a private bonded warehouse for the storage of imported/indigenous machinery and equipment, raw materials, consumables, components, spares, packing materials and finished goods and machinery and equipment.

2.3 The petitioner removed, from time to time, the excisable goods from its warehouse/licensed factory at Shed A-1/5240, GIDC, Ankleshwar, with the permission of the Development Commissioner, in Domestic Tariff Area on payment of the Central Value Added Tax (CENVAT) under the proviso to section 3(1) of the Central Excise Act, 1944 ("the Act' for short).

3. A show cause notice F.No.V(Ch.54) 03- 10/Dem/2004 dated 16.04.2004 was issued by the Commissioner of Central Excise and Customs, Surat-II calling upon the petitioner to show cause as to why the Central Excise duty amounting to Rs.9,03,814/- on the finished goods valued at Rs.50,89,666/- and Central Excise duty amounting to Rs.26,62,651/- on the finished goods valued at Rs.1,36,63,606/- be not recovered from the petitioners under section 11A of the Act.

3.1 It also demanded the custom duty of Rs.78,74,022/- on the goods like imported POY valued at Rs.2,30,14,913/- under section 72 of the Customs Act, 1962 read with section 28(1) of the Customs Act, 1962 with further notice as to why the same be not confiscated under section 111(o) of the Act and penalties.

3.2 The same was replied on 21.08.2004 urging that the proceedings were liable to be dropped.

3.3 The Commissioner of Central Excise, Surat-II, vide ex parte order dated 08.08.2005, confirmed the demand of duty with interest proposed in the said show cause notice dated 16.04.2004 and imposed penalties on the petitioners.

4. Aggrieved petitioner preferred two separate appeals before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT/the appellate Tribunal), one under section 35B of the Central Excise Act and the other under section 129A of the Customs Act, 1962.

5. The appellate Tribunal after waiving pre-deposit of the amount demanded, set aside the impugned order and remanded the matter to the Commissioner for once again deciding the matter on observing the principles of natural justice, as it was of the opinion that the order passed was in breach of the principles of natural justice. Relevant finding and observations are reproduced as under:

"2. The first hearing date was fixed by the Commissioner on 31.1.05. The appellant vide their letter of the same date brought it to the notice of the Commissioner that they attended the office but as Commissioner was not available, hearing could not take place. On second date of hearing fixed on 16.2.2001, the Commissioner was again not available in the office. This is clear from the letter dt.16.2.2005 written by the appellant to the Commissioner. As per the appellants notices for the next date of hearing were not received by them and as such appearance could not be caused.

3. It is also seen that though the appellant had field reply to the show cause notice vide their letter dt.21.8.04, the Commissioner observed in the impugned order that no reply has been filed by the appellant. As such, he has passed the order without considering the submissions made by the appellant vide their reply dt.21.8.2004.

4. for a ll the above reasons, we set aside the impugned order and remand the matter to Commissioner in re-decision after observing the principles of natural justice."

6. The petitioners, thereafter, closed the factory and after surrendering the registration, sold the factory in the year 2012.

7. The grievance on the part of the petitioner is that almost after 15 years of the remand by the Appellate Tribunal, respondent No.2 scheduled personal hearing of the show cause notice on 08.12.2020 by sending intimation to the petitioner by email on 20.11.2020. The petitioner, therefore, replied on 07.12.2020 that it would not be possible for the representative of petitioner company to appear for personal hearing on the ground that closure of the factory was almost a decade ago and the same had been sold in the year 2012. The petitioners also surrendered the registration and, therefore, they are, in present times, unable to locate any relevant documents relating to the said show cause notice dated 16.04.2004. All possible efforts were made for searching the papers and no assistance is available due to pandemic on account of Covid-19 virus, as the office of their advocate is also not functioning in full strength. It, therefore, requested for grant of time. Subsequent communication through e-mail also had indicated that henceforth learned advocate of theirs should be contacted for the said purpose.

8. The grievance on the part of the petitioner is that the inordinate delay of 15 years in purported adjudication of the said show cause notice in the post remand period of the order of the appellate Tribunal is ex facie without jurisdiction, without authority of law and in clear breach of the principles of natural justice and such action is liable to be set aside on the various grounds raised before this Court.

9. This Court issued notice after verifying that at no stage, there had been any stay granted by the Court against the process of adjudication nor was on account of pendency of similar matter, raising identical question of law before this Court or before the Apex Court, delay had occurred.

10. Mr. Nikunt Raval, learned Central Government Standing Counsel for and on behalf of the respondent had appeared on the returnable date.

11. We have heard Mr.P.D.Shah, learned Senior Advocate appearing with Mr. Dhaval Shah for the petitioner, who has fervently made his submissions and urged that there is no earthly reason as to why the show cause notice could not have been adjudicated for more than 15 years. The petitioners are not guilty of delay in adjudication, as they had replied to the show cause notice in the year 2004 itself.

11.1 He further urged that in case of Siddhi Vinayak Syntex Pvt. Ltd. vs. Union of India , 2017 352 ELT 455 ( Guj.), this Court has held that revival of the proceedings after along gap without any proper explanation therefor is unlawful and arbitrary. This decision has been challenged before the Apex Court where the quashment of the show cause notice has not been questioned by the Court. However, it has admitted the matter for the limited purpose of examining the circular of transferring the matter to the call book.

11.2 Learned Senior Counsel further relied on the decisions of M/s. Parimal Textiles vs. Union of India,2018 8 GSTL 361 (Guj.), Alidhara Textile Engineers Ltd. & Ors. vs. Union of India , 2017 3 GLH 306, Shivkurpa Processors Pvt. Ltd. vs. union of Inda,2018 362 ELT 773 (Guj), Meghmani Organics Ltd. vs. Union of India,2019 368 ELT 433(Guj.), and Yangir Properties and Trading Ltd. vs. Union of India decided by this Court in Special Civil Application No. 8933 of 2018 on 06.02.2019, where on the sole ground of inordinate delay in adjudication, the show cause notices have been quashed.

11.3 He further relied on the decision of Bhagwandas S. Tolani vs. B.C. Agarwal and others , 1983 12 ELT 44 (Bom.), wherein, the adjudication proceedings restarted after 11 years, were struck down by the Bombay High Court, where the hearing had taken place long ago, but the formal order was not received and there was no explanation from the department as to why the adjudication proceedings were not held for 11 years.

11.4 Yet another decision, which is sought to be relied upon is of the Bombay High Court in the case of Premier Ltd. vs. Union of India , 2017 354 ELT 365(Bom.), where there was inordinate delay of 25 years in adjudicating the show cause notice. The SLP filed by the department was dismissed by the Apex Court as reported in 2018(360) ELT A180(SC).

11.5 In the case of Raymond Limited vs. Union of India, 2019 378 ELT 481(Bom.), the Bombay High Court quashed the show cause notices for inordinate delay of 14 to 17 years in commencement of adjudication. This was held to be a facet of breach of principles of natural justice.

11.6 Accordingly, it is urged that commencement of adjudicatory proceedings after inordinate delay in the post issuance of show cause notice and post remand period, must be interfered with. He fervently urged that the petitioners do not have any record available to defend themselves.

12. Per contra, Mr. Nikunt Raval, learned Standing Counsel has vehemently urged that mere delay must never be the ground for the Court to intervene and even otherwise, the SLP is pending before the Apex Court, arising from Siddhi Vinayak Syntex Pvt. Ltd. (supra) where the examination of circular of transferring the matter to the call book is being considered. Therefore, at this stage, the quashment of show cause notice is not to be insisted upon. He has further submitted that on 26.06.2006, this has been transferred to the call book and, thereafter, once again in the year 2017, it was re-transferred. It was transferred to the call book of 26.06.2006 inasmuch as in a matter, which was pending before this Court, the very issue was under consideration when the same had been decided by the Court. It had been transferred for a regular hearing and the notice came to be issued for personal hearing in the year 2020. No explanation was tendered as to why after the year 2017, when an identical legal issue was decided, delay has been caused of three years. We had raised a query to the learned Standing Counsel appearing for the Central Government as to whether, there was any formal communication, whereby the party had been intimated of the transfer of the matter to the call book and his answer, after getting the instructions, has been in negation. He has also admitted that in a case of M/s. Parimal Textiles (supra), the very arguments had been advanced by the union and the Court had yet dealt with the matter and quashed and set aside the show cause notice on the ground that the admission in the case of Siddhi Vinayak Syntex Pvt. Ltd. (supra) was on a limited ground of challenging the circular.

13. Having thus heard both the sides extensively the short issue that deserves consideration of this Court is as to whether after the remand made by the Appellate Tribunal in the year 2005, whether initiation of proceedings in the year 2020 without putting the petitioners to notice of transfer of call book at any juncture in the interregnum is permissible under the law. More particularly, when the petitioner has already sold of its factory and also surrendered his registration before the authority.

14. Before adverting to the factual matrix further, the law on the subject deserves consideration.

14.1 In the case of Siddhi Vinayak Syntex Pvt. Ltd. (supra), this Court extensively examined the maintainability of writ petition in wake of the existence of alternative remedy, where there was a delay of adjudication of show cause notice after 17 years. The department's contention was that the show cause notice remained undecided as it had been consigned to call book in view of CBEC Circular 162/73/95-CX dated 14.12.1995 to await outcome of a similar case. The Court held that consistent approach adopted by different High Courts is that the revival of the proceedings after long time gap without any proper explanation is unlawful and arbitrary. The Court also held that the said circular cannot be said to have issued in exercise of powers under section 37B of the Central Excise Act as concept of call book did not relate to uniformity in classification of excisable goods, or to levy of excise duties on such goods. Instructions to consign a case to call book relatable to adjudicatory process, and do not provide for any incidental or supplemental matters, consistent with the Act or Rules thereunder. The Court held that the CBEC is not empowered to issue instructions to any adjudicatory authority in relation to matters pending for adjudication before it. Consignment of matter to call book were on grounds extraneous to proceedings and not due to impossibility of authority to decide the case and hence the Court held that transferring the matter to call book is contrary to the provisions of law and explanation put forth by Department for delay is not plausible explanation for not adjudicating upon show cause notice within reasonable time. It is, therefore, held that the revival of the proceedings after long gap without discussing any reason for delay is unlawful and arbitrary. Assessee was not informed about consigning matter to call book. Therefore, he would have reasonable and bone fide belief that the proceedings has been dropped as in other cases and his position also would change considerably in the interregnum period. Hence, such transfer to the call book of the matter and revival of the same would cause immense prejudice to the assessee.

"15. The moot question that arises for consideration in the present case is, whether it was permissible for the respondents to act upon a show cause notice issued in the year 1998, after a period of seventeen years. At this juncture, it may be germane to refer to the decisions on which reliance has been placed by the learned counsel for the petitioner.

16. The decision of the Bombay High Court in the case of Shirish Harshavadan Shah v. Deputy Director, Enforcement Directorate, Mumbai (supra), was relied upon wherein in the facts of the said case for a period of almost twelve years, no steps had been taken by the respondents therein to proceed with the adjudication proceedings. The court held that no fault could be attributed to the petitioners for this delay and inaction on the part of the respondents; the respondents had not alleged any malice on the part of the petitioners nor was it the case of the respondents that the petitioners therein were responsible for the delay in the proceedings. The court found no justification in the explanation tendered for causing delay in the adjudication proceedings and held that the department was not entitled to re-open old matters in this manner and if the department's contention as to limitation were to be accepted, it would mean that the department can commence adjudication proceedings twenty years, twenty-five years or thirty years after the original show cause notice, which cannot be permitted.

17. In Hindustan Lever Limited v. Union of India (supra), the Bombay High Court held that the extent of delay which had occurred in adjudication upon the issues was also relevant. The court observed that it was well-settled that the adjudication proceedings have to be culminated within a reasonable time and if it is not done so, they stand vitiated on the said ground.

The court observed that, normally for compliance of the principles of natural justice it would have remanded the matter back to the concerned authority. However, considering the time lag that has elapsed from the date of first hearing granted to the petitioner, since there had been undue delay in deciding the said proceedings, it did not deem it fit to remand the matter to the concerned authority of the respondents. The court, accordingly, set aside the impugned 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.162/73/95-CX dated 14.12.1995 issued by the CBEC. Insofar as the power of the CBEC to issue instructions to the authorities under the Central Excise Act are concerned, the same are relatable to the provisions of section 37B of the Act, which read thus:-

"37-B. Instructions to Central Excise Officers-The Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963), may, if it considers it necessary or expedient so to do for the purpose of uniformity in the classification of excisable goods or with respect to levy of duties of excise on such goods or for the implementation of any other provision of this Act, issue such orders, instructions and directions to the Central Excise Officers as it may deem fit, and such officers and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the said Board: Provided that no such orders, instructions or directions shall be issued- V(a) so as to require any Central Excise Officer to make a particular assessment or to dispose of a particular case in a particular manner: or

(b) so as to interfere with the discretion of the Commissioner of Central Excise (Appeals) in the exercise of his appellate functions.

21. Thus, under section 37B of the Act, the Central Board of Excise and Customs is empowered to issue instructions to Central Excise Officers if it considers it necessary or expedient to do so firstly, for the purpose of uniformity in the classification of excisable goods; secondly with respect to levy of duties of excise on such goods; and thirdly, for the implementation of any other provision of the Act. Insofar as the concept of call book is concerned, the same evidently does not relate to uniformity in the classification of excisable goods, or to levy of duties of excise of such goods. Insofar as the implementation of any other provision of this Act is concerned, the concept of call book, cannot be traced to any other provision of the Act nor does it appear to be relatable to the implementation of any other provision of the Act. Evidently, therefore, the circular dated 14.12.1995, cannot be said to have been issued in exercise of powers under section 37B of the Act.

22. On behalf of the respondents, reliance has also been placed upon rule 31 of the Central Excise Rules, which makes provision 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. 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 is a quasi-judicial authority. Such proceedings are strictly governed by the statutory provisions. Section 11A of the Act as it stood at the relevant time when the show cause notice came to be issued, provided for issuance of notice within six months from the relevant date in ordinary cases and within five years in case where the extended period of limitation is invoked. Section 11A thereafter has been amended from time to time and in the year 2011, various amendments came to be made in the section including insertion of sub-section (11) which provides that the Central Excise Officer shall determine the amount of duty of excise under sub-section (10) - (a) within six months from the date of notice where it is possible to do so, in respect of cases falling under subsection (1);

(b) within one year from the date of notice, where it is possible to do so, in respect of cases falling under subsection (4) or sub-section (5).

24. Thus, with effect from the year 2011 a time limit has been prescribed for determining the amount of duty of excise where it is possible. It cannot be gainsaid that when the legislature prescribes a time limit, it is incumbent upon the authority to abide by the same. While it is true that the legislature has provided for such abiding by the time limit where it is possible to do so, sub-section (11) of section 11A of the Act gives an indication as to the legislative intent, namely that as far as may be possible the amount of duty should be determined within the above time frame, viz. Six months from the date of the notice in respect of cases falling under subsection (1) and one year from the date of the notice in respect of cases falling under sub-section (4) or sub-section (5) . When the legislature has used the expression "where it is possible to do so", it means that if in the ordinary course it is possible to determine the amount of duty within the specified time frame, it should be so done. The legislature has wisely not prescribed a time limit and has specified such time limit where it is possible to do so, for the reason that the adjudicating authority for several reasons may not be in a position to decide the matter within the specified time frame, namely, a large number of witnesses may have to be examined, the record of the case may be very bulky, huge workload, non-availability of an officer, etc. which are genuine reasons 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 of the rules, envisage issuance of such directions. The concept of call book is, therefore, contrary to the provisions of the Central Excise Act and such instructions are beyond the scope of the authority of the CBEC. Transferring matters to the call book being contrary to the provisions of law, the explanation put forth by the respondents for the delay in concluding the proceedings pursuant to the show cause notice 3.8.1998 cannot be said to be a plausible explanation for not adjudicating upon the show cause notice within a reasonable time. In view of the settled legal position, as propounded by various High Courts, with which this court is in full agreement, the revival of proceedings after a long gap of ten to fifteen years without disclosing any reason for the delay, would be unlawful and arbitrary and would vitiate the entire proceedings.

25. Examining the matter from another angle, it is the stand of the respondents that the matter was kept in the call book for all these years to await the outcome of a similar case in the case of M/s. Siddharth Petro Products Limited and others, which was pending before the Appellate Tribunal. In such a situation, the decision in the case of the petitioner should be governed by the decision of the Appellate Tribunal. However, the respondents after keeping the matter in the call book for fifteen years, have thereafter chosen not to follow the outcome of the other matter wherein the show cause notice had been dropped by the adjudicating authority, and the Appellate Tribunal had dismissed the appeal, albeit on grounds other than on merits.

26. Moreover, as is evident from the facts noted hereinabove, the respondents while consigning the matter to the call book did not deem it fit to inform the petitioner about it. Since in other cases, such proceedings had been dropped, the petitioner had reason to form a bona fide belief that the proceedings in its case had also been dropped. During the interregnum the petitioner's position has changed considerably. Ln view of the fact that the factory of the petitioner company has been closed down and sold, it cannot be gainsaid that even if the petitioner was served with the notice of personal hearing, it would be difficult for it to defend the case inasmuch as in view of the lapse of time and intervening circumstances, the evidence might have been lost. After seventeen years, the persons who were conversant with the case may not be available, documentary evidence may have been displaced. Thus, the delay in deciding the proceedings, that too without bringing it to the notice of the petitioner that the case was transferred to the call book and was therefore pending, causes immense prejudice to the petitioner. The revival of the proceedings, therefore, is in complete breach of the principles of natural justice and hence, the impugned show cause notice and the order-in-original judgement passed pursuant thereto, cannot be sustained."

14.2 This very issue came up for hearing in the case of Meghmani Organics Ltd. (supra), where there was a 13 years of delay in deciding the show cause notice. Following the decision of Siddhi Vinayak Syntex Pvt. Ltd. (supra) and other decisions, the Court did not find explanation offered by the respondent as convincing and hence, allowed the writ application and the order of Commissioner GST & Central Excise (Appeal) was quashed and set aside.

14.3 In the case of Yangir Properties and Trading Ltd. (supra) the show cause notice was transferred to the call book without informing the petitioner and had been recalled after a long delay of 13 years. This also, by following the decision of Siddhi Vinayak Syntex Pvt. Ltd. (supra) was allowed quashing the notice and setting aside the order of the concerned officer.

15. It would be worthwhile to consider the decision of M/s. Parimal Textiles (supra), where this court had examined the very issue and followed the decision of Siddhi Vinayak Syntex Pvt. Ltd. (supra). It also had considered the submissions of admission of the very matter before the Apex Court and held thus:

"6. Under similar circumstances, one of the entities Siddhi Vinayak Syntex Pvt Ltd. had approached this Court and asked for similar relief. Division Bench of this Court by a judgement dated 7.3.2017 in Special Civil Application No.19437/2016 allowed the petition making the following observations :

"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 is a quasi judicial authority. Such proceedings are strictly governed by the statutory provisions. Section 11A of the Act as it stood at the relevant time when the show cause notice came to be issued, provided for issuance of notice within six months from the relevant date in ordinary cases and within five years in case where the extended period of limitation is invoked. Section 11A thereafter has been amended from time to time and in the year 2011, various amendments came to be made in the section including insertion of subsection (11) which provides that the Central Excise Officer shall determine the amount of duty of excise under subsection (10) ( a) within six months from the date of notice where it is possible to do so, in respect of cases falling under subsection (1);

(b) within one year from the date of notice, where it is possible to do so, in respect of cases falling under subsection (4) or sub section (5).

24. Thus, with effect from the year 2011 a time limit has been prescribed for determining the amount of duty of excise where it is possible. It cannot be gainsaid that when the legislature prescribes a time limit, it is incumbent upon the authority to abide by the same. While it is true that the legislature has provided for such abiding by the time limit where it is possible to do so, subsection (11) of section 11A of the Act gives an indication as to the legislative intent, namely that as far as may be possible the amount of duty should be determined within the above time frame, viz. Six months from the date of the notice in respect of cases falling under subsection (1) and one year from the date of the notice in respect of cases falling under subsection (4) or subsection (5). When the legislature has used the expression where it is possible to do so, it means that if in the ordinary course it is possible to determine the amount of duty within the specified time frame, it should be so done. The legislature has wisely not prescribed a time limit and has specified such time limit where it is possible to do so, for the reason that the adjudicating authority for several reasons may not be in a position to decide the matter within the specified time frame, namely, a large number of witnesses may have to be examined, the record of the case may be very bulky, huge workload, nonavailability of an officer, etc. which are genuine reasons 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 of the rules, envisage issuance of such directions. The concept of call book is, therefore, contrary to the provisions of the Central Excise Act and such instructions are beyond the scope of the authority of the CBEC. Transferring matters to the call book being contrary to the provisions of law, the explanation put forth by the respondents for the delay in concluding the proceedings pursuant to the show cause notice 3.8.1998 cannot be said to be a plausible explanation for not adjudicating upon the show cause notice within a reasonable time. In view of the settled legal position, as propounded by various High Courts, with which this court is in full agreement, the revival of proceedings after a long gap of ten to fifteen years without disclosing any reason for the delay, would be unlawful and arbitrary and would vitiate the entire proceedings.

25. Examining the matter from another angle, it is the stand of the respondents that the matter was kept in the call book for all these years to await the outcome of a similar case in the case of M/s. Siddharth Petro Products Limited and others, which was pending before the Appellate Tribunal. In such a situation, the decision in the case of the petitioner should be governed by the decision of the Appellate Tribunal. However, the respondents after keeping the matter in the call book for fifteen years, have thereafter chosen not to follow the outcome of the other matter wherein the show cause notice had been dropped by the adjudicating authority, and the Appellate Tribunal had dismissed the appeal, albeit on grounds other than on merits.

26. Moreover, as is evident from the facts noted hereinabove, the respondents while consigning the matter to the call book did not deem it fit to inform the petitioner about it. Since in other cases, such proceedings had been dropped, the petitioner had reason to form a bona fide belief that the proceedings in its case had also been dropped. During the interregnum the petitioners position has changed considerably. In view of the fact that the factory of the petitioner company has been closed down and sold, it cannot be gainsaid that even if the petitioner was served with the notice of personal hearing, it would be difficult for it to defend the case inasmuch as in view of the lapse of time and intervening circumstances, the evidence might have been lost. After seventeen years, the persons who were conversant with the case may not be available, documentary evidence may have been displaced. Thus, the delay in deciding the proceedings, that too without bringing it to the notice of the petitioner that the case was transferred to the call book and was therefore pending, causes immense prejudice to the petitioner. The revival of the proceedings, therefore, is in complete breach of the principles of natural justice and hence, the impugned show cause notice and the order in original passed pursuant thereto, cannot be sustained.

27. For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned Order in original No.AHMEXCUS0030401516 dated 11.3.2016 as well as the Show Cause Notice F.No.V.54/1529/ OA/98 dated 3.8.1998 are hereby quashed and set aside. Rule is made absolute with no order as to costs."

7. We are informed that the department carried the issues before the Supreme Court. The Supreme Court has however entertained the department's appeal to the limited extent of deciding whether circular issued by CBEC providing that the proceedings be kept in call book is in conformity with the provisions of section 37B of the Central Excise Act. It can thus be seen that the judgement of the High Court rendered in identical facts is not disturbed by the Supreme Court insofar as its main impact on quashing the show cause notice and the orderinoriginal is concerned. Even without going into the question whether the circular of CBEC was valid or not, the judgement of the Division Bench in case of Siddhi Vinayak would apply in the present cases. In all cases, the department had issued show cause notices sometime in the year 2000. These proceedings were kept in call book without intimating the noticees. Without service of any further notices on the petitioners, the order in original came to be passed by the adjudicating authority."

15.1 The matter was carried to the Supreme Court, which dismissed the Special Leave Petition (Civil) No.6948 of 2018 with I.A. No.38644 of 2018 with Diary No.7026 of 2018, whereby the Apex Court passed the following order:-

"Heard the Learned Counsel for the petitioners and perused the relevant material.

Delay condoned.

We do not find any legal and valid ground for interference. The Special Leave Petitions are dismissed."

16. It is, thus, quite clear that the Courts have not approved transfer to the call book for number of years and pendency of adjudication for a protracted period. The Courts have always given primacy to the public interest and also have heavily curbed the attempts to economic offence and dealt with the offenders in stringent manner. At the same time, it has also struck a balance by upholding the cause of litigant that if there is unexplained delay in proceeding with the adjudication of the show cause notice without any cause attributable to the petitioner for such tiring delay and inaction on the part of the respondent. In absence of any kind of malice on the part of the petitioners, there is no justification for enormous delay to have a march over the principles of natural justice on permitting such belated adjudication of the show cause notice. The Courts have, in no unclear terms, held that this results into deep prejudice to the assessee, inasmuch as in the interregnum period the position of the assessee would have changed substantially and therefore, hearing that takes place may affect its right adversely.

17. In the case of Bhagwandas S. Tolani (supra), the Bombay High Court has held and observed thus:-

"5. It is clear from this letter that the letter of the petitioner dated 6th January, 1977, has not been properly understood by the Addl. Director. It is not the petitioner's case that an adjudication order was formally passed and handed over to the petitioner. The petitioner cannot be aware whether any order was formally signed by the person who heard the adjudication proceedings. All that the petitioner could say was that a hearing had taken place but that he had not received the formal order. It is for the department to keep records of its adjudication proceedings. No explanation is forthcoming from the department as to why adjudication proceedings were not held for 11 years since that is the department's case.

6. It is true that no period of limitation has been prescribed for such adjudication. It follows also that the adjudication proceedings cannot be held twice over. The petitioner has averred that the adjudication proceedings took place at New Delhi and that is the position, which it would be reasonable to accept because of long lapse of time. The petitioner has also pointed out that certain directions were given to the Reserve Bank of India for lifting the earlier ban. It was open to the department to enquire from the Reserve Bank of India which also is a government concern as to what were the directions given to it earlier and subsequently for lifting the ban.

7. There is also one more aspect of the matter. In the reply, the firm has pointed out that almost all the relevant records have been destroyed and the persons who was in charge is no longer in their employment. In my view, even without considering the case that adjudication proceedings had in fact been held, I am of the opinion that this is otherwise also a stale matter which cannot be allowed to be reopened, since to allow it to be reopened, would cause serious detriment and prejudice to the petitioner. The fact that the petitioner is not able to produce the formal order is immaterial; that there were earlier adjudication proceedings may be reasonably borne out by the fact that the department did nothing for 11 years. The department has failed to clarify the position as regards the directions given to the Reserve Bank of India and an adverse inference is required to be drawn from such failure even otherwise in respect of such stale matter. In my opinion, the department is not entitled to take up old matters is this manner. If the department's contentions as to limitation were to be accepted, it would mean that the department can commence adjudication proceedings 10 years, 15 years or 20 years after the original show cause notice which cannot be permitted. The position might have been different if there had been any default on the part of the petitioner or any act of omission or commission on his part which had resulted in this long period of delay. Then in such case, the petitioner could not be permitted to take advantage of his own wrong. This is not the department's case in the present matter."

18. In the case of Raymond Limited (supra), the Bombay High Court has held thus:-

"In the present facts, it is the case of the petitioner that because of long delay, papers and proceedings relevant to meet the show cause notice are not available. Thus, seriously, hampering the petitioners to appropriately meet the show cause notice. This delay in taking up the adjudication of the show cause notice 9 in the absence of any fault on the part of the party complaining) is a facet of breach of principles of natural justice. It impinges on procedural fairness, in the absence of the party being put to notice that the show cause notices will be taken up for consideration, after some event and/or time, when it is not heard in a reasonable time. In the absence of the above, particularly as in this case, long delay has result in papers being misplaced. The reasonable period may vary for case to case. However, when the notices are being kept in abeyance ( by keeping them in the call book as in this case), the Revenue should keep the parties informed of the same. This serves two fold purpose-One it puts the party to notice that the show cause notice is still alive and is only kpe in abeyance. Therefore, the party can then safeguard its evidence, till the show cause notice is taken up for adjudication. Secondly, if the notices are being kept in the call book for some reason, the party gets an opportunity to point out to the Revenue that the reasons for keeping it in call book are not correct and the notices could be adjudicated upon immediately. This is the transparent manner in which the State administration must function.

10. In fact, we note that the above manner of functioning is the objective of the State administration, as our attention has been drawn to the C.B.E & C Circular No.1053/2017-CX dated 10.03.2017. In paragraph 9.4 of the circular of C.B.E & C. has directed the officers of the department to formally communicate to the party that the notices which have been issued to them, are being transferred to the call book. This would be expected of the State even in the absence of the above circular; the circular only states the obvious. In this case, the show cause notices were kept in the call book not at the instance of petitioner, but by the Revenue of its own accord. After having kept in in the call book, no intimation/communication was sent by the Commissioner pointing out that the show cause notices had been kept in the call book.

Please Login To View The Full Judgment!
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 relevant tot he show cause notices are not available with the petitioners." 19. Adverting to the facts of the instant case, it is not the case of the respondent that the petitioner had been, in any manner, formally communicated by way of the notices or otherwise of the matter being transferred to the call book. There is nothing to indicate of the petitioner having been made aware of such transfer or the reason of such move in all these years. The show cause notice issued in the year 2004 had been decided ex parte on 08.08.2005 and the challenge to the same was made by the petitioner by two separate appeals before the CESTAT. The same resulted in favour of the petitioner on 02.12.2005, whereby the Tribunal waived the pre-deposit of the amount demanded and set aside the impugned order and remanded the matter to the Commissioner for once again deciding by clearly holding that it was in breach of the principles of natural justice. 20. The transfer to the call book was on the ground that there was yet another matter on the very legal issue, which was pending before this Court, being Special Civil Application No. 537 of 2007, which came to be decided by this Court in the year 2017. However, from 26.06.2006 till the issuance of notice in the month of November, 2020, at no stage, there had been any intimation given to the petitioner on the part of the respondent. Least that could be expected from the authorities, more particularly, in wake of the circular of CBEC Circular No.1053/2/2017-CX dated 10.03.2017 as provided in paragraphs 9.4 of the said circular is to formally communicate to the party about transferring the matter to the call book, as held by the Apex Court. Even without such circular also, it is expected of the authorities that it cannot, on its own, place the matter in a call book without the assessee knowing as to what was happening at the end of the authorities. Transparency is the hallmark of every system and, more particularly, the authorities is obligated to adopt transparency, while dealing with citizens and with the technological advancement, it is much easier to communicate. Assuming that in the year 2006 and 2007, the information technology was at its nascent stage, that would not, in any manner, take away the responsibility of the authorities to intimate the assessee, who would be waiting for the adjudication of the show cause notice and the same cannot work as a Democle's Sword for the parties, merely because the authorities wield the power. Correspondingly, it also has an obligation to discharge such powers with extreme sense of responsibility. 21. The Court also notices that not only the factory of the petitioner had been closed, but the registration also had been surrendered with the permission of the respondent authority and the factory has been sold off in the year 2012. It is virtually impossible for anyone to then defend as the respondent itself does not have the papers and it was asking for the reply of the respondent. Even if that aspect is not considered, expecting the petitioner to adduce the evidence of the closed factory after 15 years is virtually impossible. This would amount to serious prejudice and breach of principles of natural justice and, therefore, also this petition deserves to be allowed noticing that before the Apex Court, limited issue of challenging the circular and subsequently in the case of M/s. Parimal Textiles (supra), the Court also referred that fact and has dismissed the petition. Therefore, there is no reason for this Court not to follow the said decision. 22. For the foregoing reasons, the petition succeeds, the challenge of the petitioner to the communication dated 20.11.2020 is quashed and set aside along with the show cause notice F.No. V(Ch.54)03-10/Dem/2004 dated 16.04.2004. Petition stands disposed of accordingly. No order as to costs. 23. Resultantly the petition is allowed.
O R