CX - SCNs issued more than decade back and proceedings having not been concluded within reasonable time, same are quashed - words 'where it is possible to do so' in s.11A of CEA, 1944 will not stretch period to decades: HC
By TIOL News Service
CHANDIGARH, AUG 23, 2018: THE petitioner contends that the proceedings in this case deserve to quashed on the primary ground of inordinate delay in disposal thereof.
Inasmuch as the Show cause notices were issued way back in the years 2001, 2002, 2003 and 2006 and thereafter, the department remained silent. The SCNs stem out of the audit objection raised by the AG (Audit), Shimla, pertaining to the year 2000-01.
The petitioner also challenges the Board circular dated 29.9.2016.
It is submitted by the petitioner that sub-section (11) of Section 11A of the CEA, 1944 mandates that, as far as possible, in normal cases, the proceedings should be concluded within a period of six months, whereas in the case of fraud, collusion, etc., the period prescribed is one year. In the case in hand, the proceedings are pending for the last more than 16 years when fresh notice for date of hearing was issued on 03.05.2017.
Reliance is placed in support upon the judgment of Gujarat High Court in Siddhi Vinayak Syntex Private Limited - 2017-TIOL-911-HC-AHM-CX wherein the order passed 17 years after the issuance of show cause notice was set aside. Further, the SLP filed by the department was also dismissed by the apex court on 28.07.2017. The decision in Parimal Textiles - 2017-TIOL-2395-HC-AHM-CX, which is to the same effect is also relied upon. Furthermore, the decision of the apex court in State of Punjab vs Bhatinda District Co-op. Milk P. Union Limited - 2007-TIOL-176-SC-CT, where period of five years was held to be reasonable in the absence of any time provided in the Act. Nonetheless, in the present case, maximum period provided is one year and, therefore, this is all the more reason to quash the show cause notices, the petitioner submitted.
The Counsel for the Revenue submitted that since the Audit objection was contested by the department, as per Circular No. 385/18/98/CX dated 30.3.1998, the cases were transferred to the call book; that Section 11A only provides that order should be passed within the period prescribed, as far as possible; that there is no definite time limit prescribed; that in any case, the petitioner will not suffer any prejudice as he will be afforded due opportunity before passing any order against him; that pursuant to the revised Circular No. 1023/11/2016-CX dated 8.4.2016 the matters which were transferred to the call book have now been taken up for adjudication and thereafter notices had been issued to the petitioner for hearing; that the delay in the cases where the revenue of the department is involved, should not be treated as fatal.
The High Court considered the submissions and after extracting the decisions cited by the petitioner inter alia observed -
++ Section 11A(11) of the Act provides that Central Excise Officer shall determine the amount of duty within six months in case notice has been under Sub-section 1 thereof, whereas in the case of fraud, collusion, etc., the period prescribed is one year. No doubt, the words 'where it is possible to do so' have been used, however, that will not stretch the period to decades as is in the cases in hand.
++ We find that the notices in the present cases having been issued more than decade back and the proceedings having not been concluded within reasonable time, the same deserves to be quashed.
The petitions were disposed of.
(See 2018-TIOL-1686-HC-P&H-CX)
