Kerala High Court
Apollo Tyres Limited vs The Commissioner Of Central Taxes And ... on 12 February, 2025
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W.P(C) No.11633 of 2019
and con.cases 2025:KER:10904
"C.R."
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE HARISANKAR V. MENON
WEDNESDAY, THE 12TH DAY OF FEBRUARY 2025 / 23RD MAGHA, 1946
WP(C) NO.11633 OF 2019
PETITIONER:
APOLLO TYRES LIMITED,
HAVING ITS REGISTERED OFFICE AT 3RD FLOOR,
AREEKAL MANSION, NEAR MANORAMA JUNCTION,
PANAMPILLY NAGAR, KOCHI-682 036, REPRESENTED
BY ITS GROUP MANAGER - TAXATION MS.POOJA SHARMA
BY ADVS.
JOSEPH KODIANTHARA (SR.)
SRI.V.ABRAHAM MARKOS
SRI.ABRAHAM JOSEPH MARKOS
SRI.ISAAC THOMAS
SRI.P.G.CHANDAPILLAI ABRAHAM
SHRI.VIPIN ANTO H.M.
SHRI.ALEXANDER JOSEPH MARKOS
SHRI.SHARAD JOSEPH KODANTHARA
RESPONDENTS:
1 THE COMMISSIONER OF CENTRAL TAXES AND CENTRAL EXCISE
CENTRAL REVENUE BUILDING, I.S. PRESS ROAD,
COCHIN - 682 018.
2 THE JOINT COMMISSIONER OF CENTRAL TAX AND CENTRAL
EXCISE CENTRAL REVENUE BUILDING, I.S. PRESS ROAD,
COCHIN - 682 018.
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W.P(C) No.11633 of 2019
and con.cases 2025:KER:10904
3 THE DEPUTY COMMISSIONER OF CENTRAL TAX AND CENTRAL
EXCISE, CENTRAL EXCISE BHAVAN, KATHRIKADAVU, KALOOR,
COCHIN - 682 017.
4 THE ASSISTANT COMMISSIONER OF CENTRAL TAX AND CENTRAL
EXCISE, KAKKANAD DIVISION, CENTRAL EXCISE BHAVAN,
KATHRIKADAVU, KALOOR, COCHIN - 682 017.
5 THE SUPERINTENDENT OF CENTRAL TAX AND CENTRAL EXCISE
KAKKANAD I RANGE, CENTRAL EXCISE BHAVAN, KATHRIKADAVU,
KALOOR, COCHIN - 682 017.
BY SRI.SREELAL N. WARRIER
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 05.02.2025,
ALONG WITH WP(C).11717/2019, 16115/2019, THE COURT ON 12.02.2025
DELIVERED THE FOLLOWING:
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W.P(C) No.11633 of 2019
and con.cases 2025:KER:10904
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE HARISANKAR V. MENON
WEDNESDAY, THE 12TH DAY OF FEBRUARY 2025 / 23RD MAGHA, 1946
WP(C) NO.11717 OF 2019
PETITIONER:
APOLLO TYRES LIMITED,
HAVING ITS REGISTERED OFFICE AT 3RD FLOOR,
AREEKAL MANSION, NEAR MANORAMA JUNCTION,
PANAMPILLY NAGAR, KOCHI - 682 036, REPRESENTED
BY ITS GROUP MANAGER - TAXATION MS.POOJA SHARMA
BY ADVS.
JOSEPH KODIANTHARA (SR.)
SRI.V.ABRAHAM MARKOS
SRI.ABRAHAM JOSEPH MARKOS
SRI.ISAAC THOMAS
SRI.P.G.CHANDAPILLAI ABRAHAM
SHRI.VIPIN ANTO H.M.
SHRI.ALEXANDER JOSEPH MARKOS
SHRI.SHARAD JOSEPH KODANTHARA
RESPONDENTS:
1 THE COMMISSIONER OF CENTRAL TAXES AND CENTRAL EXCISE,
CENTRAL REVENUE BUILDING, I.S PRESS ROAD,
COCHIN - 682 018.
2 THE JOINT COMMISSIONER OF CENTRAL TAX AND CENTRAL
EXCISE, CENTRAL REVENUE BUILDING, I.S PRESS ROAD,
COCHIN - 682 018.
3 THE ADDITIONAL COMMISSIONER OF CENTRAL TAX AND CENTRAL
EXCISE, CENTRAL REVENUE BUILDING, I.S PRESS ROAD,
COCHIN - 682 018.
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W.P(C) No.11633 of 2019
and con.cases 2025:KER:10904
4 THE ASSISTANT COMMISSIONER OF CENTRAL TAX AND CENTRAL
EXCISE, CENTRAL EXCISE BHAVAN, KATHRIKADAVU, KALOOR,
COCHIN - 682 017.
5 THE SUPERINTENDENT OF CENTRAL TAX AND EXCISE,
KAKKANAD I RANGE, CENTRAL EXCISE BHAVAN,
KATHRIKADAVU, KALOOR, COCHIN - 682 017.
BY SRI.SREELAL N.WARRIER
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 05.02.2025,
ALONG WITH WP(C).11633/2019 AND CONNECTED CASES, THE COURT ON
12.02.2025 DELIVERED THE FOLLOWING:
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W.P(C) No.11633 of 2019
and con.cases 2025:KER:10904
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE HARISANKAR V. MENON
WEDNESDAY, THE 12TH DAY OF FEBRUARY 2025 / 23RD MAGHA, 1946
WP(C) NO.16115 OF 2019
PETITIONER:
PRINCE TMT STEELS PVT. LTD.,
REGISTERED OFFICE AT 6/439, ANAPPURAMKADU,
KINASSERY.P.O., PALAKKAD-678701, REPRESENTED
BY ITS MANAGING DIRECTOR, MR.T.K.ABDUL KARIM.
BY ADVS.
M.S. SAJEEV KUMAR
A.N.JYOTHILEKSHMI(K/109/2006)
LAKSHMI S KUMAR(K/000098/2017)
RESPONDENTS:
1 THE COMMISSIONER OF CENTRAL GST AND CENTRAL EXCISE,
CALICUT COMMISSIONERATE, C.R.BUILDING, MANANCHIRA,
KOZHIKODE-673001. (EARLIER COMMISSIONER OF CENTRAL
EXCISE, CUSTOMS AND SERVICE TAX).
2 THE ADDITIONAL COMMISSIONER OF CENTRAL GST
AND CENTRAL EXCISE, OFFICE OF THE COMMISSIONER OF
CENTRAL TAX AND CENTRAL EXCISE, CALICUT COMMISSIONERATE,
C.R.BUILDING, MANANCHIRA, CALICUT-673001.
3 THE SUPERINTENDENT (ADJ) OF THE CENTRAL GST AND CENTRAL
EXCISE, OFFICE OF THE COMMISSIONER, CENTRAL GST AND
CENTRAL EXCISE, C.R.BUILDING, MANANCHIRA,
KOZHIKODE-673001.
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W.P(C) No.11633 of 2019
and con.cases 2025:KER:10904
BY SRI.P.R.SREEJITH, SC, CENTRAL BOARD OF EXCISE AND
CUSTOMS
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 05.02.2025,
ALONG WITH WP(C).11633/2019 AND CONNECTED CASES, THE COURT ON
12.02.2025 DELIVERED THE FOLLOWING:
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W.P(C) No.11633 of 2019
and con.cases 2025:KER:10904
JUDGMENT
[WP(C) Nos.11633/2019, 11717/2019 and 16115/2019] These three writ petitions essentially seek to challenge the show cause notices issued by the Assessing Authority under the Central Excise Act, 1944 (for short, the 'Act') on the ground of limitation.
2. The short facts as culled out from W.P(C)No.16115 of 2019 are as under:
The petitioner is stated to be engaged in the manufacture of MS/TMT Bars and Rods, out of MS Ingots. It is on the final products like MS/TMT Rods and Bars that excise duty is exigible. They contend that Ext.P1 show cause notice dated 28.04.2015 was issued by the 1st respondent noticing the consumption of raw materials during the years 2010-11 onwards and the actual production carried out. The notice states, with reference to the raw materials used and the actual production, that the output was only 91.74% of the raw materials. It further states that as 8 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 per the norms fixed by M/s.Steel Authority of India Ltd. (for short, 'SAIL') the output should be 95%. With reference to the afore, the notice states that there was a short production of 6698.703 MT and the said quantity ought to be assessed to duty. The petitioner states that it submitted Ext.P2 reply to the 1st respondent herein seeking a copy of the audit report of CERA, referred to in the show cause notice, a copy of input/output norms fixed by SAIL, copy of the statutory authority which adopts the norms fixed by SAIL to be observed by companies like the petitioner. Ext.P3 is stated to be issued thereafter for the period from December 2014 to October 2015 on the very same basis. Though the petitioner states that it sent various communications seeking the documents already sought, Ext.P9 notice was issued for the period from November 2015 to June 2017, repeating the same allegations. It is stated that the petitioners are served with Ext.P14 letter dated 06.06.2019 from the 3rd respondent herein enclosing the copy of the tender 9 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 instructions of SAIL as the evidence for the input-output norms as also the observation of CERA.
3. It is in the afore circumstances that the captioned writ petition is filed challenging Exts.P1, P3 and P9 notices on the ground that they are time-barred under Section 11A(11) of the Act, apart from contending that the very basis of the initiation of adjudication steps was flawed.
4. W.P(C) No.11633 of 2019 and 11717 of 2019 are filed by another company engaged in the manufacture of Pneumatic Tyres challenging show cause notices issued during 2009 and 2012, respectively, on the ground of limitation under Section 11A (11) of the Act.
5. I have heard Sri.Aravind P. Datar, the learned senior counsel instructed by Sri. Sajeev Kumar the learned counsel for the petitioner in W.P(C) No.16115 of 2019 and Sri.Joseph Kodianthara, the learned senior counsel for the petitioner in the other two cases. I have also heard Sri.Sreelal N. Warrier, the 10 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 learned counsel for the respondents in W.P(C) Nos.11717 and 11633 of 2019 and Sri.P.R.Sreejith, the learned counsel for the respondents in W.P(C)No.16115 of 2019.
6. Sri.Datar, the learned senior counsel, would contend that:
. The show cause notices were issued against the petitioner solely on the basis of the audit of the petitioner's records by CERA, which in turn relied on some "norms" fixed by the SAIL. The afore details were not provided to the petitioner originally, and it is only pursuant to Ext.P14 dated 06.06.2019 that they have been served on the petitioner.
. The details so served in 2019, cannot be the basis for assuming jurisdiction over the petitioner under the provisions of the Central Excise Act.
. Unless and until the statutory basis for the adoption of the so-called norms fixed by SAIL is made known 11 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 by the respondent, no adjudication is possible against the petitioner.
. He relied on the provisions of Section 3A of the Act to contend that the insistence of a particular output to be maintained by the manufacturer can only be with reference to the afore provision and no adjudication on the basis of the norms fixed by SAIL is possible. . In the light of the afore, he contends that the very basis for issuance of the notices was flawed and hence, the show cause notices are to be set aside. . He relied on the provisions of Section 11A(11) of the Act to contend that the show cause notices may be quashed in view of the period of limitation prescribed therein.
. He relied on various orders of CESTAT in support of the afore contention.12
W.P(C) No.11633 of 2019
and con.cases 2025:KER:10904
7. Sri.Kodianthara, the learned senior counsel, would contend that:
i. The show cause notices challenged in
W.P(C)No.11633 of 2019 were issued during
2009/2010/2011, and insofar as the period
prescribed under Section 11A(11) of the Act is over, there cannot be any further proceedings against the petitioner. As regards W.P(C) No.11717 of 2019, the show cause notices were issued from 2008 to 2018 and the adjudication cannot be carried out for the very same reasons.
ii. He would rely on the judgment of the Gujarat High Court in Siddhi Vinayak Syntex Pvt. Ltd. v. Union of India [2017 (352) E.L.T 455 (Guj.)] and that of the Bombay High Court in W.P(C) No.3671 of 2021.
8. Sri.Sreelal N. Warrier, the learned counsel, would 13 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 contend that:
i. The show cause notices were issued on the basis of the observation on audit and there is no irregularity.
ii. The fact that the notices were kept in the call book does not attract the provisions of Section 11A(11).
9. Sri.P.R.Sreejith, the learned counsel for the respondents, apart from adopting the submissions made by Sri.Sreelal N. Warrier, would contend that:
i. The petitioners are challenging the show cause notices alone. Therefore, no writ petition can be filed against the show cause notices and it is for the petitioner to file replies to the said notices. ii. He would point out that the reliance placed on the norms fixed by SAIL cannot be found fault with, when those details have been provided to the petitioner. 14 W.P(C) No.11633 of 2019
and con.cases 2025:KER:10904
10. I have considered the rival submissions and the connected records.
11. The following issues arise for consideration in these writ petitions.
i. Can the petitioners challenge the show cause notices in a writ petition filed under Article 226 of the Constitution of India?
ii. Can the adjudicating authority initiate proceedings solely on the basis of the "norms" fixed by SAIL as seen from the show cause notices challenged in W.P(C) No.16115 of 2019?
iii. Are the impugned show cause notices barred by limitation under Section 11A (11) of the Act?
12. The first issue arising for consideration, as noticed above, is with reference to the maintainability of the writ petitions so far as they seek to challenge the show cause notices 15 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 issued under the Act. It is settled principle that as against show cause notices, it is the duty of the assessee to file objections to the proposals contained therein. The learned Standing Counsel for the respondents would rely on a series of judgments of the Apex Court as well as various High Courts including this Court, in support of the afore contention.
13. In the case at hand, the petitioners essentially contend that the notices issued are barred by limitation under Section 11A(11) of the Act. As regards the question of limitation, there cannot be any dispute that a writ petition is maintainable against show cause notices which have been issued beyond the period prescribed by the statute. Similarly, a writ petition against show cause notices on the basis of the admitted facts can also be challenged under Article 226 of the Constitution of India. Here, as already noticed, the show cause notices have been issued on the basis of the norms fixed by the SAIL. The question as to whether there can be an adjudication 16 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 on the basis of such alleged "norms" without statutory backing, strikes at the very root of the assessment proceedings, even questioning the jurisdiction of the adjudicating authority. This Court notices that the petitioners have sought to quash the show cause notices both on the ground of the limitation as well as on the ground of the jurisdiction of the adjudicating authority. Therefore, a writ petition at the show cause stage is maintainable as held by the Apex Court in Union of India and Others v. Coastal Container Transport Association and Others [(2019) 20 SCC 446].
14. In the light of the afore, I am of the opinion that the petitioners are justified in challenging the show cause notices through the afore writ petitions.
15. The second issue arising for consideration is the power of the adjudicating authority to rely "on the norms fixed by SAIL". The show cause notices have been issued with 17 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 reference to the provisions of Section 11A(1) and (4) of the Act, which reads as under:
"(1) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, for any reason, other than the reason of fraud or collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty.
........
(4) Where any duty of excise has not been levied or paid or has been short- levied short-paid or erroneously refunded, by the reason of-
(a) fraud; or
(b) collusion; or
(c) any wilful mis-statement; or
(d) suppression of facts; or
(e) contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant date, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 11AA and a penalty equivalent to the duty specified in the notice."
True, the statute empowers the adjudicating authority to proceed against the assessee in situations where the duty of excise has been "short-levied" or "short-paid". 18 W.P(C) No.11633 of 2019
and con.cases 2025:KER:10904
16. A reading of the show cause notices challenged in W.P(C) No.16115 of 2019 would show that the petitioner therein was engaged in the manufacture of MS Bars/TMT Bars from Billets/Ingots and the ratio of such manufacture in comparison to raw materials was 91.74%. The show cause notices proceed on the basis of the audit of the petitioner's records in comparison with the norms fixed by SAIL. The show cause notice alleges that SAIL has fixed such ratio of production of MS Bars/TMT Bars at 95% of the consumption. It is with reference to the afore that the show cause notices allege suppressed production to the extent of the difference between the afore percentages. Here, this Court notices that the difference noticed is hardly 3.26%.
17. The norms of SAIL have also been forwarded to the petitioner along with Ext.P14 letter dated 06.06.2019. A reading of the document attached along with the afore letter would show that the same applies only as against those 19 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 manufacturers agreeing to act as "conversion agents" for SAIL. It is as against such work of conversion being entrusted by SAIL to private manufacturers, norms have been fixed by SAIL to the effect that even though the raw materials are supplied by SAIL, they would tolerate wastage to the extent of 5% alone. That does not mean that there cannot be more than 5% wastage. It is only that as regards the job works entrusted by SAIL pursuant to the afore tender, SAIL would tolerate wastage to the extent of 5% alone. Apart from this, there is no statutory backing for such adoption of the conversion ratio fixed by SAIL for adjudication purposes. The liability to excise duty under the provisions of the Act is with reference to the provisions of Section 3 on the "production/manufacture" within the country. In the case at hand, apart from making reference to the norms fixed by the SAIL, no reasons are seen mentioned under the show cause notices.
18. In State of Rajasthan and Another v. Rajasthan 20 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 Chemists Assn. [(2006) 6 SCC 773], the Apex Court considered the question as to whether a "notional value" can be the basis for taxation than the "actual value" with reference to the provisions of Section 4A of the Rajasthan Sales Tax Act, 1994. Considering the afore issue, the Apex Court found as under:
"50. ........By substituting the assumed quantity of goods or a price which is not the subject-matter of that contract of completed sale for the purpose of measuring tax, the legislature assumes existence of contract of sale of drugs by legal fiction which has not taken place and which cannot be considered to be a sale in the manner stated in the Sales Act, which alone can be the subject of tax under Entry 54 in List II. Substitution of assumed price or the assumed quantity in place of actual price/quantity in a completed sale transaction, for the purpose of levy of tax on the subject- matter of tax results in taking away from it the character of "sale of goods" as envisaged under the Sales Act.
53. By devising a methodology in the matter of levy of tax on sale of goods, law prohibits taxing of a transaction which is not a completed sale and also confines sale of goods to mean sale as defined under the Act. This cannot be overridden by devising a measure of tax which relates to an event which has not come into existence when tax is ex hypothesi determined, much less which can be said to be a completed sale and which cannot be the subject of legislation providing tax on "sale of goods" by transplanting a 21 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 sum related to as "likely price" to be charged for subsequent sale to be taxed by the devise of measuring tax for the completed transaction which has become subject of tax."
The afore principles would apply to the case at hand also, insofar as the show cause notices have been issued by notionally refixing the quantity manufactured by the petitioner which attracts duty under the Act, by deviating from the procedure prescribed under the statute.
19. Again, a Division Bench of this Court in U.K.Monu Timbers (M/s.) v. State of Kerala [2012 (3) KHC 111 (DB)], was called upon to consider the legality of the steps taken for refixing the output tax liability by adopting certain price for the commodity fixed by certain Circulars for a different purpose. Considering the issue, this Court found as under:
"20. The value so prescribed by the Commissioner, as contended by the Government Pleader, might have been after taking into consideration the market conditions and also after holding discussions with the dealers' association. This, however, does not create a prohibition insofar as the dealers are concerned to sell the goods at a rate in variance with the rates so prescribed. The actual 22 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 sale price may be lesser or greater than that prescribed by the circular. When it is lesser, the dealer definitely gets a right to claim a refund of the tax paid in advance, but however, subject to any incriminating material as to under - valuation detected and established by the assessing authority. When the price is higher, it goes without saying that the tax liability also gets increased and the dealer is obliged to pay the amounts in excess of that paid as advance, at the time of filing of returns as prescribed by the Act. The circular is only for the purpose of collecting tax in advance and cannot be considered as an unassailable document of universal application with respect to the price at which the goods are to be sold. There can be no other interpretation possible and the second question raised by us is also answered against the Revenue and in favour of the assessee.
21. In the instant case, there were no discrepancies in the books of accounts, the stock found on inspection and the other documents indicating the sale of goods within the State..."
The case at hand also seeks only to refix the quantity manufactured, which attracts an excise duty, without suggesting any discrepancy in the petitioner's returns/books of accounts.
23W.P(C) No.11633 of 2019
and con.cases 2025:KER:10904
20. Another Division Bench of this Court in U.Manikandan v. Assistant Commissioner of State Tax, State GST Department and Ors.[MANU/KE/2522/2020] considered a case where a dealer in "day-old chicks" sold at a particular price was sought to be proceeded against on the basis of the higher price at which a Government Agency sold the very same commodity. This Court noticing the fallacy in adopting the price fixed by the PSU for the purpose of assessment of an individual assessee found as under:
"14. The grounds raised against rejection of returns and consequential best judgment, were rejected by the Assessing Officer on the finding that the assessee had not proved the same, i.e.: the distinctive nature of the same goods based on the source, the quality, the expense incurred on procurement or production, the end consumer and so on and so forth. In this context we have to emphasize that the assessee's books of accounts were not found to be doctored in any manner. The sale price as asserted by the assessee was available from their invoices and there was no material detected that the assessee had in fact made sales for higher prices than that disclosed in the invoices. It was the Assessing Officer on the basis of the Audit Report and the details of the sale price available from KEPCO, who sought to reject the returns and the books of accounts. The assessee has the initial 24 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 burden to prove that the returns filed are in accordance with the provisions of the tax enactment and the books of accounts kept truly and correctly in the course of business. The Assessing Officer having not found anything to discredit the returns filed by the assessee or the books of accounts maintained, and relied on the turnover of another dealer that too a PSU, who incidentally also has the same business, to resort to a best judgment assessment. The onus shifts to the Assessing Officer, to prove that the operations carried on by the two dealers are similar and identical. The mere fact that both are dealing in the same product cannot lead to any irrefutable conclusion that the sale price would be the same.
16............We garner support from Gujarat Ambuja Cements Ltd to find that the proceedings itself is an abuse of process of law for reason of the Assessing Officer having rejected the books of accounts merely on the ground that a PSU sells day-old chicks at a price higher than that of the assessee. The estimation made is on the basis of the books of accounts of the PSU and there was no defect, omission or suppression detected from the books of accounts maintained by the assessee. We find that the rejection of books of accounts of the assessee was not justified and the basis adopted, being the sale price of another dealer, that too a PSU, has no reasonable nexus with the estimation made. We hence set aside the assessment only to the extent the additions were made based on the sale price of day-old chicks of KEPCO, on the particular facts of this case."
The afore principles laid down by this Court would show that the show cause notices issued solely on the basis of the so-called 25 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 "norms" fixed by SAIL were without any justification.
21. As already noticed, a reading of the show cause notices do not disclose any discrepancy regarding the petitioner's books of accounts and other records. In such circumstances, I am of the opinion that the initiation of the adjudication steps under the provisions of the Act in the case at hand was without any justification. This Court also notices the provision under Section 3A of the Act providing for fixation of the annual capacity of a unit engaged in manufacturing process. The respondents have no case that any such determination has been carried out in the case at hand.
22. The last issue arising for consideration, which is common for all three writ petitions is regarding the application of the provisions of Section 11A(11) of the Act. The show cause notices regarding W.P(C) No.11633 of 2019 were issued prior to 2011. The show cause notice regarding W.P(C) No.11717 of 2019, Ext.P3(a) was issued in 2008. In W.P(C) No.16115 of 26 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 2019, objections were also filed to the show cause notice(s). However, in none of these cases, final adjudication under the statute has taken place.
23. In this connection, provisions of Section 11A(11) assume significance and the same provides as under:
"(11) 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 two years from the date of notice, where it is possible to do so, in respect of cases falling under sub-
section (4)"
The afore provision requires the adjudicating authority to determine the amount of excise duty payable within a period of "six months" as regards show cause notices issued under Section 11A(1). As regards the cases where show cause notices are issued under Section 11A(4), the statute requires finalization of proceedings within "2 years". In the cases at hand, the show cause notices have been issued under Section 27 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 11A(4). The statute requires the final determination to be carried out within the period prescribed therein. True, as rightly contended by the learned counsel for the respondents, the statute visualizes such final determination "where it is possible to do so." However, that does not mean that the revenue can keep the matters pending indefinitely. Furthermore, no plausible explanations have been provided for the delay in finalization of the proceedings as above.
24. In this connection, I notice the judgment in Siddhi Vinayak Syntex (supra). In the said case, the Gujarat High Court considered the question as regards the proposed adjudication of show cause notices after inordinate delay, which will actually amount to the revival of the proceedings after a long gap without disclosing any valid reason for the delay. Considering the said issue, after making reference to the provisions of Section 11A(11), a Division Bench of the Gujarat High Court has found as under:
28W.P(C) No.11633 of 2019
and con.cases 2025:KER:10904 "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 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 29 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 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 C.B.E. & C. 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 C.B.E. & C.. 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 hereinabove, there is no power vested in the C.B.E. & C. 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 C.B.E. & C. 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 30 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 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."
Thus, the court found that the expression "where it is possible to do so" does not clothe the Department to sleep over the adjudication proceedings indefinitely. Though the afore judgment is challenged by the revenue before the Apex Court by filing SLP(C) No.18214 of 2017, notice has been issued only to a limited extent as regards certain circulars issued alone. Thus, the other findings of the Gujarat High Court have become final. This Court also notices that even in cases where no period of limitation is prescribed for exercising a power, the Apex Court in State of Punjab v. Bhatinda District Cooperative Milk Producers Union Ltd. [(2007) 11 SCC 363] has held that the action has to be taken within a reasonable period of time. 31 W.P(C) No.11633 of 2019
and con.cases 2025:KER:10904 When the afore principles are applied to the facts of the present case, I notice that the adjudication is not finalized within a reasonable period of time and hence, the proceedings cannot be permitted to be continued any further. The judgment of the Gujarat High Court has been followed by the Punjab and Haryana High Court also in Shree Baba Exports v. Commissioner [2022 (381) E.L.T 53(P & H)] and GPI Textiles Limited v. Union of India [2018 (362) E.L.T 388(P & H).
25. On the whole, I am of the opinion that the impugned notices are not to be sustained on account of the limitation prescribed under Section 11A (11) of the Act.
26. This Court also notices the judgment of the Apex Court in Babu Verghese and Others v. Bar Council of Kerala and Others [(1999) 3 SCC 422] following the judgment in Taylor v. Taylor [(1875) 1 Ch.D. 426] holding that when a statute requires a thing to be done in a particular manner, the 32 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 authorities are duty bound to follow that course. Therefore, the time limit prescribed under Section 11A(11) ought to have been followed mandatorily and so far as that is not done, the impugned show cause notices are only to be quashed.
On the whole, I am of the opinion that the petitioners are entitled to succeed. Hence, these writ petitions would stand allowed by quashing Exts.P1(a) to P1(c) in W.P(C) No.11633 of 2019, Exts.P1, P3 and P9 in W.P(C) No.16115 of 2019 and Exts.P3(a) to P3(j) in W.P(C) No.11717 of 2019.
Sd/-
HARISANKAR V. MENON, JUDGE
ln
33
W.P(C) No.11633 of 2019
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APPENDIX OF WP(C) 11717/2019
PETITIONER'S EXHIBITS:
EXHIBIT P1 TRUE COPY OF BOARD CIRCULAR NO.1065/4/2018-CX
DATED 08/06/2018
EXHIBIT P2 TRUE COPY OF FINAL ORDER NO. 10374-10375/2019
DATED 25/02/2019 PASSED BY THE HONOURABLE CESTAT, AHMEDABAD IN THE CASE OF SANGHI INDUSTRIES LTD. V.C.C.E, KUTCH (GANDHIDHAM) EXHIBIT P3(a) TRUE COPY OF SHOW CAUSE NOTICE NO.54/2008-CE DATED 05/09/2008 ISSUED TO THE PETITIONER EXHIBIT P3(b) TRUE COPY OF SHOW CAUSE NOTICE NO.24/2010-CE DATED 08/04/2010 ISSUED TO THE PETITIONER EXHIBIT P3(c) TRUE COPY OF SHOW CAUSE NOTICE NO. 07/2011-CE DATED 01/02/2011 ISSUED TO THE PETITIONER EXHIBIT P3(d) TRUE COPY OF SHOW CAUSE NOTICE NO.02/2012-CE DATED 02/02/2012 ISSUED TO THE PETITIONER EXHIBIT P3(e) TRUE COPY OF SHOW CAUSE NOTICE NO.22/2012-EC DATED 17/12/2012 ISSUED TO THE PETITIONER EXHIBIT P3(f) TRUE COPY OF SHOW CAUSE NOTICE NO.60/2013-EC DATED 28/08/2013 ISSUED TO THE PETITIONER EXHIBIT P3(g) TRUE COPY OF SHOW CAUSE NOTICE NO.10/2014-CE DATED 03/09/2014 ISSUED TO THE PETITIONER EXHIBIT P3(h) TRUE COPY OF SHOW CAUSE NOTICE NO.61/2015-CE DATED 07/09/2015 ISSUED TO THE PETITIONER EXHIBIT P3(i) TRUE COPY OF SHOW CAUSE NOTICE NO.02/2018-CE DATED 19/01/2016 ISSUED TO THE PETITIONER EXHIBIT P3(j) TRUE COPY OF SHOW CAUSE NOTICE NO.02/2018-CE DATED 19/01/2018 ISSUED TO THE PETITIONER EXHIBIT P4(a) TRUE COPY OF REPLY DATED 27/09 2008 FILED BY 34 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 THE PETITIONER TO EXHIBIT P3(A) SHOW CAUSE NOTICE NO.54/2008-CE EXHIBIT P4(b) TRUE COPY OF REPLY DATED 24/05/2010 FILED BY THE PETITIONER TO EXHIBIT P3(B) SHOW CAUSE NOTICE NO.24/2010-CE EXHIBIT P4(c) TRUE COPY OF REPLY DATED 09/2/2011 FILED BY THE PETITIONER TO EXHIBIT P3(C) SHOW CAUSE NOTICE NO.07/2011-CE EXHIBIT P4(d) TRUE COPY OF REPLY DATED 05/04/2012 FILED BY THE PETITIONER TO EXHIBIT P3(D) SHOW CAUSE NOTICE NO.02/2012-CE EXHIBIT P4(e) TRUE COPY OF REPLY DATED 30/12/2012 FILED BY THE PETITIONER TO EXHIBIT P3(E) SHOW CAUSE NOTICE NO.22//2012-CE EXHIBIT P4(f) TRUE COPY OF REPLY DATED 30/9/2013 FILED BY THE PETITIONER TO EXHIBIT P3(F) SHOW CAUSE NOTICE NO.60/2013-CE EXHIBIT P4(g) TRUE COPY OF REPLY DATED 30/09/2013 FILED BY THE PETITIONER TO EXHIBIT P3(G) SHOW CAUSE NOTICE NO.10/2014-CE EXHIBIT P4(h) TRUE COPY OF REPLY DATED 08/10/2015 FILED BY THE PETITIONER TO EXHIBIT P3(H) SHOW CAUSE NOTICE NO.61/2015-CE EXHIBIT P4(i) TRUE COPY OF REPLY DATED 22/02/2018 FILED BY THE PETITIONER TO EXHIBIT P3(J) SHOW CAUSE NOTICE NO.02/2018-CE EXHIBIT P4(j) TRUE COPY OF REPLY DATED 22/02/2018 FILED BY THE PETITIONER TO EXHIBIT P3(J) SHOW CAUSE NOTICE NO.61/2015-CE.
EXHIBIT P5 TRUE COPY OF ORDER DATED 28/07/2017 IN S.L.P.(C) NO.18214 OF 2017 PASSED BY THE HONOURABLE SUPREME COURT REPORTED IN 2018 (362)E.L.T. A122(SC) 35 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 EXHIBIT P6 TRUE COPY OF JUDGMENT DATED 10/01/2019 PASSED BY THE HONOURABLE GUJARAT HIGH COURT IN SPECIAL CIVIL APPLICATION NO. 16157/2018 FILED BY THE PETITIONER.
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APPENDIX OF WP(C) 16115/2019
PETITIONER'S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE SHOW CAUSE NOTICE
NO.34/2015-CE (C.NO.V/72/15/27/2015 ADJ.) DATED 28.4.2015 ALONG WITH ANNEXURES A & B ISSUED BY THE 1ST RESPONDENT.
EXHIBIT P2 TRUE COPY OF LETTER DATED 9.7.2015 ISSUED BY THE PETITIONER TO THE 1ST RESPONDENT.
EXHIBIT P3 TRUE COPY OF SHOW CAUSE NOTICE NO.84/2015 CE DATED 29.12.2015 (C.NO.V/72/15/88/2015 C.EX.ADJ/5723) ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER.
EXHIBIT P4 TRUE COPY OF LETTER DATED 7.1.2016 ISSUED BY THE PETITIONER TO THE 1ST RESPONDENT.
EXHIBIT P5 TRUE COPY OF NOTICE DATED 22.11.2016 (C.NO.V/72/15/27/2015 CX. ADJ/875) ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER.
EXHIBIT P6 TRUE COPY OF LETTER DATED 29.11.2016 ISSUED BY THE PETITIONER'S ADVOCATE TO THE 1ST RESPONDENT.
EXHIBIT P7 TRUE COPY OF NOTICE DATED 9.2.2017 (C.NO.V/72/15/27/2015 CX.ADJ./555) ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER.
EXHIBIT P8 TRUE COPY OF LETTER DATED 16.2.2017 ISSUED BY THE PETITIONER'S ADVOCATE TO THE 1ST RESPONDENT.
EXHIBIT P9 TRUE COPY OF SHOW CAUSE NOTICE NO.18/2017-18- CE DATED 6.11.2017 (C.NO.V/31/15/09/2017 C.EX.-ADJ./803) ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER.
EXHIBIT P10 TRUE COPY OF NOTICE DATED 21.2.2019 (C.NO.V/72/15/88/2015 C.EX. ADJ./451) ISSUED 37 W.P(C) No.11633 of 2019 and con.cases 2025:KER:10904 BY THE RESPONDENT TO THE PETITIONER.
EXHIBIT P11 TRUE COPY OF LETTER DATED 2.3.2019 SENT BY THE PETITIONER TO THE 3RD RESPONDENT.
EXHIBIT P12 TRUE COPY OF NOTICE DATED 19.3.2019 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER.
EXHIBIT P13 TRUE COPY OF RECORD OF PERSONAL HEARING DATED 4.4.2019 ISSUED BY THE 1ST RESPONDENT.
EXHIBIT P14 TRUE COPY OF NOTICE DATED 6.6.2019 (C.NO.V/72/15/27/2015 CX. ADJ./1199) ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER ALONG WITH ENCLOSURES.
EXHIBIT P15 TRUE COPY OF JUDGMENT OF THE DIVISION BENCH OF THE GUJARAT HIGH COURT IN THE CASE OF M/S.SIDDHI VINAYAK SYNTEX PRIVATE LIMITED VS.UNION OF INDIA AND OTHERS REPORTED IN 2017 (352) ELT 455 (GUJ.) EXHIBIT P16 TRUE COPY OF ORDER DATED 28.7.2017 IN S.L.P.(C)NO.18214 OF 2017 PASSED BY THE HONOURABLE SUPREME COURT.
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APPENDIX OF WP(C) 11633/2019
PETITIONER'S EXHIBITS:
:
EXHIBIT P1 A TRUE COPY OF SHOW CAUSE NOTICE NO. 14/2009
CENTRAL EXCISE DATED 05/03/2009 ISSUED TO THE PETITIONER.
EXHIBIT P1 B TRUE COPY OF SHOW CAUSE NOTICE NO 19/2009 DATED 23/11/2009 ISSUED TO THE PETITIONER EXHIBIT P1 C TRUE COPY OF SHOW CAUSE NOTICE NO.10/2011-CE DATED 01/06/2011 ISSUED TO THE PETITIONER EXHIBIT P2 A TRUE COPY OF REPLY DATED 22/08/2009 FILED BY THE PETITIONER TO EXHIBIT P1(A) EXHIBIT P2 B TRUE COPY OF REPLY DATED 18/01/2010 FILED BY THE PETITIONER TO EXHIBIT P1(B) EXHIBIT P2 C TRUE COPY OF REPLY DATED 24/08/2011 FILED BY THE PETITIONER TO EXHIBIT P1(C) EXHIBIT P3 TRUE COPY OF NOTICE OF PERSONAL HEARING DATED 18/08/2011 ISSUED ON BEHALF OF THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE TO THE PETITIONER EXHIBIT P4 TRUE COPY OF ORDER DATED 28/07/2017 IN S.L.P(C)NO.18214 OF 2017 PASSED BY THE APEX COURT REPORTED IN 2018(362) E.L.T.A122(SC) EXHIBIT P5 TRUE COPY OF JUDGMENT DATED 10/.1/2019 PASSED OF THE HONOURABLE GUJARAT HIGH COURT IN SPECIAL CIVIL APPLICATION NO.16157/2018 FILED BY THE PETITIONER