TMI Blog2017 (3) TMI 1534X X X X Extracts X X X X X X X X Extracts X X X X ..... ence adjudication proceedings after such long years. Revival of proceedings after a long time gap without any proper explanation therefor, is unlawful and arbitrary. 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? - Held that: - 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 general impression in the entire textile trade that even the change or amendment in the above referred Chapter Note did not render such activity liable to excise duty. The Draw Winders Association of India, of whom the petitioner company was also a member, obtained a legal opinion from a renowned firm of Advocates about this process and the opinion was given to the effect that there was no change in the form of base yarns after Draw Winding process and, therefore, Drawn and Wound yarn were not in the nature of excisable goods and there was no duty liability also. It appears that in view of the general understanding, the petitioner company had not been paying excise duty on Drawn Wound Yarn, but this activity was declared in the classification list filed by the petitioner in accordance with rule 173B of the erstwhile Central Excise Rules, 1944. It appears that the Central Excise authorities conducted certain i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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, the petitioner was unaware about such adjudication order also. 5. It is further the case of the petitioner that the Superintendent of Central Excise visited the site of the Registrar of Companies (ROC) and found the name and address of the Chartered Accountant who was the statutory auditor of the petitioner company at the relevant time. Thereafter, the said Chartered Accountant was contacted by the Superintendent to inquire about the details of the petitioner company and that the Chartered Accountant could obtain the mobile number of Shri Pravinchandra R. Joshi through his brother-in-law and furnished the mobile number to the Superintendent. The Superintendent of Central Excise, thereafter, contacted Shri Joshi on his mobile and informed him about the Commissioner's order and payment of duties etc. to be made in that regard. In view of the telephonic discussion between Shri Joshi and Superintenden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, it was pointed out that no reasons are disclosed in the order for reviving the proceedings after such a long and unreasonable delay and there is also no reason stated in the order as to why the adjudication was not conducted and completed during Financial year 1999-2000. It was submitted that revival of proceedings after a time gap of seventeen years without disclosing any reason for the delay is not a mere matter of impropriety. It was contended that when the show cause notice proceedings do not culminate into an adjudication order within a reasonable time, the long unexplained delay would vitiate the proceedings; inasmuch as such delay would result in the relevant documents being lost and misplaced as regards the assessee, thereby causing prejudice. 7.2 Reliance was placed upon the decision of the Bombay High Court in the case of Shirish Harshavadan Shah v. Deputy Director, Enforcement Directorate, Mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 compulsions held up the adjudicatory process for so long. In the absence of such explanation, revival of the proceedings would be unlawful and arbitrary. The duty to give reasons is a sine qua non of any executive action, without which the action is liable to be struck down. Mr. Dave submitted that in the facts of the present case also nothing had been disclosed in the impugned order as to why the proceedings have been revived after a time gap of almost fifteen years. It was submitted that absence of such explanation, would render the revival of the proceedings unlawful and arbitrary and hence, the impugned order is required to be quashed and set aside. 7.5 Reference was also made to the decision of the Supreme Court in the case of Government of India v. Citedal Fine Pharmaceuticals, Madras, (1989) 42 E.L.T. 515 (SC), wherein the court held thus: 6. Learned counsel appearing for the respondents urged that Rule 12 is unreason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 of the court was invited to the fact that the Larger Bench of the Appellate Tribunal dismissed the Department s appeal in the case of M/s. Siddharth Petro Products v. CEC, Surat, against which the Department filed an appeal before this High Court, and a Division Bench of this court restored the appeal before the Tribunal; and that by an order dated 18.6.2013 passed in the case of Shri Pradeep Kumar Shyam Shukla, M/s. Siddharth Filaments Private Limited and M/s. Siddharth Petro Products Limited, the appeal was decided against the revenue. It was submitted that by a letter dated 20.2.2014, the Chief Commissioner, Vadodara Zone informed them that the order of the Appellate Tribunal had been accepted. It was submitted that in view of the fact that a similar issue was pending before the Tribunal, the present case was transferred to the call book and upon the dismissal of the appeal by the Tribunal, the show cause notice was retrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how 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 which it was otherwise required to make. It was urged that the proceedings pursuant to the show cause notice were never closed and that, at best, if the court comes to the conclusion that there has been breach of principles of natural justice, the court may set aside the impugned order and remand the matter, but the entire proceedings may not be quashed. 8.3 In support of such submission the learned counsel referred to the decision of this court in the case of Waghbakriwala Rayons v. Commissioner of Cental Excise, Surat-I, (2016) 331 E.L.T. 433 (Guj.), wherein the court had remanded the matter to the adjudicating authority to decide the case afresh in de novo adjudication after providing all relied upon documents to the petitioners and after extending them an opportunity of personal hearing. 9. In rejoinder, Mr. Paresh Dave, learned advocate for the petitioner submitted that insofar as the question of alternative remedy is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 contrary, contemplates speedy disposal of cases. Reference was made to the provisions of section 35A of the Act, which provides for procedure of appeal before the Commissioner (Appeals) and more particularly, to sub-section (4A) thereof, which provides that the Commissioner (Appeals) shall where it is possible to do so, hear and decide every appeal within a period of six months from the date on which it is filed. Reference was also made to the provisions of sub-section (2A) of section 35C of the Act, which provides that the Appellate Tribunal shall, where it is possible to do so, hear and decide every appeal within a period of three years from the date on which such appeal is filed. 9.2 Reliance was placed upon the decision of the Supreme Court in the case of Abdul Rehman Antulay v. R. S. Nayak, (1992) 1 SCC 225, and more particularly to the contents of paragraph 86 thereof, wherein the Supreme Court has laid down certain pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner 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 presently kept the appeal in call book as per the circular; in other words, the Commissioner has kept the hearing of the appeal in abeyance sine die. The court observed that this was presumably because the Department s appeal against the judgment of the Tribunal, which was in favour of the petitioner was pending before the High Court. The court, however, noticed that while admitting the appeal, the High Court had rejected the Department s stay application and was of the opinion that when, thus, the court refused to stay implementation of the judgment of the Tribunal, benefit thereof must flow in favour of the assessee, who succeeded. The court held that the action of the Commissioner in keeping the appeal against the order of the adjudicating authority refusing to grant refund would be an indirect attempt to deny the benefit to the petitioner flowing from such judgment of the Tribunal when the High Court refused to grant protection. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue 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, accordingly, urged that the petition being devoid of merits, deserves to be dismissed. 11. From the facts and contentions noted hereinabove, as well as on a perusal of the impugned order, it appears to be an accepted position that the show cause notice was issued on 3.8.1998, pursuant to which the petitioner filed its written submissions under letter dated 15.3.2000; however, prior thereto, two Superintendents were cross-examined on 16.2.1999. But, after the petitioner filed its written submissions, for fifteen years no further action was taken by the respondents. It is the case of the petitioner that it was given to understand that similar cases for demanding duty on Draw Winding were dropped in the Surat region and therefore, the cases in Ahmedabad and elsewhere were also closed. In the meanwhile, due to efflux of time, viz., about fifteen years, the petitioner s factory was closed down and possession of the plant and facto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ural 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 Article 226 of the Constitution, except in cases where there is violation of the principles of natural justice, or where the authority concerned lacks jurisdiction or exercises powers in excess of its jurisdiction or does not does not exercise the jurisdiction vested in it. In the present case, the petition filed been filed on the ground that the impugned order is without jurisdiction, as the adjudicating authority has exercised powers beyond a reasonable period of time and that the same is in breach of principles of natural justice. Under the circumstances, if the petitioner is in a position to show that any of the above circumstances are satisfied, it would be entitled to invoke the writ jurisdiction of this court under Article 226 of the Constitution. 13. Another notable aspect of the matter is that in view of the reply filed by the respondents wherein a stand has been taken that the matter has been referred to the call book, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 37C of the Act, it cannot be said that there was no service of notice upon the petitioner. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation 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). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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