Gujarat High Court
M/S Meghmani Organics Ltd vs Union Of India on 2 August, 2018
Bench: Akil Kureshi, B.N. Karia
C/SCA/5960/2018 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION No. 5960 of 2018
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M/S MEGHMANI ORGANICS LTD
Versus
UNION OF INDIA
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Appearance :
Mr AMAL PARESH DAVE, Advocate for the PETITIONER(s) No. 1,2
Mr PARESH M DAVE, Advocate for the PETITIONER(s) No. 1,2
Mr NIRZAR S DESAI, Advocate for the RESPONDENT(s) No. 2
NOTICE SERVED(4) for the RESPONDENT(s) No. 1
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CORAM: HONOURABLE Mr. JUSTICE AKIL KURESHI
and
HONOURABLE Mr. JUSTICE B.N. KARIA
2nd August 2018
ORAL ORDER (PER : HONOURABLE Mr. JUSTICE AKIL KURESHI)
The petitioner no.1 is a company registered under the Companies Act, 1956 and is engaged in the business of manufacturing of goods like Pesticides and Intermediates. The petitioners have objected to jurisdiction of the departmental authorities in keeping the adjudicating proceedings arising out of the show cause notice dated 27th April 2005 in abeyance, till the judgment of the Supreme Court in the case of Jindal Drugs Limited in an appeal filed by the Department against the judgment of Customs, Excise & Service Tax Appellate Page 1 of 7 C/SCA/5960/2018 ORDER Tribunal ["CESTAT" for short] is available.
Briefly stated, the facts are that the petitioners were served with a show cause notice on 27th April 2015 by the adjudicating authority objecting to the petitioner's availing CENVAT credit on clearance of goods for export by its Sanand Unit of the duty paid by its Ankleshwar unit. On such basis, the Department wishes to confirm the following proposal.
"I. Total Cenvat Credit ie., Basic Excise duty of Rs.9,38,73,935/- Education Cess of Rs. 18,77,476/- and Higher Education Cess of Rs. 9,38,739/=, a total amount of Rs.9,66,90,153/-. On value of purchase price of Rs. 80,64,56,128/- (Detailed as per Annexure-A to the S.C.N) on purchase of Cypermethrin technical, Zeta Cypermethrin Technical, Permethrin Technical from M/s Meghmani Organics limited, Ankleshwar for the period from August-2011 to June-2013 should not be demanded and recovered under Provisions of Section 11 A of Central Excise Act, 1944 read with Rule 14 of the Cenvat Rules, 2004, which were taken and availed wrongly;
II. interest on amount (I) above should not be recovered from him under Section 11 AA of the Central Excise Act, 1944 on the above Wrong Cenvat Credit availed and utilized; and III. penalty should not be imposed on him under Section 11 AC(1) (a) of the Central Excise Act, 1944 read with Rule 15 of Cenvat Credit Rules, 2004;"
The petitioners replied to the show cause notice in which various factual and legal contentions were raised. Essentially, the petitioners argued that the CENVAT credit was correctly Page 2 of 7 C/SCA/5960/2018 ORDER availed. Petitioners relied on several judgments of the Tribunal and the High Court; including the one in the case of Jindal Drugs Limited v. Commissioner of Central Excise, Belapur, of the CESTAT reported in 2015-TIOL-857-CESTAT- MUM.
The respondents conveyed to the petitioners under communication dated 23rd November 2017 that the proceedings arising out of the said show cause notice dated 27th April 2015 have been transferred to "the call book" as in the similar matter, in the case of Messrs. Jindal Drugs Limited, the departmental appeal is pending before the Supreme Court.
The petitioners replied to such communication on 1st January 2018 objecting to such procedure adopted by the department and requested that the proceedings be finally adjudicated without waiting for the outcome of the appeal in Jindal Drugs Limited. Reliance was placed on the observations made by the Division Bench of this Court in the case of Siddhi Vinayak Syntex Private Limited v. Union of India, reported in 2017 [352] ELT 455 [Guj.]. Such request was reiterated under the subsequent communication dated 23rd February 2018 by the petitioners. Since the respondents did Page 3 of 7 C/SCA/5960/2018 ORDER not accept the petitioners' request, the present petition came to be filed.
In response to the notice issued, the respondents have appeared and filed reply. The main ground taken in such reply is that in view of pendency of identical issue before the Supreme Court in a departmental appeal in the case of M/s. Jindal Drugs Limited, as per the Circular issued by the CBEC on 10th March 2017, it was decided to keep the proceedings in the "Call Book".
The phrase "call book" is used by the departmental authorities for keeping certain proceedings in abeyance, awaiting certain developments. Under instructions issued by CBEC, when due to specific reasons, it is not possible or advisable to complete the proceedings, they are kept in the "call book". Essentially by such action, the departmental authorities would keep the proceedings in abeyance. The hearing in the proceedings would be re-activated once the reason for keeping the proceedings in "call-book" no longer exists.
The CBEC circular dated 10th March 2017 contains various instructions, procedure for issuance of show cause Page 4 of 7 C/SCA/5960/2018 ORDER notices and adjudication thereof. Para 9.37 thereof pertains to "Call-Book cases" and it provides that, "a call book of cases is to be maintained of such cases which cannot be adjudicated immediately due to certain specified reasons and adjudication is to be kept in abeyance." The Circular lists certain category of cases which could be transferred to Call-book, one of them being the cases in which the Department has gone in appeal before the appropriate authority. In the present case, the Department wishes to press this category in service.
The pattern of keeping certain cases in Call-Book by the Department came up for minute scrutiny by the Division Bench of this Court in the case of Siddhi Vinayak Syntex Private Limited [Supra] in somewhat different context then the one, we are concerned in the present case. The Court referred to the amended provision of Section 11A of the Central Excise Act, 1944 providing preferable time limit for completing the adjudication proceedings and frowned upon the practice of putting cases in the cold storage, that too even without intimation to the noticee.
We are prepared to accept that there may be certain situations and categories where immediate adjudication of the Page 5 of 7 C/SCA/5960/2018 ORDER proceedings may not be possible or desirable. It is not possible to list all such cases since complex situation may arise from time to time making any exhaustive catalog of such situations hazardous. Nevertheless, going by the suggested time limit provided by the statute for completion of adjudication proceedings and the observations of Division Bench in the case of Siddhi Vinayak Syntex Private Limited [Supra], the proceedings cannot be kept pending by the Department indefinitely unless valid reasons for doing so can be shown.
Reverting back to the facts of the case, the only ground on which the Department has decided not to proceed further with the show cause notice against the petitioners is that similar issue is pending before the Supreme Court in the appeal filed by the Department. The department concedes that the situation arising in such case ie., in the case of Jindal Drugs Limited -is identical to the present case. Without conceding to the set of cases being identical, the petitioners also heavily rely on the judgment of the Tribunal in the case of Jindal Drugs Limited. However, this by itself would not be sufficient for the department to keep the proceedings in abeyance. The demand under the show cause notice is considerable. It is not the case Page 6 of 7 C/SCA/5960/2018 ORDER of the Department that the Supreme Court has stayed the judgment of the Tribunal in case of M/s. Jindal Drugs Limited, or granted some general injunction against the authorities proceeding in similar cases. The department does not even contend that the judgment of the Supreme Court in case of M/s. Jindal Drugs Limited is likely to be available in the near future.
Under the circumstances, the petition is disposed of with a direction that the respondents shall proceed further with the adjudication of show cause notice dated 27th April 2015 and complete the same expeditiously.
Petition stands disposed of. Notice discharged.
[Akil Kureshi, J.] [B.N Karia, J.] Prakash Page 7 of 7