Jcbl Limited vs. Principal Commissioner, Ludhiana And Ors

Held

The Court held that the impugned show cause notices dated 04.09.2008 and 12.11.2008 are liable to be quashed due to inordinate delay in adjudication. The Court referred to Section 11A of the Central Excise Act, 1944, and its interpretation by a Division Bench of the same High Court in M/s Shree Baba Exports, which was subsequently affirmed by the Supreme Court. The Court noted that the notices were issued in 2008 and had not been adjudicated upon. The explanation provided by the respondents, that the matter was transferred to the Call Book as per CVIC guidelines, was found to be insufficient and not a plausible reason for the delay. The Court emphasized that while Section 11A(11) includes the phrase 'where it is possible to do so', this does not permit perpetual extension of time, and a reasonable time limit must be adhered to. The delay in this case, spanning over a decade, was deemed unreasonable. Therefore, the Court quashed the show cause notices. Other issues raised in the writ petition were expressly left undecided.

Facts

The petitioner, JCBL Limited, was engaged in fabricating bodies on chassis. They cleared vehicles built on chassis from manufacturers on payment of excise duty. For chassis from independent owners, they claimed exemption under Notification No. 06/2006-CE dated 01.03.2006, after taking Cenvat Credit on inputs. The Revenue believed this exemption was wrongly availed, leading to two show cause notices: one dated 04.09.2008 for Rs. 1,62,99,205/- for the period 01.08.2007 to 31.10.2007, and another dated 12.11.2008 for Rs. 2,43,05,657/- for the period 01.11.2007 to 31.03.2008. The petitioner filed a writ petition challenging these notices. During pendency, the petitioner attempted to settle the dispute under the Sabka Vishvas (Legacy Dispute Resolution) Scheme, 2019, but disagreed with the Designated Committee on the calculation of the settlement amount regarding the reversal of Cenvat Credit.

Key Issues

1. Whether the impugned show cause notices dated 04.09.2008 and 12.11.2008, issued under Section 11A of the Central Excise Act, 1944, are liable to be quashed on grounds of inordinate delay in adjudication? Petitioner's contention: The petitioner argued that there has been an inordinate delay in the adjudication of the show cause notices, which were issued over a decade ago. They relied on the Division Bench judgment of this Court in M/s Shree Baba Exports vs. Commissioner, GST & Central Excise, Commissionerate, Chandigarh and another (CWP No. 11860 of 2021), decided on 15.03.2022, which held that show cause notices issued more than a decade back, without conclusion, deserve to be quashed due to unreasonable delay. They also cited the Supreme Court's decision in Commissioner of Central Excise vs. Krishna Wax (P) Limited, (2020) 12 SCC 572, emphasizing the significance of the reckoning date for limitation and the legislative intent behind Section 11A(11) prescribing time limits. Respondents' contention: The respondents' explanation for the delay, as stated in their written statement, was that the matter had been transferred to the Call Book as per CVIC guidelines. The Court found this explanation to be lacking cogent basis or legal impediment.