M/S. Apollo Tyres Limited vs. Union Of INDIA

Held

The Court held that the impugned show cause notices were in clear breach of the statutory mandate of Section 11A(11) of the Customs Act, 1962, and could not be sustained. The Court noted that the issue involved in the notices had previously been raised concerning the petitioner's operations in Kerala and was resolved in favor of the petitioner by the CESTAT, Bangalore, on 08.02.2005, a decision against which the Revenue had not preferred an appeal. The Court found it undisputed that the respondent resurrected the dormant show cause notices from the 'call book' only after the filing of the present petition and issued a communication for a personal hearing. The Court reasoned that the act of keeping the notices in the 'call book' for an unduly long period without disclosing any reason for the delay was an arbitrary exercise of power and violated the principles of natural justice, vitiating the entire proceedings. The Court relied on its previous decisions in Parimal Textiles, M/s. Siddhi Vinayak Syntex Pvt. Ltd., and Shivkurpa Processors Pvt. Ltd., which held that inordinate delay in adjudication results in a denial of the principles of natural justice and that such delay can justify a plea of prejudice. Consequently, the Court quashed and set aside the impugned show cause notices.

Facts

The petitioner, Apollo Tyres Limited, engaged in tyre manufacturing, received 25 show cause notices between August 2002 and May 2017, covering periods from August 1997 to October 2016. These notices challenged the petitioner's practice of deducting averaged government levies (turnover tax, octroi/entry tax) from the Net Dealer Price to arrive at an assessable value for excise duty. The petitioner contended that a similar issue concerning their Kerala operations was resolved in their favor by the CESTAT, Bangalore, in 2005, and no appeal was filed by the Department. The petitioner argued that the issuance of these notices was in breach of Section 11A(11) of the Customs Act. The respondents argued that the petition was not maintainable as the notices had been taken out of the 'call book' and a personal hearing was scheduled, suggesting the petitioner could avail of alternative remedies.

Key Issues

1. Whether the impugned show cause notices, issued for periods between August 1997 and October 2016, are in breach of the statutory mandate of Section 11A(11) of the Customs Act, 1962, due to inordinate delay in adjudication and the prior resolution of a similar issue in favor of the petitioner by the CESTAT, Bangalore? Petitioner's arguments: - The issue is no longer res integra and the show cause notices are in clear breach of Section 11A(11) of the Customs Act. - A similar issue concerning their Kerala operations was resolved in their favor by CESTAT, Bangalore, order dated 08.02.2005, which has attained finality. - Relied on this Court's decision in M/s. Siddhi Vinayak Syntex Pvt. Ltd. Vs. Union of India. Respondents' arguments: - The petition is not maintainable as the impugned show cause notices have been taken out of the call book and a personal hearing has been fixed. - The petitioner can avail of the alternative remedy for redressal of their grievance. - The grievance regarding delay has been redressed as the notices have been taken out of the call book and a personal hearing is fixed.