Suraj Karan Baradia vs Union Of India

The petitioner has preferred present petition under Article 226 of the Constitution of India for the following reliefs:

"(a) That Your Lordship 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 the Petitioner in pursuance of Show Cause Notice F.NO.DRI/AZU/ Misc.-38/02 dated 29.12.2003 (Annexure-"B") and OIO No.AHM-CUSTM-000-COM-001-18-19 dated 10.04.2018 (Annexure" D")

(b) That Your Lordships may be pleased to issue a Writ of Certiorari or any other appropriate writ, direction or order, quashing and setting aside OIO No.AHM-CUSTM-000-COM-001-18-19 dated 10.04.2018 (Annexure-"D");

(c) Pending hearing and final disposal of the present petition, Your Lordships may be pleased to restrain the Respondents, their servants and agents from taking any action against the Petitioner including any coercive recovery pursuant to OIO No.AHM-CUSTM-000-COM-001-18-19 dated 10.04.2018 (Annexure-"D") thereby staying implementation and execution of this adjudication order dated 10.04.2018;

(d) An ex-parte ad-interim relief in terms of para 18(C) above may kindly be granted."

The issue involved in this petition is short and in order to appreciate the same, few relevant facts need mention hereinbelow:

2.1 On January, 2002, the petitioner was allowed to set up a 100% Exported Oriented Undertaking in the name of "Western Silks" for manufacturing silk yarn out of raw mulberry silk. The petitioner imported certain consignments of raw mulberry silk free of customs duty for manufacturing Silk Yarn.

2.2 On 29.10.2002, the Directorate of Revenue Intelligence (for short "DRI"), Ahmedabad Zonal Unit conducted enquiry at the petitioner's unit and seized various documents, files etc. under a panchnama. The petitioner in the month of November, 2002, discontinued aforesaid business and thereafter, he has been serving as an employee at various textile industries. Thereafter, the DRI authorities searched various premises and numerous documents were seized from such premises and statements of various persons were recorded and opinion / report of textile experts was also obtained by the said authorities.

2.3 On 29.12.2003, the Additional Director, DRI issued show cause notice proposing to recover customs duty from the petitioner with interest and penalty and also classification of imported materials. Thereafter, no development has taken place in respect of said show cause notice. The petitioner's business activities having been completely closed down, no papers or any document including even the show cause notice were available with the petitioner any longer.

2.4 Thereafter, after a long period of 14 years, on 27.10.2017, a letter dated 27.10.2017 was issued by the respondent No.2 at the address of the petitioner's native, calling the petitioner with two other persons for personal hearing on 17.11.2017 for the show cause notice dated 29.12.2003.

2.5 The petitioner's advocate, therefore, appeared before the respondent No.2 and requested for copy of the show cause along with all relevant papers as the petitioner did not have with him any such papers including the show cause notice. In response to the aforesaid request, the photocopy of the show cause notice was given to the petitioner after 2/3 days.

2.6 The petitioner submitted a letter / reply to the show cause notice dated 28.12.2017 and brought to the notice of the respondent No.2 that no document relevant for the show cause notice was given and revival of adjudication proceedings after 14 years was a violation of principles of natural justice as well as not permissible as held by this Hon'ble Court in case of M/s. Siddhi Vinayak Syntex Pvt. Ltd. Union of India and ors. reported in 2017(352) ELT 455 and M/s. Parimal Textiles Vs. Union of India reported in 2018(8) G.S.T.L. 361 (Guj.). as well as Alidhara Textile Engineers Ltd. & Ors. Vs. Union of India decided by this Hon'ble Court vide order dated 28.06.2017 passed in Special Civil Application No. 20125 of 2016.

2.7 The respondent No.2 passed an adjudication order on 10.04.2018 confirming the liabilities proposed in the show cause notice dated 29.12.20003 and held that there was no time limit laid down under the Act for concluding adjudication proceedings. Hence, present petition.

We have heard Mr. Paresh M. Dave, learned advocate for the petitioner and Mr. Nirzar Desai, learned advocate for the respondent No.2.

Mr. Paresh M. Dave , learned advocate for the petitioner submitted that the show cause notice was issued on 29.12.2003 and thereafter, no adjudication proceedings were conducted or concluded by the concerned Authority within a reasonable period and after a very long period of 14 years, the case was taken up for adjudication by the Authority. There was no reason for the respondent Authority to not complete the adjudication of the show cause notice and therefore, the action reviving the adjudication of the case that was kept pending for than 14 years is in gross violation of the principles of natural justice. He further submitted that the issue involved in the present petition is no longer res integra and the show cause notice issued by the respondent is in clear breach of the statutory mandate of Section 11A(11) of the Customs Act and can no longer be sustained. In support of his submissions he placed reliance on the decision of this Court in the case of M/s. Siddhi Vinayak Syntex Pvt. Ltd. (Supra), M/s. Parimal Textiles (Supra) and Alidhara Textile Engineers Ltd. (Supra) and submitted the case could not have been kept pending for so many years and the delay of more than 14 years is fatal and amounts to re-opening the case. It was submitted that no mala fide or any other default is attributable to the petitioner for the delay in adjudicating the show cause notice and hence, the impugned order which has been passed after a reasonable period of time and show cause notice are required to be quashed and set aside by allowing the petition.

Mr. Nirzar Desai, learned advocate for the respondents submitted that present petition is not maintainable as the impugned show cause notice has been taken out from call book and personal hearing notices were issued to the petitioner to adjudicate the show cause notice. It is his submission that the show cause notice was issued to M/s. Western Silks and the petitioner was proprietor of the said firm and by the said show cause notice asked the petitioner to show cause as stated in said notice dated 29.12.2003. He also submitted that the petitioner was given sufficient opportunity of hearing, but the petitioner himself sought adjournment to prolong the proceeding. He further submitted that present petition of petitioner is an afterthought action after receipt of an adverse adjudication order from the adjudicating authority. He therefore, urged to dismiss the petition.

We have heard learned advocates of either side and we have also perused the documents on record. It is undisputed fact that the issue involved in the impugned show cause notice had for the year 2003. On 28.12.2017, the petitioner made detailed reply along with submissions by relying the decisions in the case of M/s. Siddhi Vinayak Syntex Pvt. Ltd. (Supra), M/s. Parimal Textiles (Supra) and Alidhara Textile Engineers Ltd. (Supra).

It is also undisputed fact that the respondents after keeping the impugned show cause notice in the call book, have not chosen to follow up it for unduly long period. It is very evident from the affidavit in reply filed by the respondents that on 29.12.2003, the show cause notice was issued and thereafter, nothing has been done by the respondent though petitioners filed detailed reply / written submissions in respect of the said show cause notice. Thereafter, on 10.04.2018, after a period of 14 years, the respondent passed the order by confirming the demand against the petitioners without considering the replies made by the petitioner from time to time. The act on the part of the respondents of keeping the impugned show cause notice in call book for unduly long period, without disclosing cogent reason for delay is arbitrary in exercise of powers and is also in violation of provisions of Section 11A of the Customs Act. It would in our opinion vitiate the entire proceedings.

Similar issue raised for consideration before this Court in the cases of M/s. Siddhi Vinayak Syntex Pvt. Ltd. (supra), more particularly paras 23 and 24, which read 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 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 subsection (1);

(b) within one year from the date of notice, where it is possible to do so, in respect of cases falling under subsection (4) or sub-section (5).

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 subsection (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 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 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.

In the case of Shivkurpa Processors Pvt. Ltd. Vs. Union of India reported in 2018 (362) E.L.T. 773 (Guj.). In the case of Shivkrupa (Supra), this Court has held as under:

"10. We have heard learned counsels for the parties and perused the documents on record. The undisputed aspect that emerged from the proceedings would unequivocally indicate that notice dated 22.8.2002 did not result into any order for quite sometime and as per say of respondent, it was consigned to the call book as per the circulars prevalent. The authority appeared to have proceeded with broad aspect of the matter that nonreceipt of the said notice cannot be said to be established by the noticee and based thereupon, recording findings that concerned authorized person of the petitioner Company, who also is the signatory to this petition, did receive the notice and therefore, it cannot be in any manner correct on the part of the petitioners to say that there was no knowledge of existence of show cause notice dated 22.8.2002. We are of the view that this contention needs to be examined in light of the principles underlying the law, which is by now settled that inordinate delay in adjudication results into denial of principles of natural justice and that proposition cannot be said to be nonest in the present proceedings. The receipt of notice dated 22.8.2002 and findings recorded thereon would pale into insignificance, if the same is to be viewed in light of observations of the Court in case of Siddhi Vinayak Syntex Pvt. Ltd (supra), Alidhara Textile Engineers Ltd. (supra) and other decisions cited as bar.

The ground of alternative remedy is also does not impress this Court in any manner, as there is clear violation of principles of natural justice, which cannot be overlooked by any authority, therefore, this ground is also not available to respondent.

Learned counsel for the respondent attempted to develop the ground for resisting this petition based upon plea of prejudice. We are of the view that said ground would also not be available to the respondent, as notice dtd 22.8.2002 had not been acted for long long period of 17 years, that in itself is sufficient to accept and justify the plea of prejudice without any further probing into the matter. The resurrection of notice dated 22.8.2002 assuming for the sake of convenience without admitting that was admittedly after subsequent notice, then also, in view of established principles of law and provisions of statute, the said resurrection would be not permissible in light of decisions cited hereinabove."

In our view, the issue involved in this petition is therefore, squarely covered by the decisions of this Court and the impugned show cause notice dated 29.12.2003 cannot be permitted to be processed further and order dated 10.04.2018 passed in Order in Original No.AHM-CUSTM-000-COM-001-18- 19 is also required to be quashed and set aside.

It is manifestly clear that the authorities kept the show cause notice in call book for 14 years and thereafter, resurrected and the impugned order dated 10.04.2018 confirmed the demand came to be passed without considering the written submissions of the petitioner. In our considered view, the action on the part of the authorities to keep the show cause notice for long period and thereafter, reviving it to confirm the order of demand as has been held in various decisions resulted in infraction of the principles of natural justice rendering the show cause notice as well as consequent order vitiated.

For the foregoing reasons, the impugned notice dated 29.12.2003 and order dated 10.04.2018 passed in Order in Original No.AHM-CUSTM-000-COM-001-18-19 are hereby quashed and set aside. Rule is made absolute. The parties are left to bear their own costs.