Gujarat High Court

Yangir Properties And Trading Ltd vs Union Of India on 12 February, 2021

Bench: Sangeeta K. Vishen

         C/SCA/16615/2020                                         JUDGMENT




            IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

             R/SPECIAL CIVIL APPLICATION NO. 16615 of 2020


FOR APPROVAL AND SIGNATURE:


HONOURABLE MS. JUSTICE SONIA GOKANI

and
HONOURABLE MS. JUSTICE SANGEETA K. VISHEN

==========================================================

1     Whether Reporters of Local Papers may be allowed to
      see the judgment ?

2     To be referred to the Reporter or not ?

3     Whether their Lordships wish to see the fair copy of the
      judgment ?

4     Whether this case involves a substantial question of law
      as to the interpretation of the Constitution of India or any
      order made thereunder ?

==========================================================
                  YANGIR PROPERTIES AND TRADING LTD.
                                Versus
                            UNION OF INDIA
==========================================================
Appearance:
MR DHAVAL SHAH(2354) for the Petitioner(s) No. 1,2
MR NIKUNT K RAVAL(5558) for the Respondent(s) No. 2
NOTICE UNSERVED(8) for the Respondent(s) No. 1
==========================================================

    CORAM: HONOURABLE MS. JUSTICE SONIA GOKANI
           and
           HONOURABLE MS. JUSTICE SANGEETA K. VISHEN

                                Date : 12/02/2021



                                    Page 1 of 43



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                     ORAL JUDGMENT

(PER : HONOURABLE MS. JUSTICE SONIA GOKANI)

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

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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

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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

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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.

     C/SCA/16615/2020                                             JUDGMENT



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

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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,

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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








     C/SCA/16615/2020                               JUDGMENT

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








  C/SCA/16615/2020                                            JUDGMENT

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) E.L.T.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

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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) G.S.T.L.361(Guj.),

Alidhara Textile Engineers Ltd. & Ors. vs.

Union of India, 2017(3)GLH 306,

ShivkurpaProcessors Pvt. Ltd. vs. union of

Inda, 2018 (362) E.L.T. 773 (Guj),

Meghmani Organics Ltd. vs. Union of India

2019(368) E.L.T. 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,

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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)

E.L.T.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) E.L.T. 481(Bom.) , the

Bombay High Court quashed the show cause

notices for inordinate delay of 14 to 17 years in

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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

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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.

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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







  C/SCA/16615/2020                                        JUDGMENT

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

C/SCA/16615/2020 JUDGMENT

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

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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

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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

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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),

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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-

(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

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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

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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).

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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

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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.

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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."

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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







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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

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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

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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.

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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.

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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

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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.

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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.

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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

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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

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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

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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. 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

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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

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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,

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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

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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

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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.

(MS. SONIA GOKANI, J. )

(SANGEETA K. VISHEN,J) SUDHIR