M/s Anil Polymers Pvt Ltd. vs CCE, Aurangabad

This Appeal has been filed against the order dated dated 10.08.2018 passed by the Commissioner (Appeals), Central Excise, Cus & ST, Aurangabad in Order-in-Appeal No. NSK/EXCUS/000/APPL/195/18-19.

The Appellants have filed refund claim of Rs.36,893/- based on the Order-in-Appeal dated 25.6.2003 passed by the Commissioner(A), C.Ex. & Customs, Aurangabad in which the learned commissioner allowed the appeal of the appellant challenging the Order-in-Original dated 21.2.2002 and set aside the said show cause notice dated 31.8.2001 which was issued to the appellants for not adding the cost of dies/moulds in the valuation of goods. The said refund claim was sanctioned by AC, C.Ex. vide Order-in-Original dated 17.12.2003 issued under F.No. V/18-228/TD03-04 dated 17.12.2003. On the other hand, the Revenue challenged the Order-in-Appeal dated 25.6.2003 before this Tribunal in the year 2003 itself being Appeal No.E/2922/2003-Mum. and this Tribunal vide order dated 5.12.2008 modified the Order-in-Appeal dated 25.6.2003 only to the extent of setting aside the penalty part under Section 11AC of the Central Excise Act, 1944. So far as the duty demanded in show cause notice dated 31.8.2001 alongwith interest is concerned, the order of Adjudicating Authority was maintained and it was upheld. Revenue filed appeal against the said order before the Hon'ble High Court of Judicature at Bombay but the same was dismissed on monetary grounds.

During the pendency of Appeal before this Tribunal, the department had issued show cause notice u/s. 11A of the Central Excise Act, 1944 dated 18.8.2004 demanding the refund of Rs.36,893/- granted to the Appellant erroneously on the basis of Order-in-Appeal dated 25.6.2003. The said show cause cum demand notice was adjudicated and upheld by the Adjudicating Authority vide Order-in-Original dated 28.3.2017 and the recovery of the refund of Rs.36,893/- sanctioned erroneously to the appellant alongwith interest was confirmed. On Appeal filed by the Appellant, the learned Commissioner vide impugned order dated 10.8.2018 rejected the same.

I have heard learned Consultant for the appellant and learned Authorised Representative for the Revenue and perused the case records alongwith the written submission and case laws filed by the respective sides. The learned consultant for the Appellant challenged the impugned order on two counts. Firstly, that the refund order was never reviewed and appealed by the Revenue and therefore the refunded cannot be demanded/recovered under Section 11A of the Act. According to learned Consultant, the show cause notice for demanding erroneous refund without appealing the refund Order-in-Original is illegal. Secondly, according to learned consultant the Order-in-Original was decided after the lapse of 13 years which itself is illegal. On the other hand, Mr. Hasija, learned Authorised Representative reiterated the findings recorded in the impugned order. According to him there is no delay in passing the Order-in-Original, as the same has been passed immediately after the passing of the order dated 29.2.2016 by the Hon'ble High Court of Judicature at Bombay by dismissing the appeal of revenue on monetary grounds and that any adjudication prior to that would have been against the principle of natural justice. He also submits that the plea of the appellant that refund order was not reviewed, cannot be accepted as the demand was under dispute and the same was got settled only after the order of the Hon'ble High Court in the year 2016 and therefore the demand of erroneous refund was correctly issued under Section 11A ibid.

Firstly I am taking up the issue of delay in adjudicating the show cause notice. Since this is legal issue therefore it is permitted to be taken at any stage. Insofar as the show cause notice in the instant case is concerned, the same has been issued under Section 11A of the Act on 18.8.2004 but it was adjudicated vide Order-in-Original dated 28.3.2017. According to learned Consultant, the show cause notice dated 19.8.2004 was decided by the Order-in-Original dated 28.3.2017 but the same was handed over to the appellants only on 21.9.2017. Although in his submissions, learned Authorised Representative tried to justify the delay in passing the adjudicating order but there was not a whisper about it in the Adjudicating Order or in the impugned order. The Adjudicating Authority only mentioned that the personal hearing was held on 14.3.2017, without mentioning anywhere that due to the pendency of department's appeal before the Hon'ble Court the hearing of the show cause notice was delayed. He did not even find it necessary to mention the date of the order of the Hon'ble High Court by which department's appeal was dismissed. From the case records, it is not clear, whether any intimation was given to the appellants that the show cause notice are being kept pending awaiting a final decision of the Hon'ble High Court in the appeal filed by the Revenue from the order of the Tribunal. It is settled legal position that inordinate delay in adjudication results into denial of principles of natural justice. In the case in hand, the assessee cannot be blamed for delay as they had never delayed the proceedings. Adjudication proceedings have to be culminated within reasonable time and if not, it would be vitiated. The act on the part of Revenue of keeping the show cause notice pending for unduly long period is arbitrary and it would, in my opinion, vitiate the entire proceedings.

The Hon'ble High Court of Judicature at Bombay in the matter of Sanghvi Reconditioners Pvt. Ltd. vs. Union of India; reported in 2018 (12) G.S.T.L. 290 (Bom.) on the issue of delay in adjudication of show cause notice, held as under:-

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With the assistance of Mr. Raichandani and Mr. Jetly, we have perused the petition and the annexures thereto. We have also perused the consistent view taken by this Court, based on which the judgment in the case of Lanvin Synthetics Private Ltd. (supra) was rendered. The obligation on the respondents to adjudicate the show cause notices with expediency has been repeatedly emphasized. The decisions in the cases of Shirish Harshavadan Shah v. Deputy Director, E.D., Mumbai [2010 (254) E.L.T. 259] and Cambata Indus. Pvt. Ltd. v. Additional Dir. of Enforcement, Mumbai [2010 (254) E.L.T. 269] underline as to how show cause notices issued decades back cannot be allowed to be adjudicated by the Revenue merely because there is no period of limitation prescribed in the statute to complete such proceedings. The adjudication proceedings serve a definite purpose. The object is to secure and recover public revenue. The larger public interest therefore requires that the Revenue and its officials adjudicate the show cause notices expeditiously and within a reasonable time. The term 'reasonable time' is flexible enough and would depend upon the facts and circumstances of each case. There is no rigidity or inflexibility, in the sense, a time is prescribed in the judgments of this Court and that is termed as reasonable. Thus, what would be a reasonable time depends upon the facts and circumstances of each case. Surely, a period of 13 years as was found in the case of Shirish Harshavadan Shah (supra) and equally, long period in the case of Cambata Indus. Pvt. Ltd. (supra) was not termed as reasonable. This Court, relying upon the judgment of the Hon'ble Supreme Court in the case of Government of India v. Citedal Fine Pharmaceuticals, Madras & Ors., reported in AIR 1989 SC 1771 = 1989 (42) E.L.T. 515 (S.C.), held that in absence of any period of limitation, it is settled law that every authority should exercise the power within a reasonable period. What would be the reasonable period would depend upon the facts of each case and no hard and fast rule can be laid down in this behalf.

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In the light of the discussions made hereinabove, the appeal deserves to be succeeded on this ground itself and therefore I am not discussing the other issues/submissions raised by learned consultant. The appeal filed by the Appellants is accordingly allowed with consequential relief, if any, as per law.

(Order pronounced in the open Court on 26.08.2021)