M/S. Serve Pharmaceuticals Through Mr. Ugersen Elawadhi vs. Union Of INDIA

Held

The Court held that the adjudication proceedings were vitiated due to unreasonable and unexplained delay. The Court noted that the show-cause notice was issued in 2006, the case was retrieved from the Call Book in 2009, and adjudication did not conclude until 2018, a period of nearly nine years after retrieval. The Court found that the petitioner was not responsible for this delay and that the Department failed to provide any justification for it. Relying on the principle that adjudication proceedings must culminate within a reasonable time, as established in Siddhi Vinayak Syntex Pvt. Ltd. and other cases, the Court concluded that the show-cause notice and the impugned Order-in-Original could not be sustained. The Court also noted that the issue of proper notice service for personal hearings need not be further probed as the order was being quashed on the ground of delay. The argument of alternative remedy was rejected as the proceedings themselves were vitiated. The Court quashed and set aside the Order-in-Original and the show-cause notice.

Facts

The petitioner, M/s. Serve Pharmaceuticals, challenged an Order-in-Original dated 25.05.2018, issued on 29.05.2018 by the respondent, the Commissioner of Central Excise, Ahmedabad III. The challenge was based on the significant delay of nearly eleven years since the issuance of the show-cause notice dated 14.08.2006. The show-cause notice pertained to the period 2001-02 to 2005-06 and sought recovery of duty after recalculating the SSI exemption limit. The petitioner argued that the case was transferred to the 'Call Book' in 2007 without their knowledge or request, retrieved in 2009, and then remained dormant for approximately nine years before adjudication. The petitioner also contended a breach of natural justice due to non-service of proper notices for personal hearings.

Key Issues

1. Whether the Order-in-Original passed after a delay of nearly eleven years from the issuance of the show-cause notice is vitiated on grounds of unreasonable delay in adjudication proceedings, and if so, whether it is covered by the precedent in Siddhi Vinayak Syntex Pvt. Ltd. Vs. Union of India (2017)? 2. Whether the principles of natural justice were breached due to the alleged non-service of proper notices for personal hearings as prescribed under Section 37C of the Central Excise Act, 1944? Petitioner's arguments: The petitioner contended that the delay in adjudication was unreasonable and illegal, as the case was transferred to the Call Book without their consent and remained dormant for an extended period. They argued that the order passed after such a delay, without explanation, was without jurisdiction and covered by the binding precedent of Siddhi Vinayak Syntex Pvt. Ltd. They also asserted a breach of natural justice due to improper notice service. Revenue's arguments: The respondent contended that an alternative remedy was available against the order and that there was no breach of the principles of natural justice. They claimed that notices for personal hearings were issued and served upon the petitioner's consultant.