In W.P (T) No. 308 of 2023-JHA HC- Adjudication of show cause notice after 29 years would be contrary to mandate of Sec.11A(11) of Central Excise Act, 1944, says Jharkhand HC while allowing petition of Tata Steel Growth Shop
Justices Aparesh Kumar Singh & Deepak Roshan [14-02-2023]

Read Order: Tata Steel Ltd Vs. Union Of India And Ors

Tulip Kanth

Ranchi, February 21, 2023: The Jharkhand High Court has recently come to the aid of Tata Steel Growth Shop by setting aside the show cause notice relating to the payment of excise duty as the same was being asked to be adjudicated upon after 29 years.

“Such proceedings therefore stands vitiated due to inordinate and unreasonable delay and are accordingly fit to be quashed”, the Division Bench of  Chief Justice Aparesh Kumar Singh & Deepak Roshan asserted.

The Petitioners had approached the High Court seeking quashing of the show-cause notice issued by Central Excise Superintendent (third respondent) pertaining to the period June 1993 to November 1993 and asking the Court to prohibit the respondents from adjudicating upon the impugned show cause dated December 9, 1993.

The Petitioner engaged in the manufacture of iron and steel has a separate wing popularly known as ‘Growth Shop’ (maintenance shop) through which it used to get some of its plants and machinery manufactured/assembled/installed. The Petitioner issued a work order in terms of which, the growth shop of the petitioner manufactured the said cranes and cleared the same to the petitioner. 

A show cause notice was issued to the petitioner by the Collector of Central Excise, in 1984 alleging that the growth shop had removed electronic overhead crane without payment of duty. It was further alleged that the growth shop wrongly availed the benefit of exemption notification no. 118/75-CE dated April 30, 1975 as the goods cleared were not parts of crane but a fully functional crane. At the relevant point of time, excise duty was payable at different rates on parts of crane and crane.

The Petitioner submitted rebutted the allegations but was held exigible to excise duty @ 20% ad valorem as the adjudicating authority Collector of Central Excise held that petitioner had removed goods which were fully functional crane. Petitioner directly approached the Patna High Court in a petition which was decided against it and the matter was taken up in Civil Appeal. 

During pendency of the said appeal, the Central Excise Tariff Act was enacted and excise duty on cranes & its parts were reduced. Upon the change in rate of excise duty, the Commissioner of Central Excise issued show cause notice to the petitioner asking him to show cause as to why excise duty be not levied upon him @ 20% as the petitioner had removed parts of cranes and not crane vide a 1990 show cause notice. 

Later on the appeal of the petitioner was dismissed by CEGAT, Kolkata and the Petitioner preferred a Civil Appeal. The present writ petition pertained to the show cause notice dated December 9, 1993. During the pendency of the show cause notice Civil Appeal was decided by the Apex Court by remitting the matter to the Tribunal for fresh examination. 

In this background, it was contended that after a lapse of 29 years a notice for personal hearing had been issued to the petitioner on November 30, 2022 fixing the date of hearing as December 15, 2022. Petitioner made a request for adjournment of personal hearing and accordingly the matter was adjourned for eight weeks. Another notice was issued for personal hearing fixing the date of hearing on February 15, 2023. Therefore, the petitioner had been compelled to approach this Court.

Noting the fact that it was the petitioner who twice went up to the Apex Court in Civil Appeal against the SCNs, the Bench opined that the respondents had not enclosed any document to show that prior approval of the Collector of excise was taken before keeping the case in the call book. 

There seems to be no reference of any periodic review of the call book, though the relevant CBIC circulars of the years 1998 & 2003 specifically required the Commissioners to review the cases transferred to call books on a monthly basis in circumstances where the department was confronted with a situation where provisional assessment cases were kept pending for several years. 

“ The present case is a gross one as the impugned show cause notice are kept pending since 9 th December 1993 for 29 years and even if some explanation on the part of the respondents relating to pendency of Civil Appeal No. 3793 of 2001 till 05.05.2004 is accepted, there is no justification for not proceeding upon the impugned show cause notice for 18 years thereafter till the impugned notice of personal hearing has been served upon the petitioner”, the Bench held.

The Bench observed that adjudication of such a show-cause notice after 29 years would be contrary to the mandate of Section 11A(11) of the CEA 1944 and would lead to unreasonable and arbitrary results. 

Thus, allowing the writ petition, the Bench quashed the impugned show-cause notice dated December 9, 1993 and the notices of personal hearing.