SWATI MENTHOL & ALLIED CHEMICALS LTD. Vs. COMMISSIONER, GST & CENTRAL EXCISE COMMISSIONERATE, CHANDIGARH

JUDGEMENT

(1.) The prayer in the present petition is for issuance of a writ in the nature of certiorari seeking quashing of show cause notices dated 02.03.2010 (Annexures P-1 and P-2) and dated 06.05.2010 (Annexure P-3) proposing to recover the deficit in payment of excise duty etc. on the ground of 11 years' delay in adjudication till now.

(2.) Brief facts of the case are that petitioner No. 1 is engaged in the manufacture of Menthol Crystal/Powder/Solution, falling under Chapter Sub-Heading 2906 1100 and De-mentholised Oil (DMO), peppermint oil, terpenes, etc. falling under Sub-heading 330125 90 of the First Schedule of the Central Excise Tariff Act, 1985 (for short' 1985 Act). Petitioner No. 2 is the Managing Director of petitioner No. 1. Between 2005-2010, the petitioner purchased raw material for manufacturing final products from suppliers based out in Jammu and Kashmir. During 2008-2010, investigations were carried out by the respondent-department against various units in Uttar Pradesh engaged in the manufacture of Menthol Crystal/Powder/Solution, falling under Chapter Sub-Heading 2906 1100 and De-mentholised Oil (DMO), peppermint oil, terpenes, etc. falling under Sub-heading 330125 90 of the 1985 Act. The unit of the petitioner was also investigated. Upon investigation by the officer of Central Excise of Meerut-II, Commissionerate, respondents No. 2 and 3 issued show cause notices to the petitioner and its managing director alleging that the petitioner has been availing cenvat credit on inputs, namely, "Menthol/Menthol flakes and Mentholised Oil (DMO), Deterpenated Menthol and like inputs" against fake invoices issued by the J and K and North East based units by showing supply of raw materials without supply of goods, and that the petitioners were utilizing the Cenvat Credit so availed, towards the payment of Central Excise duty on their final products for domestic as well as for export of goods and thereafter were claiming the rebate of duty so paid on the exported goods. Vide these show cause notices dated 02.03.2010 (Annexures P-1 and P-2), the respondents proposed a demand of Rs. 11.26 crore of Cenvat credit along with interest and penalty. Further rebate amounting to Rs. 7.11 crore claimed on export was also demanded. Vide show cause notice dated 06.05.2010 (Annexure P-3) issued to the Managing director of petitioner No. 1 for the period April 2009 to February 2010, proposing demand of Rs. 7.33 lakh of Cenvat Credit along with interest and penalty. The petitioner filed a detailed reply against the aforesaid show cause notices but no proceedings were conducted in respect of the above-mentioned show cause notices issued to the petitioners from 2010-2018. Number of correspondences were exchanged between the Office of the Principal Commissioner, GST and Central Excise Commissionerate, Chandigarh fixing various dates of hearing but the hearing never materialized. Vide letter dated 10.10.2018, it was informed to the petitioners that personal hearing fixed in the aforementioned show cause notices before the Commissioner, Central GST Commissionerate, Chandigarh has been adjourned sine die for time being and next date of hearing will be informed later on. Aggrieved by the non-adjudication of the show cause notices issued to the petitioners for more than 10 years, the petitioners have approached this Court by way of present petition.

(3.) Learned counsel for the petitioners submits that show-cause notices were issued on 02.03.2010 and 06.05.2010 and a period of more than 10 years has elapsed, still it has not been adjudicated upon without any fault on the part of the petitioner. He has placed reliance on Section 11A of the 1944 Act which deals with recovery of duty not levied or not paid or short levied or short paid or erroneously refunded. Sub section (11) thereof provides that as far as possible in normal cases, the proceedings should be concluded within a period of six months, whereas in the case of fraud, collusion etc., the period prescribed is one year. In the case in hand, the proceedings are pending for the last more than 10 years.