Yangir Properties And Trading Ltd. vs Union Of India on 30 January, 2020

[Cites 10, Cited by 2]

Gujarat High Court

Yangir Properties And Trading Ltd. vs Union Of India on 30 January, 2020

Bench: R.M.Chhaya

        C/SCA/20186/2017                                JUDGMENT



           IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

        R/SPECIAL CIVIL APPLICATION NO.        20186 of 2017


FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE R.M.CHHAYA
and
HONOURABLE MR.JUSTICE VIRESHKUMAR B. MAYANI

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

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 & 1 other(s)
==========================================================
Appearance:
MR DHAVAL SHAH(2354) for the Petitioner(s) No. 1
MR ANKIT SHAH(6371) for the Respondent(s) No. 2
RULE SERVED(64) for the Respondent(s) No. 1
==========================================================

    CORAM: HONOURABLE MR.JUSTICE R.M.CHHAYA
           and
           HONOURABLE MR.JUSTICE VIRESHKUMAR B. MAYANI

                           Date : 30/01/2020

                           ORAL JUDGMENT

(PER : HONOURABLE MR.JUSTICE R.M.CHHAYA) Page 1 of 14 Downloaded on : Mon Jun 15 18:15:36 IST 2020 C/SCA/20186/2017 JUDGMENT

1. By this petition under Article 226 of the Constitution of India, the petitioner has inter alia prayed for the following reliefs "(a) Your Lordships be pleased to issue a Writ 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) 334/Dem/2000 dated 19.03.2004;

(b) Your Lordships be pleased to issue a Writ of Prohibition or a writ in the nature of prohibition or any other writ, order or direction under Article 226 of the Constitution of India prohibiting the Respondents from proceeding with the adjudication of the impugned Show Cause F. No. V(Ch.54) 334/Dem/2000 dated 19.03.2004;

(c) Your Lordships be pleased to issue a writ of Mandamus, or a writ in the nature of Mandamus, or any other appropriate writ, order or direction, directing the Respondents to forthwith refrain from taking any steps or proceedings in pursuance of or in furtherance of impugned Show Cause Notice F. No. V(Ch.54) 3 34/Dem/2000 dated 19.03.2004;

(d) 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 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) 334/Dem/2000 dated 19.03.2004."

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      C/SCA/20186/2017                                        JUDGMENT




2.    This     Court       (Coram    : S.R.       Brahmbhatt       and     A.G.
     Uraizee,           J.J.)   passed      the   following       order        on
     25.04.2018

           "1.   Heard            learned         counsel        for         the
           petitioner.

2. The learned counsel for the petitioner invited the Court's attention to the prayer clause and the fact that show cause notice is sought to be pressed into the service after inordinate delay for no reason and he placed reliance upon the following authorities:

             Sl.                      Citations                    Page Nos.
             No.
                 1       2017(3) GLH 306                           01/04/18

Alidhara Textile Engineers Ltd. vs. Union of India 2 2017(352) ELT 455 (Guj.) 05/13/18 Siddhi Vijayak Syntex Pvt. Ltd.

vs. Union of India 3 MANU/GJ/1996/2017 (SCA/9298 to 1418 9301/2017) 4 2018(8) GSTL 361 (SCA/8940/2017, 1922 89678971/2017) 5 Special Civil Applications No. 2329 18235 of 2017 Shivkrupa Processors Private Limited Vs. UOI

3. In view thereof, the learned counsel urges the Court that the proceedings deserves to be stayed. We note for the proceedings, the Court issued rule on 5.12.2017 which was made returnable on 09.12.2017. Till date, no reply appears to be filed controverting the averments and relief in the matter. In that view of the matter, when the judgment cited at par on the civil aspect holding that the belated Page 3 of 14 Downloaded on : Mon Jun 15 18:15:36 IST 2020 C/SCA/20186/2017 JUDGMENT adjudication in itself to sufficient to cause prejudice the proceedings as prayed for deserves to be stayed by way of interim relief.

4. Hence, Rule returnable on 14th June, 2018. In the meantime, till the final disposal of the appeal, the proceedings pursuant to show cause notice dated 29.03.2004, shall remain stayed.

2. Heard Mr. Dhaval Shah, learned advocate for the petitioner and Mr Ankit S. Shah, learned Central Government counsel for the respondent authorities.

3. The following facts emerge from the record of the petition 3.1 The petitioner Company is inter alia engaged in the manufacture of Polyester Texturised Yarn under Chapter 54 of First Schedule to the Central Excise Tariff Act, 1985 and as per the petitioner, during the period of dispute, the petitioner Company was 100% Export Oriented Unit (EOU).

3.2 It is the case of the petitioner that the petitioner was granted license as provided under section 58 of the Customs Act, 1962 and the manufacturing permission as provided under section 65 of the Customs Act, 1962. It is the case of the petitioner that the petitioner was governed by Exim Policy 1997 2002 and it is the case of the petitioner that the Central Government vide notification No. 2/95 CE dated Page 4 of 14 Downloaded on : Mon Jun 15 18:15:36 IST 2020 C/SCA/20186/2017 JUDGMENT 04.01.1995, in exercise of powers as provided under section 5A of the Central Excise and Salt Act, 1944, exempted all excisable goods specified under the Schedule to the said Act and such exemption was applicable to the goods produced or manufactured in 100% EOU or free trade zone or an Electronic Hardware Technology Park or Software Technology Parks unit and allowed to be soled in India under and in accordance with the provisions of sub para (a), (b), (d) and (h) of para 6.8 of Export and Import Policy. It is the say of the petitioner that the petitioner was also given permission by the Development Commissioner to remove the PTY in DTA on payment of applicable excise duty in terms of para 9.9(b) of the Foreign Trade Policy 1997 2002. As averred by the petitioner, the petitioner had cleared 293455.65 kgs. Of Polyester Texturised Yarn, total value of Rs. 1,31,25,916.78 during the period from July 1999 to March 2000 in Domestic Traiff Area.

3.3 The record no.2 issued notice petitioner touching the exim the case of the notice was replied communication respondent had already Page 5 of 14 id="span_11"> Downloaded on : Mon Jun 15 18:15:36 IST 2020 JUDGMENT all facts and asked for time and also asked for copy of the made earlier by the petitioner. indicates that the show cause in question was transferred to call the respondent no.2 did not the said show cause notice for a than 13 years and the said notice is pending for its till date. The respondent no.2 the authorised person of the that the show cause notice is from call book and the adjudication over in the month of October It is thus the case of the petitioner adjudication after 13 years of of impugned show cause notice in cleared more than 17 years arbitrary and unreasonable and without authority of law and to the binding decisions of the Apex Court as well as this Court and said show cause notice is

4. Mr. Dhaval Shah, learned advocate appearing for the petitioner submitted that the show cause notice impugned in this petition is dated 19.03.2004 and thereafter no adjudication proceedings were conducted or concluded by the respondent no.2 authority within reasonable period and after a long delay of more than 13 Page 6 of 14 Downloaded on : Mon Jun 15 18:15:36 IST 2020 C/SCA/20186/2017 JUDGMENT years, the case was taken up for its adjudication by respondent no.2.

5. Relying upon the judgments of the Apex Court in the case of M/s. Siddhi Vinayak Syntex Pvt. Ltd vs. Union of India and Ors. reported in 2017 (352) ELT 455, M/s. Parimal Textiles Vs. Union of India reported in 2018(8) GSTL 361(Guj.) as well as Alidhara Textile Engineers Ltd. & Ors. vs. Union of India reported in 2017(3) GLH 306, it was contended by Mr. Dhaval Shah that the action of the respondent authority in now adjudicating the show cause notice which came to be issued on 19.03.2004 for the transaction which is more than 17 years old is in gross violation of principles of natural justice. Mr. Shah contended that as per the binding decisions of the Apex Court as well as this Hon'ble Court, the adjudication is now sought to be reopened after unreasonable time of almost 13 years without their being any reason. It was contended by Mr. Shah that the issue involved in this petition is no longer ress integra and the action of the respondent authority is not only beyond reasonable time and delay of more than 13 years, but the same is fatal. Mr. Shah contended that it is not the case of the respondent authority that the petitioner Company is guilty of any malafide or that there is any default by the petitioner Company for the delay in adjudicating the show cause notice. It was contended by Mr. Shah that the show cause notice Page 7 of 14 Downloaded on : Mon Jun 15 18:15:36 IST 2020 C/SCA/20186/2017 JUDGMENT was kept in abeyance in call book without their being any reason and therefore, the impugned show cause notice is now sought to be revived after unreasonable period of more than 13 years, which deserves to be quashed and set aside by allowing the petition.

6. Per contra, Mr. Ankit Shah, learned advocate for the respondent authorities has submitted that the present petition is against the show cause notice and the petitioner company shall be accorded an opportunity of being heard and even shall be permitted to file reply to the show cause notice and hence, the present petition under Article 226 of the Constitution of India is not maintainable. Mr. Ankit Shah, learned Central Government counsel however has contended that the impugned show cause notice issued on 19.03.2004 was kept in call book. Mr. Shah contended that the respondent no.2 authority has appropriately followed the procedure as laid down by the Central Board of Excise and Customs and as per the circulars issued from time to time. Mr. Shah submitted that if the show cause notice was issued on 19.03.2004 and therefore, it cannot be said that the show cause notice and its hearing is in any way going to affect or prejudice the petitioner Company. Mr. Shah contended that by the show cause notice, the petitioner was asked way back in the year 2004 to show cause on various aspects touching the very benefits of the policy Page 8 of 14 Downloaded on : Mon Jun 15 18:15:36 IST 2020 C/SCA/20186/2017 JUDGMENT derived by the petitioner and contended that the respondent authorities are within their right and jurisdiction to reopen the show cause notice and in facts and circumstances of this case, it cannot be said that there is any delay on the part of the respondent authority and Mr. Shah contended that the petition being meritless, deserves to be dismissed.

7. No other or further submissions have been made by the learned advocates appearing for the parties.

8. Having heard the learned advocates for both the parties and on perusal of the record and proceedings of the petition, it would be appropriate to refer to the show cause notice dated 19.03.2004 impugned in this petition. It is an admitted position that the impugned notice is not adjudicated till date. The show cause notice itself shows that the petitioner Company was registered as 100% EOU with Development Commissioner, KFTZ Gandhidham and the same relates to predominantly the goods cleared by the petitioner in DTA between July 1999 to March 2000. The show cause notice also indicates that 30 days time was given to the petitioner Company and the petitioner Company had replied to the same, however the respondent authorities did not adjudicate the show cause notice.

9. This Court in the case of Siddhi Vijayak Syntex Pvt.

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C/SCA/20186/2017 JUDGMENT Ltd. (supra) has observed 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 quasijudicial 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 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 subsection (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 Page 10 of 14 Downloaded on : Mon Jun 15 18:15:36 IST 2020 C/SCA/20186/2017 JUDGMENT 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 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 Page 11 of 14 Downloaded on : Mon Jun 15 18:15:36 IST 2020 C/SCA/20186/2017 JUDGMENT 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."

In Parimal Textile vs. Union of India, relying upon the judgment in the case of Siddhi Vinayak Syntex Pvt. Ltd. (supra), the Division Bench of this Court has observed 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 Page 12 of 14 Downloaded on : Mon Jun 15 18:15:36 IST 2020 C/SCA/20186/2017 JUDGMENT matter that nonreceipt 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."

Similar view is also taken by this Court in Alidhara Textile Engineers Ltd. Vs. Union of India reported in 2017(3) GLH, Pooja Tex Prints Pvt. Ltd. Vs. Union of India & Ors. reported in MANU/GJ/1996/2017 (SCA/9298 to 9301/2017) and Shivkupa Processors Pvt. Ltd. vs. Union of India, SCA No. 18235 of 2017.

10. This Court is of the opinion that the judgments of this Court as discussed hereinabove would squarely apply to the case on hand and therefore, the impugned show cause notice dated 19.03.2004 deserves to be quashed and set aside.

   The       record            clearly              indicates         that          the


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         C/SCA/20186/2017                                                           JUDGMENT




       authorities              kept    the        show cause               notice        in call
       book        for      more        than           13         years          and       without
       informing           the petitioner                   and as averred by the
       petitioner,              which        is     not       controverted                  by     the
       respondent           authorities               and         on    the       contrary           on
       inquiry         made      by the petitioner,                          the petitioner

was informed that the impugned show cause notice has been recalled from the call book and was kept again for its adjudication which is against the principles of natural justice and beyond reasonable period.

11. Resultantly, the impugned notice dated 19.03.2004 deserves to be quashed and set aside and is hereby quashed and set aside. The petition is allowed accordingly. Rule is made absolute to the aforesaid extent. However, there shall be no order as to costs.

(R.M.CHHAYA, J) (VIRESHKUMAR B. MAYANI, J) BIJOY B. PILLAI Page 14 of 14 Downloaded on : Mon Jun 15 18:15:36 IST 2020

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