Gujarat High Court
Shree Shakambari Silk Mills & vs Union Of India & on 13 December, 2017
Author: Akil Kureshi
Bench: Akil Kureshi, A.Y. Kogje
C/SCA/12477/2017 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 12477 of 2017
With
SPECIAL CIVIL APPLICATION NO. 15272 of 2017
With
SPECIAL CIVIL APPLICATION NO. 15273 of 2017
With
SPECIAL CIVIL APPLICATION NO. 16016 of 2017
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SHREE SHAKAMBARI SILK MILLS & 1....Petitioner(s)
Versus
UNION OF INDIA & 1....Respondent(s)
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Appearance:
MR HASIT DAVE, ADVOCATE for the Petitioner(s) No. 1 - 2
MR ANKIT SHAH, ADVOCATE for the Respondent(s) No. 2
MR DEVANG VYAS, ADVOCATE for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE A.Y. KOGJE
Date : 13/12/2017
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. These petitions involve similar questions of facts and law with minor factual differences which are wholly inconsequential. We may record facts from SCA No.12477 of 2017.
2. The petitioners have challenged Order in Original dated 21.03.2017 as at Annexure-F to the petition. The petitioner No.1 is a Private Limited Company. Petitioner No.2 is Director. At the relevant time, the petitioners were engaged in manufacture of Page 1 of 10 HC-NIC Page 1 of 10 Created On Wed Dec 13 22:59:23 IST 2017 C/SCA/12477/2017 ORDER textile goods for 100% exports. The petitioners had a unit at GIDC, Pandesara which was 100% EOU. The Department issued two show cause notices dated 10.12.2001 and 08.09.2004 calling upon the petitioners to explain why customs duty leviable on the petitioners clearance to the DTA areas of the manufactured goods should not be levied along with additional duties. The petitioners had replied to such show cause notices at the relevant time.
For the reasons which were not communicated to the petitioners, there was no progress in these proceedings for a long time. The case of the Department, which now emerges is that on account of the fact that a similar issue is pending before the Supreme Court, the proceedings were kept in abeyance, which in Department's parlance is referred to as "sent to call book". Suddenly thereafter, nearly decade and half, the departmental authorities activated such proceedings and called upon the petitioners to participate in the adjudication. The petitioners made written submissions to the show cause notice under two communications both dated 28.02.2017 and raised several legal issues. Undeterred by such representation, the adjudicating authority confirmed the duty demands by the impugned order.
3. Learned Counsel for the petitioners submitted that the show cause notice proceedings were kept in Page 2 of 10 HC-NIC Page 2 of 10 Created On Wed Dec 13 22:59:23 IST 2017 C/SCA/12477/2017 ORDER abeyance for over 15 years without any reason or explanation and the reason for the same was never communicated to the petitioners. Counsel submitted that the proceeding for which show cause notice was kept pending was decided by the Supreme Court in the year 2012. The decision was rendered in favour of the assessees. If this was the reason for keeping the proceeding in abeyance, it defies logic that the adjudicating authority has now confirmed the duty demand contrary to the decision of the Supreme Court. He submitted that in the meantime, the unit was closed down in the year 2005. Due to closure of the unit and long passage of time, the petitioners were not in position to of several important documents, for which demands were made under RTI. Counsel relied on various judgments of this Court on this issue.
4. On the other hand, Counsel for the Department opposed the petitions contending that there is no prejudice caused to the petitioners on account of pendency of the proceedings. The proceedings were kept in abeyance to avoid multiplicity of litigation. The petitioners have not pleaded any prejudice on account of delay.
5. Few things emerge from the record. First is that the show cause notices were issued in the years 2001 Page 3 of 10 HC-NIC Page 3 of 10 Created On Wed Dec 13 22:59:23 IST 2017 C/SCA/12477/2017 ORDER and 2004. After petitioners filed their replies, no further development took place. No hearing was conducted. Without communication to the petitioners or reason for keeping the proceedings in abeyance, the proceedings were sent to call book. The proceedings were activated in the year 2017, again without any indication or reasons. The proceedings, which prompted the Department to defer the adjudication, came to be decided by the Supreme Court in the year 2012. In the meantime, the unit was shut down since long. In this regard, we may refer to the decision of this Court in case of Siddhi Vinayak Syntex Pvt. Ltd. Vs. Union of India & Ors., dated 07.03.2017 in SCA No.19437 of 2016, wherein this Court in paras-23 to 27 held as under:-
"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 Page 4 of 10 HC-NIC Page 4 of 10 Created On Wed Dec 13 22:59:23 IST 2017 C/SCA/12477/2017 ORDER 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 sub-section (1);
(b) within one year from the date of notice, where it is possible to do so, in respect of cases falling under sub-section (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 sub-section (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 Page 5 of 10 HC-NIC Page 5 of 10 Created On Wed Dec 13 22:59:23 IST 2017 C/SCA/12477/2017 ORDER 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 6 of 10 HC-NIC Page 6 of 10 Created On Wed Dec 13 22:59:23 IST 2017 C/SCA/12477/2017 ORDER 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.
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 Page 7 of 10 HC-NIC Page 7 of 10 Created On Wed Dec 13 22:59:23 IST 2017 C/SCA/12477/2017 ORDER 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 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 petitioners 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, Page 8 of 10 HC-NIC Page 8 of 10 Created On Wed Dec 13 22:59:23 IST 2017 C/SCA/12477/2017 ORDER 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.AHM-EXCUS-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."
6. The decision in case of Siddhi Vinayak Syntex Pvt. Ltd. (supra) was followed in different situations in cases of Pooja Tax Prints Private Ltd. & Ors. Vs. Union of India & Ors., dated 04.12.2017 in SCA No.9298 of 2017 and connected matters, Swagat Synthethics & Ors. Vs. Union of India & Anr., dated 20.11.2017 in SCA No.9510 of 2017 and Parimal Textiles & Ors. Vs. Union of India & Ors., dated 06.11.2017 in SCA No.8940 of 2017 and connected matters.
7. In the result, respective Orders in Original in each petition are quashed. The petitions disposed of accordingly.
(AKIL KURESHI, J.) (A.Y. KOGJE, J.) Page 9 of 10 HC-NIC Page 9 of 10 Created On Wed Dec 13 22:59:23 IST 2017 C/SCA/12477/2017 ORDER SHITOLE Page 10 of 10 HC-NIC Page 10 of 10 Created On Wed Dec 13 22:59:23 IST 2017