Geeta Fibres Pvt Ltd V. Union of India and Employee, Agent and Servant of Union of India and Central Excise Superintendent

SCA/9009/2019

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The case involves M/S Geeta Fibres Pvt Ltd, a company operating a 100% Export Oriented Undertaking (EOU), which faced a show cause notice issued by the Union of India regarding customs duty and penalties for non-duty paid raw materials used in manufacturing. The notice, issued in 2000, was not acted upon for 17 years, leading the petitioner to seek judicial intervention. The court examined the prolonged delay in adjudication and the lack of communication from the respondents, ultimately deciding in favor of the petitioner based on precedents that emphasize timely adjudication of such notices.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 802572 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 13-03-2020
• Assessment Year: misc
• Other Referred Cases: Siddhi Vinayak Syntex Pvt. Ltd. vs. Union of India
• Laws Referred To: Customs Act, Central Excise Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: MITESH AMIN
• Assessee Lawyers: HASIT DAVE
• Keywords: 100% Export Oriented Undertaking; Adjudication Delay; Call Book; Central Excise; Customs Duty; Show cause notice
• Section: 12; 28(1); 11 AC; 11A(11)

Judgement Text

"C/SCA/9007/2019 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 9007 of 2019 With R/SPECIAL CIVIL APPLICATION NO. 9009 of 2019 With R/SPECIAL CIVIL APPLICATION NO. 20821 of 2019 ========================================================== M/S GEETA FIBRES PVT LTD Versus UNION OF INDIA ========================================================== Appearance: MR HASIT DAVE(1321) for the Petitioner(s) No. 1 MR MITESH R AMIN(2876) for the Respondent(s) No. 1,2,3 ========================================================== CORAM: HONOURABLE MS JUSTICE SONIA GOKANI and HONOURABLE MS. JUSTICE GITA GOPI Date : 13/03/2020 ORAL ORDER (PER : HONOURABLE MS JUSTICE SONIA GOKANI) 1. All the three petitions are taken up for hearing today. Since all the petitions contain identical facts and law, facts are drawn from Special Civil Application No. 9007 of 2019 for the purpose of adjudication. 2. Relief sought for are as follows:­ “11. In the above premises, the petitioners most respectfully pray as under:­ A) That Your Lordships be pleased to issue an appropriate writ order or direction in the nature of a writ of Certiorari and or any other appropriate writ order or direction, quashing and Page 1 of 8 C/SCA/9007/2019 ORDER setting aside the Show Cause Notice F No.V/SCN/Geeta/R­VI/D­V/99­00 dtd 7­03­2000. B) That Your Lordships may be pleased to issue a Writ of Prohibition or any other appropriate writ, direction or order, completely and permanently prohibiting the Respondents, their servants and agents from taking any action against them in pursuance of Show Cause Notice No.V/SCN/Geeta/R­ VI/D­V/00­00 dtd 7­3­2000. C) Pending hearing and final disposal of the present petition, Your Lordships may be pleased to restrain the Respondents, their servants and agents from seeking any coercive recovery from the Petitioners pursuant to the above referred SCN thereby staying any implementation and adjudication of Show Cause Notice Nov/SCN/Geeta/R­ VI/D­V/99­00 dtd 7­3­2000. D) An ex­parte ad­interim relief in terms of para 11 (C) above may kindly be granted pending the issuance of notice and further hearing of this Petition; E) Any other further relief that may be deemed fit in the facts and circumstances of the case may also please be granted;” 3. Petitioner is a private limited Company operating a 100% Export Oriented Undertaking (“EOU” for short) at the address shown in the cause title of this petition for manufacturing textile goods like processed fabrics. The first respondent is the Union of India, whereas respondent No.2 is the employee, agent and servant of Union of India. Respondent No.2 is also the adjudicating authority. Respondent No.3 is the Central Excise Superintendent, which issued impugned notice dated 07.05.2000. 4. The petitioner set up a 100% EOU for textile Page 2 of 8 C/SCA/9007/2019 ORDER goods in the year 1998 and had, therefore applied for Approval/License as 100% EOU to the office of the Development Commissioner, Kandla. Thereby, licensing and approving them to set up and run 100% EOU with a private Bonded Warehouse in the factory. The petitioner has averred in the said petition that the petitioner functioned as a 100% EOU by virtue of LOP. It also complied with the provisions of the Central Excise Act and the Rules framed thereunder and other applicable laws for the time being in force. The show cause notice on 07.03.2000 came to be issued, wherein the petitioner was called upon to show cause as to why the customs duty amounting to Rs.40,25,373/­ should not be recovered under section 12 of the Customs Act read with proviso to sub­section (1) of section 28 of the Customs Act on non­duty paid raw material used in manufacturing of non­permitted goods in Bonded premises and for recovery of payment of penalty under section 11­AC of the Central Excise Act and other such matters. 5. This had been replied to on 24.02.2001. The Page 3 of 8 C/SCA/9007/2019 ORDER first date given for hearing of the show cause notice was on 15.12.2017. It is the grievance on the part of the petitioner that for the entire period of 17 years, the show cause notice issued in the year 2000 was not heard and surprisingly the date of hearing was given after 17 years. It also chose to approach this Court with the aforementioned prayers. 6. It is also urged that the petitioner was not informed the reason for not deciding the case for a long time, nor the reason for reviving the case of adjudication, and thus there is no justification or reason brought on record by the respondents for transferring the case to call book and for retrieving the case from call book, and thus there is no justification or reason on record showing why the case remained unattended for about 19 long years 7. Affidavit­in­reply is filed by the respondents stating therein that the reliance is placed on the decision of this Court in Siddhi Vinayak Syntex Pvt. Ltd. vs. Union of India in Special Page 4 of 8 C/SCA/9007/2019 ORDER Civil Application No. 19437 of 2016. However, this has been challenged by the Department before the Apex Court. All other aspects have been refuted and denied specifically. 8. We have heard Mr. Jay Mehta, learned advocate appearing for and on behalf of Mr. Hasit Dave, learned advocate for the petitioner in all three matters. Mr. Amin in appearing for the Customs Department. 9. In the reply filed by the respondents, all averments have been denied and it has been stated that the petitioner had not produced any documentary evidence like income tax return or other documentary evidence showing that the petitioner had stopped the business and the factory and its office premises had been sold out. Since, these facts had not been stated with substantive and supportive documents, claims have not been genuine. 10. The Division Bench of this Court in the case of Siddhi Vinayak Syntex Pvt. Ltd. vs. Union of India and others decided on 07.03.2017 in Special Civil Application No. 19437 of 2016, Page 5 of 8 C/SCA/9007/2019 ORDER we noticed that there are no grounds to wriggle out of the ratio laid down by this Court for us to consider the contentions raised in affidavit­ in­reply. We notice that there are no grounds putforth by the department, which can attribute any of the reasons to the petitioners for delay, which has been caused in adjudicating the matter. The provisions of law have been made apparently clear and the ratio is emphatically focused on adhering to the time limit while adjudicating the show cause notice 11. In absence of following statutory details, this Court relies on the following findings and observations in the case of Siddhi Vinayak Syntex Pvt. Ltd.(supra):­ “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 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 sub­section (5) . When the legislature has used the expression Page 6 of 8 C/SCA/9007/2019 ORDER “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, non­availability 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 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 Page 7 of 8 C/SCA/9007/2019 ORDER 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.” 12. In view of the ration laid down in the above decision, these petitions stand allowed. Disposed of accordingly. (MS. SONIA GOKANI, J. ) (GITA GOPI,J. ) SUDHIR Page 8 of 8 "