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M/s. Tablets (India) Ltd. Versus The Assistant Commissioner, B Division, Chennai

2018 (1) TMI 531 - MADRAS HIGH COURT

Validity of demand / show cause notice - SCN issued based on audit objections - Benefit of N/N. 29/88 Central Excise dated 01.3.1988 - Clearance of Tablets - Held that: - Admittedly, the reason for impossibility of adjudicating the show cause notices cannot be put against the assessee, as the Department was contesting the audit objections. Therefore, this Court is convinced that the reasons contained in the counter affidavit as well as in the additional counter affidavit do not justify the actio .....

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s, case laws on the subject and relevant circulars of the Board, if any. - Petition allowed. - Writ Petition Nos. 8881 & 9870 to 9872 of 2017 & WMP. Nos. 9789, 9790 & 10859 to 10864 of 2017 - Dated:- 2-1-2018 - T. S. Sivagnanam, J. For the Petitioner : Mr. T. Ramesh For the Respondent : Mr.Rabu Mahohar, SPC and Dr.S.Seethalakshmi, SPC ORDER Heard both. By consent, the writ petitions are taken up for joint disposal. 2. The petitioner is a company registered under the Companies Act, 1956, eng .....

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ers on merits. 4. The preliminary objection raised by the Revenue is not impressive for the reason being that the show cause notices are dated 14.11.1995 and 09.12.1995 and that the adjudication is sought to be done in February 2017. Thus, this Court is inclined to consider as to whether the action initiated by the Department at this juncture during February 2017 to adjudicate the show cause notices issued in the year 1995 is just and proper. 5. The petitioner availed the benefit of exemption no .....

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and the diluent in question called as di calcium phosphate used in the manufacture of the tablets concerned is not only found to be a calcium supplement, but also an active ingredient. 6. Therefore, the respondent proposed to deny the benefit and disallow the claim for exemption as per Notification No.29/88 and called upon the petitioner to show cause as to why the differential duty on the clearance of the tablets concerned during the period between April 1992 and February 1994 should not be dem .....

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A of the Central Excise Act, 1944, the duties, which have not been levied or not paid or short-levied or short-paid or erroneously refunded, can be recovered. However, the Statute provides a time limit, within which, such proceedings are to be initiated under Sections 11A(11)(a) and (b), which read as follows : 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 c .....

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the Revenue would contend that both in Clauses (a) and (b) of Section 11A(11) of the said Act, it has been provided that time limit has to be adhered to only in cases where it is possible to do so and not a rigid time frame is fixed for the Central Excise Officer to effect recovery of duties not levied or not paid or short levied or short paid or erroneously refunded. Thus, the respondent seeks to justify their action in attempting to adjudicate the show cause notices after a period 22 years by .....

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gned show cause notices. The settled legal principle is that when the correctness of an order is tested by a Court in a Writ of Certiorari, the respondent, defending such an action, is entitled to rely upon as to what has been stated in the order, which is sought to be set aside and that the respondent cannot substitute fresh reasons in the form of a counter affidavit. 12. However, in the instant case, the respondent seeks to substitute reasons not only by way of a counter affidavit alone, but a .....

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interesting to note from the counter affidavits is that the Department/Assessing Officer did not accept the audit objections, but contested the same. In other words, the Department was of the firm view that the availment of the benefit of the said exemption notification as approved by the Department in the petitioner's case was proper. Nevertheless, on such contest, the audit objections were converted into Statement of Fact Verification (SFV). This conversion appears to have taken place dur .....

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as kept in dark and was not intimated about these proceedings, which were taking place administratively. For 22 years, the matters remained in cold storage and all of a sudden, a notice was issued to the petitioner on 28.2.2017 directing them to appear for a personal hearing on 22.3.2017. This has necessitated the petitioner to come before this Court. 15. When the cases came up for hearing on the earlier dates, this Court directed the respondent to file an affidavit to show as to whether the tra .....

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e seen as to whether this could be a reason for not being able to pass an order within the time permitted under Section 11A(11)(a) of the said Act. 16. Admittedly, the reason for impossibility of adjudicating the show cause notices cannot be put against the assessee, as the Department was contesting the audit objections. Therefore, this Court is convinced that the reasons contained in the counter affidavit as well as in the additional counter affidavit do not justify the action in keeping the im .....

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e of the cargo and five years of the issuuance of the show cause notice, which cannot be considered to be reasonable. The Hon'ble Division Bench observed that though the Statute does not prescribe a period of limitation for passing an order of adjudication, the law is well settled that anything, in respect of which, no period of limitation is prescribed, should be done at least within a reasonable time and that what is reasonable time would depend upon the facts and circumstances of each cas .....

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tion order for 17 long years and that the petitioner therein cannot be faulted for approaching the Court belatedly. The explanation, which was offered by the Revenue before the Court that they were unable to trace the file was rejected and it was held that the law postulates early end to such proceedings and the fact that there is no period of limitation prescribed does not mean that the proceedings initiated could be concluded at the sweet will and fancies of the Department. The case on hand is .....

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was not done. Thus, it is clear that the respondent, who had been then adjudicating the proceedings, proceeded with the adjudication despite the fact that they were contesting the audit objections. The reason now sought to be given for resurrecting the matter after 22 years is absolutely fallacious and cannot be accepted. Hence, the impugned show cause notices are liable to be quashed. 20. It is important to note that the Central Board of Excise and Customs issued a circular bearing Circular No. .....

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icated to the assessee in terms of the provisions of Section 37C of the Central Excise Act, 1944. 21. It is also important to note that in paragraph 4 of the additional counter affidavit filed by the respondent, the respondent referred to Board's Circular No.162/73/95/CX dated 14.12.1995 to justify their action by stating that there is no specific mention about the intimation to the assessee in respect of transfer to the Call Book. 22. The reliance on the Board's Circular dated 14.12.199 .....

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