Case Law Details
Adani Ports And Special Economic Zone Ltd. Vs Union Of India (Gujarat High Court)
Conclusion: Demand notice demanding duty to the tune of Rs. 25,03,414/- on the basis of bill of entries filed for imported second hand equipment on the ground that assessee had contravened the provisions of DFSECC Scheme benefit of exemption under the Notification No.54/2003 was not sustainable as after issuance of demand notice, no steps had been taken by Authorities in furtherance of the aforesaid notice and almost after 11 years, assessee would be justified in forming a bonafide belief that the demand notice must have been dropped.
Held: Assessee-company was engaged in the business of developing, operating and maintaining the Port and Port based related infrastructure facilities, including multi product Special Economic Zone. In the year 2004, it imported certain second hand equipment’s, i.e. capital goods/professional equipments. This led to issuance of the Demand Notice dated 2.8.2007, demanding duty to the tune of Rs.25,03,414/- on the basis of bill of entries filed for imported second hand equipment. It had been alleged that assessee – company in spite of availing the benefit of Notification No.27/2002, had debited the same duty under DFCE Certificate in terms of Notification No. 54/2003 – Cus., dated 1.4.2003. In the Demand Notice, it was the case of Revenue that the capital goods imported by assessee–company on re-export basis and assessed to duty at concessional rate under Notification No.27/2002, the ownership of the goods was not vested in assessee and in view of the condition No.2 of the Notification No. 54/2003 dated 1.4.2003 as amended, the goods so imported against the license issued to assessee-company should not be transferred or sold. Assessee had contravened the provisions of DFSECC Scheme benefit of exemption under the Notification No.54/2003 awarded was not admissible. It was held that the goods in question under import had not been transferred or sold to any other person, but the same had been re-exported after their actual use in the premises of assessee–company. Further, held that the petition deserved to be allowed by quashing the Demand Notice dated 2.8.2007 considering the aspects, firstly, that after the issuance of Demand Notice dated 2.8.2007 and filing of the reply dated 8.10.2007, no steps worth the name had been taken by the Revenue in furtherance of the aforesaid notice; secondly, that no fault had been attributed to assessee for the delay in adjudication of the notice; thirdly, that almost after 11 years, assessee would be justified in forming a bonafide belief that the notice dated 2.8.2007 by now must have been dropped; fourthly, that to expect the petitioners to preserve the relevant document and evidence, in absence of any intimation of keeping the notice in abeyance, is an expectation too far fetched; and lastly, for the petitioners to gather all the records and in absence of sufficient record/assistance of the concerned employees/officers working at the relevant point of time, it would not be possible for the petitioners to defend the case properly.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. With the consent of the learned advocates for the respective parties, the matter is taken up for final disposal.
2. By this petition, inter alia,under Article 226 of the Constitution of India, the petitioners have prayed for quashing and setting aside the impugned Less Charge Demand Notice being F.No.B/E No.F-1434./02.11.04 dated 2.8.2007.
3. The brief facts of the case are that the petitioner No.1 – company is, inter alia,engaged in the business of developing, operating and maintaining the Port and Port based related infrastructure facilities, including multi product Special Economic Zone.
3.1 On 1.3.2002, the Central Government issued a Notification No.27/2002 by which, leased machinery, equipment and tools temporarily imported for execution of contract were eligible for concessional rate of duty at the rate of 15% of the aggregate duties of customs, i.e. total duty leviable under the Customs Act, 1962 (hereinafter referred to as ‘the Act of 1962’), if they are re-exported within six months. The said notification was followed by another Notification No.54/2003 dated 1.4.2003, exempting spares, office equipments and furniture, professional equipments and consumables, but excluding agricultural and dairy products, when imported into India against a duty free service entitlement credit certificate issued under paragraph 3.8 of Export and Import Policy. Yet another Circular No.59/2004 dated 21.10.2004 was issued by the Government of India pertaining to the new schemes under Foreign Trade Policy for the period 2004 – 2009.
3.2 It is the case of the petitioner No.1 – company that in the year 2004, it imported certain second hand equipments, i.e. capital goods/professional equipments, more particularly, as mentioned in the Less Charge Demand Notice dated 2.8.2007 (hereinafter referred to as ‘the Demand Notice’). This led to issuance of the Demand Notice dated 2.8.2007, demanding duty to the tune of Rs.25,03,414/- on the basis of bill of entries filed for imported second hand equipment. It has been alleged that the petitioner No.1 – company in spite of availing the benefit of Notification No.27/2002, have debited the same duty under DFCE Certificate in terms of Notification No.54/2003 – Cus., dated 1.4.2003. In the Demand Notice, it is the case of the Revenue that the capital goods imported by the petitioner No.1 – company on re-export basis and assessed to duty at concessional rate under Notification No.27/2002, the ownership of the goods was not vested in the petitioner and in view of the condition No.2 of the Notification No.54/2003 – Cus., dated 1.4.2003 as amended, the goods so imported against the license issued to the petitioner No.1 company shall not be transferred or sold. It is alleged that in view of the same, the petitioner has contravened the provisions of DFSECC Scheme benefit of exemption under the Notification No.54/2003 awarded was not admissible.
3.3 In response to the Demand Notice dated 2.8.2007, that the petitioner No.1 – company filed its reply dated 8.10.2007, inter alia, denying all the allegations levelled in the notice. It clarified that the goods in question under import have not been transferred or sold to any other person, but the same have been re-exported after their actual use in the premises of the petitioner No.1 – company. It denied that there was any violation of the conditions of Notification No.54/2003.
3.4 It is averred that after issuance of the Demand Notice dated 2.8.2007 and filing of the reply by the petitioner on 8.10.2007, nothing was heard from the authorities concerned. It is the say of the petitioners that approximately 11 years have passed; however, no steps have been taken by the concerned respondent for proceeding with the adjudication of the Demand Notice dated 2.8.2007, that the petitioner No.1 – company is constrained to file the present petition.
4. The respondents, apropos the issuance of the notice by this Court, have filed the counter. It has been stated that the Demand Notice dated 2.8.2007 has been issued to the petitioner No.1 – company on the ground that it had contravened the provisions of DFSECC Scheme and benefit of exemption under the Notification No.54/2003. Owing to the said contravention, the petitioner has been required to pay the duty amounting to Rs.25,03,414/- under Section 28 of the Act of 1962 together with interest. It has been further stated that in spite of availing the benefit of the Notification No.27/2002, the petitioner No.1 – company had debited the same duty under the DFCEC license in terms of Notification No.54/2003 dated 1.4.2003. It is also the case of the respondent authorities that since the capital goods imported by the party on re-export basis and assessed to duty at concessional rate under Notification No.27/2002,, ownership of the goods was not vested in the petitioner No.1 – company and though condition No.2 provides for the certificate and goods imported against it shall not be transferred or sold, the petitioner, prima facie, have contravened the said condition. Accordingly, the petitioner was issued Demand Notice dated 2.8.2007, requiring the petitioner No.1 – company to deposit the duty amount to the tune of Rs.25,03,414/- as per the provisions of Section 28 of the Act of 1962.
4.1 So far as the inaction on the part of the respondent authorities for not adjudicating the Demand Notice dated 2.8.2007 is concerned, it has been stated that due to reorganization of the department, the then office of the Joint Commissioner of Customs, has been reorganized/upgraded into the office of Principal Commissioner of Customs, Customs House, Mundra. It is being further stated that during the shifting of the office, the documents pertaining to the Demand Notice were misplaced. However, the office had tried to find out the said documents, the same are not traceable. In the reply, it has been desired that the petitioner instead of approaching this Court, ought to have approached the respondent authorities for settlement of the issues. The reply concludes by alleging that the petitioner has violated the various provisions and the matter requires adjudication by the competent officer of the Customs and therefore, the petition may not be entertained.
5. Heard Mr. Paritosh Gupta, learned advocate for the petitioners and Mr. Parth Divyeshvar, learned Central Government Standing Counsel for the respondents.
6. Paritosh Gupta, learned advocate for the petitioners has submitted that the issue involved in the present writ petition, is no longer res integra in principle inasmuch as, this Court in various judgments, have clearly held that if the show-cause notices are issued and if the proceedings are kept in the call book without intimating the noticee; revival of the proceedings after a long delay, would be in complete breach of the principles of natural justice and the show-cause notice and the consequent proceedings, would not sustain.
6.1 Reliance has been placed on the judgments, viz. (i) Siddhi Vinayak Syntex Pvt. Ltd. vs. Union of India reported in 2018 (362) ELT A122 (SC); (ii) Pooja Tex Prints Pvt. Ltd. & Ors. vs. Union of India & Ors. reported in 2018 (9) G.S.T.L. 129 (Guj.); (iii) Parimal Textiles vs. Union of India reported in 2018 (8) G.S.T.L. 361 (Guj.); (iv) Shivkrupa Processors Pvt. Ltd. vs. Union of India reported in 2018 (362) E.L.T. 773 (Guj.); (v) Alidhara Textiles Engineers Ltd. & Ors. vs. Union of India & Ors. reported in 2018 (360) E.L.T. 493 (Guj.).
6.2 It is next submitted that so far as the judgment rendered by this Court in the case of Siddhi Vinayak Syntex Pvt. Ltd. (supra) is concerned, though the Special Leave to Appeal (Civil) has been filed before the Apex Court, the Apex Court has issued a limited notice to the question as to whether Circular No.162/73/95-CX, dated 14.12.1995 issued by the Central Board of Excise and Customs, Department of Revenue, Ministry of Finance, Government of India is in conformity/authorized by the provisions of Section 37B of the Central Excise Act, 1944. In view of the notice having been issued for the limited purpose, rest of the observations made by this Court deserves to be followed in the present case as well.
6.3 It is submitted that clearly and not disputed by the respondent authorities, the Demand Notice was issued on 2.8.2007 and thereafter, the respondent, has not addressed a single communication to the petitioners. Moreover, even after the reply dated 8.10.2007 filed by the petitioners, no communication worth the name has been addressed by the respondent authorities to the petitioner No.1 – company.
6.4 It is further submitted that as is evident from the contents of the affidavit-in-reply, the only ground which has been put forth by the Revenue is that owing to the reorganization of the department and upgradation of office of the Joint Commissioner of Customs to the office of Principal Commissioner of Customs and during the shifting of the office, the documents pertaining to the Demand Notice might have been misplaced. Except the said ground, nothing has been stated in the reply, substantiating the inaction on its part.
6.5 It is next submitted that it is nobody’s case that the Demand Notice dated 2.8.2007 was kept in abeyance, except the reasons mentioned in paragraph 3.3 of the reply. By now, 11 years have already been passed, however, no steps have been taken by the respondents to proceed with the adjudication proceedings. However, no fault can be attributed to the petitioners for this delay and therefore, the respondents should not be permitted to reopen the proceedings at such a belated stage inasmuch as, the issue now stands squarely covered by the principle enunciated in the various judgments of this Court.
6.6 It is, therefore, urged that in view of the issue having been covered by the principle enunciated by the various judgments and no distinction having been carved out by the respondents, the petition deserves to be allowed only on this limited ground.
7. Mr. Parth Y. Divyeshvar, learned Central Government Standing Counsel, while referring to the merits, submitted that though it is the case of the petitioner No.1 – company that the goods in question under import have not been transferred or sold and that the same have been re-exported after their actual use in the premises of the petitioner No.1 – company, none of the documents have been supplied by the petitioner No.1 – company supporting such stance.
7.1 It is next submitted that had the intention of the petitioner No.1 – company been bonafide, it would have approached the department for settling the issue instead of approaching this Hon’ble Court praying for the quashing of the Demand Notice dated 2.8.2007. It is submitted that as discussed, the petitioner No.1 – company has violated the various provisions and therefore, the matter requires adjudication at the hands of the competent officer of the Customs. It is thus, urged that in view of the explanation offered in the counter, the petition deserves to be dismissed without grant of any relief. No other and further submissions have been made by the learned Central Government Standing Counsel.
8. An issue which arises for consideration of this Court is as to whether the respondent authorities could now be permitted to adjudicate the Demand Notice dated 2.8.2007, more particularly, when no intimation was issued to the petitioner No.1 – company communicating about keeping the adjudication of the Demand Notice in abeyance. The issue is no longer res integrain principle.
9. This Court, in the case of Siddhi Vinayak Syntex Pvt. Ltd. (supra) has in detail held and observed that where the department has kept the proceedings in call books, it would be impermissible for the department to reactivate the same after years together and more particularly, when the noticee has not been informed or communicated about transferring the matter to the call book and therefore, the action would be in breach of the principles of natural justice. The relevant paragraphs 23 to 27 of the said judgment, read thus:-
“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 und1er 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 herein above, 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 3.8.1998cannot 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 herein above, 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. 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.AHMEXCUS-003-040-15-16 dated 11.3.2016 as well as the Show Cause Notice F.No.V.54/15-29/OA/98 dated 3.8.1998 are hereby quashed and set aside. Rule is made absolute with no order as to costs.”
10. The decision in the case of Siddhi Vinayak Syntex Pvt. Ltd. (supra) has been challenged by the Union of India before the Supreme Court of India, wherein the Supreme Court of India has passed following order dated 28.7.2017.
“Heard the learned counsel for the petitioners and perused the relevant material.
Exemption from filing certified copy of the impugned order is granted.
Issue notice limited to the question as to whether Circular No.162/73/95-CX dated 14th December, 1995 issued by the Central Board of Excise and Customs, Signature Not Verified Department of Revenue, Ministry of Finance, Government of India is in conformity/authorized by the provisions of Section 37B of the Central Excise Act, 1944 read with the relevant provisions of the Central Excise Rules.”
Clearly, the notice in the proceedings before the Apex Court, has been issued only for the limited purpose of determining the question as to whether the Circular issued by the Central Board of Excise & Customs, is in conformity/authorised by the provisions of Section 37B of the Act of 1962. Also, the co-ordinate bench of this court in the case of Parimal Textiles (supra) while relying on the judgment in the case of Siddhi Vinayak Syntex Pvt. Ltd. (supra) has in paragraph 7 observed that the judgment of the High Court rendered in the identical facts is not disturbed by the Supreme Court of India insofar as its main impact on quashing the show-cause notice and the Order-in-Original is concerned. The co-ordinate bench, while allowing the writ petition, quashed and set aside the show-cause notices which were issued in the year 2000; where the proceedings were kept in call-book, without intimating the noticees. The relevant paragraphs 7 and 8 are reproduced herein below for ready reference:-
“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 C.B.E. & C. 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 judgment 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 order-in-original is concerned. Even without going into the question whether the circular of C.B.E. & C. was valid or not, the judgment 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.
8. In the result, in all cases, the show cause notices followed by the order-in-original are set aside. All petitions are disposed of accordingly. ”
11. The judgment in the case of Parimal Textiles (supra) was challenged before the Apex Court, which dismissed the Special Leave Petition (Civil) No.008638/2018 (Diary No.7026/2018). The Apex Court has 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.”
12. In another decision in the case of Pooja Tex Prints Private Ltd. (supra), this Court, while allowing the writ petition, quashed the Orders-in-Original. In the said case, the show-cause notice was issued in the year 2002. Reply was filed by the petitioner therein, however, no hearing took place till the year 2016. During the interregnum, proceedings remained dormant and the reason for keeping the proceedings in abeyance or the reason for reactivation were not communicated to the petitioners therein. The unit of the petitioners was closed down in the year 2006 when the competent authority activated the show-cause notice proceedings. The co-ordinate bench, as aforesaid, allowed the writ petition; whereby, Order-in-Original came to be quashed and set aside.
13. Yet in another decision in the case of Shivkrupa Processors Pvt. Ltd. (supra), the co-ordinate bench while quashing the notice issued in the year 2002 as well as the Order-in-Original, followed the aforesaid principle enunciated by the co-ordinate bench. Paragraph 10 of the judgment, reads thus:-
“10. We have heard learned counsels for the parties and perused the documents on record. The undisputed aspect that emerged from the proceedings would unequivocally indicate that notice dated 22.8.2002 did not result into any order for quite sometime and as per say of respondent, it was consigned to the call book as per the circulars prevalent. The authority appeared to have proceeded with broad aspect of the matter that non-receipt of the said notice cannot be said to be established by the noticee and based thereupon, recording findings that concerned authorized person of the petitioner Company, who also is the signatory to this petition, did receive the notice and therefore, it cannot be in any manner correct on the part of the petitioners to say that there was no knowledge of existence of show cause notice dated 22.8.2002. We are of the view that this contention needs to be examined in light of the principles underlying the law, which is by now settled that inordinate delay in adjudication results into denial of principles of natural justice and that proposition cannot be said to be nonest in the present proceedings. The receipt of notice dated 22.8.2002 and findings recorded thereon would pale into insignificance, if the same is to be viewed in light of observations of the Court in case of Siddhi Vinayak Syntex Pvt. Ltd (supra), Alidhara Textile Engineers Ltd. (supra) and other decisions cited as bar. “
A similar view, has been taken by the co-ordinate bench in other judgments, namely, (i) Alidhara Textiles Engineers (supra); and (ii) Meghmani Organics Ltd. vs. Union of India reported in 2019 (368) E.L.T. 433 (Guj.) etc.
14. Recently, this Court in the case of Yangir Properties and Trading vs. Union of India rendered in Special Civil Application No.16615 of 2020, allowed the writ petition. In the said case, the show-cause notice was issued in the year 2004 and was decided ex-parte on 8.8.2005. The said order was carried in appeal before the CESTAT, which remanded the matter to the Commissioner, to be decided afresh. The factory of the petitioner therein was thereafter closed in the year 2012 followed by surrendering of registration. It was almost after 15 years of the remand by the Appellate Tribunal, that the authorities therein scheduled the personal hearing in the year 2020. The grievance on the part of the petitioner was that purported adjudication of the show-cause notice after inordinate delay of 15 years was, inter alia, without jurisdiction and in violation of the principles of natural justice. This Court, observed that 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; if there is unexplained delay in proceeding with the adjudication of the show cause notice without any cause attributable to the parties concerned. Relevant paragraphs 16, 20 and 21 are reproduced herein below:-
“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.
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 2006and 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.”
15. At this stage, one more aspect is required to be considered that is, the judgments cited are dealing with the provisions of Section 11A of the Central Excise Act, 1944; whereas, in the present case, the proceedings have been initiated under Section 28 of the Act of 1962. Notably, Section 11A of the Central Excise Act, 1944 as well as Section of the Act of 1962 are more or less identically worded. Therefore, in view of similarity of the provisions, namely, Section 11A as well as Section 28, the principle laid down in the aforesaid judgments would apply on all fours to the proceedings under Section 28 of the Act of 1962. Also, the respondents, could not dispute that the issue in the present writ petition is distinct to the issue obtaining in the said cases. The learned Central Government Standing Counsel has also not been able to dispute that the principle laid down in the aforesaid judgments cannot be made applicable to the facts of the present case.
16. Clearly, the petitioners by this petition, have challenged the Demand Notice dated 2.8.2007 mainly on the ground that after the issuance of said notice, no steps worth the name have been taken by the respondent authorities for adjudicating the said notice. Perceptibly, not a single communication has been addressed by the respondent to the petitioners, intimating it about keeping the show-cause notice in abeyance. Furthermore, in the reply filed by the respondent, limited explanation is offered in paragraph 3.3 to the effect that due to reorganization of the department, shifting of the office documents have taken place, and during such shifting, the documents might have been misplaced. It is further averred that the office has tried to find out the documents related to the concerned Demand Notice dated 2.8.2007, however, the same are not traceable. Clearly, the Revenue has thoroughly failed to justify its lapse for not adjudicating the Demand Notice dated 2.8.2007 for more than 11 years. Quite apart, as is discernible from the contents of paragraph 3.3 of the reply, during the shifting of the office, papers pertaining to the Demand Notice dated 2.8.2007 are not traceable. Therefore, allowing the Revenue at this stage to proceed with the adjudication of the notice dated 2.8.2007, would be an exercise in futility, in breach of the principles of natural justice and against the principle laid down by this Court.
17. Hence, the petition deserves to be allowed by quashing the Demand Notice dated 2.8.2007 considering the aspects, firstly, that after the issuance of Demand Notice dated 2.8.2007 and filing of the reply dated 8.10.2007, no steps worth the name have been taken by the Revenue in furtherance of the aforesaid notice; secondly, that no fault has been attributed to the petitioners for the delay in adjudication of the notice; thirdly, that almost after 11 years, the petitioners would be justified in forming a bonafide belief that the notice dated 2.8.2007 by now must have been dropped; fourthly, that to expect the petitioners to preserve the relevant document and evidence, in absence of any intimation of keeping the notice in abeyance, is an expectation too far fetched; and lastly, for the petitioners to gather all the records and in absence of sufficient record/assistance of the concerned employees/officers working at the relevant point of time, it would not be possible for the petitioners to defend the case properly.
18. Under the circumstances, the Demand Notice being F.No.B/E No.F-1434./02.11.04 dated 2.8.2007 deserves to be quashed and set aside and is hereby quashed and set aside.
19. The petition is allowed to the aforesaid extent. No order as to costs.
Author Bio
