Kamdhenu Exim Private LTD vs. Union Of INDIA

Held

The Court allowed the petition, quashing and setting aside the Order-in-Original No.SRT/DIV-IV/ADJ-14/2018 dated January 11, 2018, and the show-cause-notice dated July 15, 2004. The Court found the inordinate delay of approximately 14 years in adjudication proceedings, without explanation and without any fault on the part of the petitioners, to be unreasonable. The Court noted that the issue was covered by the judgments relied upon by the petitioners, specifically mentioning *Siddhi Vinayak Syntex Pvt. Ltd.*. The Court rejected the revenue's contention that the case should be kept sine die merely because the *Siddhi Vinayak Syntex Pvt. Ltd.* decision was carried to the Supreme Court, especially since no stay was granted. The ratio decidendi is that prolonged dormancy of adjudication proceedings without justification, coupled with a breach of natural justice, renders the subsequent order unsustainable. The operative direction was to quash the impugned order and show-cause notice.

Facts

The petitioner, Kamdhenu Exim Private Ltd., challenged an Order-in-Original dated January 11, 2018, passed by the Assistant Commissioner of CGST and Central Excise, Surat. This order was based on a show-cause notice issued on July 15, 2004, demanding Rs. 7,66,836/- towards central excise short-paid on DTA clearances of waste and rejects of fabrics, along with penalty and interest. The petitioner argued that after filing a reply in 2005, the proceedings remained dormant for 13 years, during which the petitioner exited EOU and changed its address. The petitioner claimed that no further notice of personal hearing was served, leading to a breach of natural justice. The department had reactivated proceedings after a significant delay.

Key Issues

1. Whether the adjudication proceedings, initiated by a show-cause notice dated July 15, 2004, and culminating in an order dated January 11, 2018, after a dormancy of approximately 13 years, are vitiated by an inordinate delay and breach of principles of natural justice, particularly concerning the lack of proper notice for personal hearing? (Question of mixed law and fact, turning on principles of natural justice and procedural fairness under the CGST Act/Central Excise Act). Petitioner's Arguments: The petitioner contended that the impugned order is arbitrary, illegal, and unreasonable due to the 13-year delay in adjudication after their reply in 2005. They argued that notices for personal hearing in 2017 were not served, violating natural justice. They relied on judgments in *Siddhi Vinayak Syntex Pvt. Ltd. vs. Union of India*, *Pooja Tex Prints Private Limited and others v. Union of India and others*, *GPI Textiles Limited v. Union of India*, and a previous order of the Gujarat High Court in SCA No. 18235 of 2017, arguing that reactivating proceedings after such a long gap constitutes a miscarriage of justice. Revenue's Arguments: The revenue contended that the decision in *Siddhi Vinayak Syntex Pvt. Ltd.* was carried to the Supreme Court, and the matter was adjourned sine die. However, they could not show that the judgment was stayed.