M/S Shree Baba Exports vs. Commissioner And Another

Facts

The petitioners, M/s Shree Baba Exports, M/s A.B. Industries, and M/s Shiv Shakti Enterprises, filed writ petitions challenging Show Cause Notices (SCNs) issued to them between December 2009 and March 2010. The SCNs alleged that the petitioners had availed Cenvat Credit on inputs based on invoices from Jammu & Kashmir and North East units, showing supply of raw materials without actual supply of goods. This credit was allegedly used to pay excise duty on final products, including for exports, for which rebates were claimed. The petitioners argued that these SCNs remained unadjudicated for over 11 years. The respondents (Commissioner, GST & Central Excise) did not dispute the delay but contended that the SCNs were transferred to the 'Call Book' category in 2019 due to pending appeals before the Jammu & Kashmir High Court, as per Circular No.1053/02/2017-CX.

Held

The Court held that the Show Cause Notices (SCNs) issued to the petitioners in 2009/2010, remaining unadjudicated for over 11 years, were liable to be quashed. The Court referred to Section 11A(11) of the Central Excise Act, 1944, which prescribes time limits for adjudication (six months for sub-section (1) cases and one year for sub-section (4) cases), stating that the expression 'where it is possible to do so' does not permit perpetual extension of time. The Court found no plausible explanation offered by the respondents for the inordinate delay in adjudicating the SCNs. Regarding the pendency of appeals before the Jammu & Kashmir High Court, the Court noted that these appeals were filed in 2018, and no explanation was provided for why the SCNs could not be adjudicated prior to that. The Court relied on its own previous decision in 'M/s Mentha & Allied Products Ltd. vs. Commissioner, Central Goods & Service Tax, Chandigarh', which held that appeals concerning suppliers would not impact the purchasers' cases if the delay was unreasonable. Therefore, the Court quashed the impugned SCNs.

Key Issues

1. Whether the Show Cause Notices issued between December 2009 and March 2010, remaining unadjudicated for over 11 years, are liable to be quashed on grounds of delay and non-adjudication, in light of Section 11A of the Central Excise Act, 1944? (Question of law) Petitioner's Contention: The petitioner argued that the prolonged delay in adjudicating the SCNs, exceeding 11 years, violates the principles of natural justice and statutory time limits prescribed under Section 11A of the Central Excise Act, 1944. They relied on judgments like 'Siddhi Vinayak Syntex Private Limited vs Union of India', 'Parimal Textiles vs. Union of India', and 'State of Punjab vs. Bathinda District Co-op. Milk P. Union Limited', emphasizing that proceedings should conclude within a reasonable time. Respondent's Contention: The respondent relied on Circular No.1053/02/2017-CX dated 10.03.2017, asserting that the transfer of pending SCNs to the 'Call Book' category due to appeals before the Jammu & Kashmir High Court justified the non-adjudication and that the delay was not illegal.