Beico Industries PVT. LTD. (Formerly Known As Beico Electrical Insulation PVT. LTD.) vs. The Union Of INDIA And Ors

Held

The Court held that the inordinate delay of 28-31 years in adjudicating the show cause notices was in breach of the principles of natural justice. The Court found that the petitioner had reasonably proceeded on the basis that the department had abandoned the proceedings due to the prolonged silence. The Court emphasized that if the Revenue intended to keep the show cause notices alive, they should have strictly followed the instructions in the CBE & C circular dated 10th March 2017, which mandates formal communication to the party about the transfer of notices to the call book. The absence of such communication meant the petitioner was not put on notice that the notices were still pending. The Court agreed with the reasoning in Sushitex Exports (India) Ltd. that after such a long delay, the petitioner, having approached the Court, should not be made to suffer an order facilitating the conclusion of proceedings which would likely prejudice them. Consequently, the Court quashed and set aside all 16 impugned show cause notices.

Facts

Petitioner, Beico Industries Pvt Ltd., manufacturing electrical grade insulating papers, filed a writ petition challenging 16 show cause notices issued between October 1991 and April 1994. The petitioner argued that the inordinate delay of 28-31 years in adjudicating these notices breached principles of natural justice and was contrary to established law. The dispute concerned the classification of the petitioner's product, with the Revenue contending it fell under Chapter heading 85.46, while the petitioner argued for classification under Chapter heading 48.11. A prior dispute regarding classification was remanded by the Supreme Court to the Tribunal, which was never decided. The petitioner later settled related disputes under the Sabka Vishwas Scheme. Despite this, the Revenue issued notices for personal hearings in 2022, prompting the present petition.

Key Issues

1. Whether the inordinate delay of 28-31 years in adjudicating the show cause notices, and the subsequent issuance of personal hearing notices after such a long gap, violates the principles of natural justice and is contrary to law? (Question of law) Petitioner's arguments: The petitioner contended that the extensive delay in adjudicating the show cause notices led them to reasonably believe the proceedings were abandoned. Issuing hearing notices after such a long period, especially when relevant documents and personnel are no longer available, prejudices a fair trial and amounts to arbitrary state action. They relied on several High Court and Supreme Court judgments, including Premier Ltd. Vs. Union of India and Sushitex Export India Ltd. & Ors Vs. Union of India & Anr., to support their claim of prejudice and violation of natural justice. Revenue's arguments: The Revenue's primary defense was that the show cause notices were transferred to the 'call book' due to the pendency of a related matter before the CESTAT, following a Supreme Court remand. They argued that enquiries with their departmental representative were not being responded to, leading to this action. The Revenue also submitted that the petitioner had already replied to the show cause notices and attended personal hearings, suggesting liberty to conclude the proceedings.