Prem Cables Private LTD. vs. The Assistant Commissioner, CGST Division-D

Facts

The petitioners, P G Foils Limited and Prem Cables Private Limited, challenged show cause notices issued between 2007 and 2012 for demand of Central Excise Duty. These notices were allegedly consigned to the 'Call Book' due to pending litigation before the Supreme Court. Proceedings were revived in 2020-2021, with intimations for personal hearings sent to the petitioners. The petitioners argued that they were not informed about the notices being placed in the Call Book and that the revival after such a long delay was unjustified. The respondents are the Assistant Commissioner, Superintendent (Adjudication), and Commissioner of CGST.

Held

The Court held that the revival of show cause notices after a significant delay, by consigning them to the 'Call Book' without informing the petitioners, was unlawful and arbitrary. The Court found that the 'Call Book' mechanism, as created by the CBEC, is contrary to the statutory mandate of determining duty within prescribed time limits, 'as far as possible'. The Court noted that Section 11A(11) of the Central Excise Act prescribes time limits for determination of duty, and the CBEC has no power to extend these limits for years on end to await decisions in other cases. The Court also observed that the reason cited for placing cases in the Call Book (pendency of M/s. J.K. Cement Works case) was not a valid justification, as that case was registered in 2012, while some show cause notices were issued as early as 2007. The Court concluded that there was no material to satisfy it that the original notices were transferred to the Call Book following due process, nor was there a satisfactory explanation for the delay. Consequently, the impugned show cause notices, revival notices, and any consequential orders were quashed. The Court expressly left undecided the specific amounts of duty in dispute as the proceedings were vitiated by procedural illegality.

Key Issues

1. Whether the revival of show cause notices issued between 2007 and 2012, after being consigned to the 'Call Book' and revived in 2020-2021, is legally sustainable, considering the delay and lack of intimation to the petitioners? (Question of law and mixed fact and law, turning on principles of natural justice and statutory time limits for adjudication). Petitioner's arguments: The petitioners contended that the revival notices were illegal and arbitrary. They argued that no intimation was provided regarding the consignment of the original show cause notices to the Call Book, leading them to believe the proceedings were dropped. This lack of communication prejudiced their ability to defend themselves as evidence might have been lost. They also argued that the 'Call Book' mechanism, as implemented by CBEC, is contrary to statutory provisions and that the delay in adjudication, particularly when the reason cited (pendency of another case) was itself registered after some of the show cause notices were issued, is unsustainable. Revenue's arguments: The judgment does not explicitly record arguments made by the revenue. However, their actions in reviving the proceedings imply a belief in the validity of the 'Call Book' procedure and the justification for delayed adjudication.