Parle International LTD vs. Union Of INDIA Through The Secretary Dept. Of Revenue, Ministry Of Finance And Ors

Held

The Court held that the respondents were not justified in commencing adjudication proceedings 13 years after the issuance of the show-cause notices. The Court found that the delay was wholly attributable to the respondents and that such a prolonged delay defeated the purpose of issuing a show-cause notice, which should be taken to its logical consequence within a reasonable period to achieve finality. A period of 13 years was deemed unreasonable. The Court reasoned that an assessee cannot be faulted for believing that its reply had been accepted and the matter had been closed after such a long period of no response from departmental authorities. This delayed adjudication was held to be in contravention of procedural fairness and violative of the principles of natural justice, making the action unfair and unsustainable. The Court also noted that the passing of the order-in-original after the writ petition was filed, without waiting for the Court's adjudication, was improper and amounted to interfering with the dispensation of justice. Consequently, the impugned order-in-original dated 11.11.2019 was set aside and quashed. The Court did not expressly leave any issue undecided.

Facts

The petitioner, Parle International Limited, challenged show-cause notices dated 01.06.2006 and 28.11.2006, issued by the Joint Commissioner and Deputy Commissioner of Central Excise and Customs, Vapi, respectively. These notices alleged availment of excess CENVAT credit amounting to Rs.11,52,281.00 and Rs.98,324.00. The petitioner filed replies denying the allegations. After approximately 13 years of no communication, the petitioner was issued a letter on 13.08.2019 for a personal hearing. Subsequently, an order-in-original dated 11.11.2019 was passed by respondent No.3, confirming the demand of Rs.11,52,281.00 with interest and penalty, while dropping the proceedings initiated by the second show-cause notice. The delay in adjudication was attributed to the notices being kept in a 'call book' due to pending departmental appeals.

Key Issues

1. Whether the adjudication of show-cause notices issued on 01.06.2006 and 28.11.2006 after a delay of approximately 13 years is illegal, void, and bad in law, thereby rendering the consequential order-in-original dated 11.11.2019 invalid? (Question of law) Petitioner's arguments: The petitioner contended that the prolonged delay of 13 years in adjudicating the show-cause notices rendered the proceedings stale and that the respondents could not revive them after such an unreasonable period. They argued that this delay was wholly attributable to the revenue and violated principles of natural justice and procedural fairness, citing decisions of the High Court. The petitioner also argued that the passing of the order-in-original after the writ petition was filed was an attempt to frustrate the court's hearing. Revenue's arguments: The respondents argued that the adjudication was kept in abeyance due to pending departmental appeals and circulars of the Central Board of Excise and Customs. They contended that the show-cause notices were transferred to the 'call book' and revived after the disposal of the appeals and subsequent merger of Commissionerates due to GST implementation. They asserted that the order-in-original was rightly passed under Section 33 of the Central Excise Act, 1944.