APHC010303262024 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3516] THURSDAY, THE THIRTEENTH DAY OF FEBRUARY TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE B. KRISHNA MOHAN THE HONOURABLE SRI JUSTICE NYAPATHY VIJAY WRIT PETITION NO: 15361/2024 Between: Sharat Industries Limited ...PETITIONER AND Union Of India and Others ...RESPONDENT(S) Counsel for the Petitioner: 1. T V P SAI VIHARI Counsel for the Respondent(S): 1. SANTHI CHANDRA (Sr. Standing Counsel for CBIC) 2. Y N VIVEKANANDA 2 HBKM,J & HVN,J W.P.No.15361 of 2024 The Court made the following: ORDER: (Per Hon’ble Sri Justice B. Krishna Mohan) Heard Mr. K.S. Murthy, the learned Senior Counsel for the petitioner and Sri Ravula Nagarjuna, the learned Junior Standing Counsel for the respondent Nos.2 and 3. 2. This writ petition is filed questioning the proceedings/order of the 2nd respondent dated 23.04.2024 as under:- i) I confirm the demand of proportionate Customs duty of Rs.61,51,866/- (Rupees Sixty One Lakh Fifty One Thousand Eight Hundred and Sixty Six Only) on the imported raw materials used in the production of shrimp cleared into DTA, as detailed in Annexure-II enclosed to the show cause notice, along with interest at applicable rates, under the provisions of Notification No. 13/81-Cus., 188/1993-Cus No.196/1994-Cus dated 08.12.1994 as amended read with the Conditions of LOP/Legal Agreement and B.16/B-17 Bonds. (ii) I confirm the demand of proportionate Central Excise duty of Rs.3,65,923/- (Rupees Three Lakh Sixty five Thousand Nine Hundred and Twenty Three Only) on the indigenous Raw materials/Consumables as detailed in Annexure-IV to the show cause notice, along with interest at applicable rates under the provisions of the Notification No.10/1995- CE dated 23.02.1995 read with notification No.123/81-CE, No.57/94-CE and No. 136/94-CE, as amended read with the conditions of LOP/Legal Agreement and B.16/B-17 Bonds Section 174 of the Central Goods and Service Tax Act, 2017; (iii) I confirm the demand of Customs duty of Rs.12,77,431/- (Rupees Twelve Lakhs Seventy Seven Thousand Four Hundred and Thirty One only) (Rs. 4,05,518/- + Rs. 8,71,913/-) on the imported Artemia cleared into DTA, procured by them without payment of duty, along with interest, 3 HBKM,J & HVN,J W.P.No.15361 of 2024 at applicable rate, under the provisions of Notification No.196/1994-Cus dated 08.12.1994; (iv) I confirm the demand of Customs duty of Rs. 4,46,050/- (Rupees Four Lakhs Forty Six Thousand and Fifty only) on the imported Artemia cleared into DTA, procured by them without payment of duty, along with interest at applicable rate, under the provisions of Notification No. 196/1994-Cus, dated 08.12.1994; (v) I confirm the demand of Customs duty of Rs. 52,68,098/- (Rupees Fifty Two Lakhs Sixty Eight Thousand and Ninety Eight only), being the duty payable on the imported Aerators, which were found short and cleared outside their 100% Export Oriented Unit, under the provisions of Notification No.196/94- Cus, dt.08.12.94, as amended; (vi) I confirm the demand of Central Excise duty of Rs.239.06 Lakhs (Rupees Two Hundred and Thirty Nine Lakhs and Six Thousand only) as detailed in the Annexure VI of the show cause notice, on the Shrimp cleared into Domestic Tariff Area, during the period from 1993-94 to 2001-2002, along with interest, at the applicable rates, under the provisions of Notification No. 196/94-Cus dated 08.12.94, as amended and No.10/95-CE dated 23.02.95 read with Section 3 of the Central Excise Act, 1944 and the terms and conditions of the Legal Undertaking and B.16, B.17 Bonds executed by them from time to time read with Section 174 of the Central Goods and Service Tax Act, 2017; (vii) I drop the proposals for confiscation of imported capital goods as well as indigenous capital goods, in view of my findings detailed supra. (viii) I impose a penalty of Rs. 1,00,000/- (Rupees One lakh only) under the provisions of Sections 117 of the Customs Act, 1962, for failure to pay central excise duty on the clearances of shrimp made into DTA, violating the conditions of relevant Notifications read with Legal undertaking/Bonds executed; and 4 HBKM,J & HVN,J W.P.No.15361 of 2024 (ix) I impose a penalty of Rs. 24,00,000/- (Rupees twenty four lakhs only) under the provisions of Rule 209 of the erstwhile Central Excise Rules, read with the provisions of the Section 38A of the Central Excise Act, 1944 / Rule 25 of the Central Excise Rules, 2001 / 2002 read with Section 174 of the Central Goods and Service Tax Act, 2017. (x) I impose a penalty of Rs. 1,00,000/- (Rupees One lakh only) on Shri S.Prasad Reddy. Managing Director of M/s. Sharat Industries Ltd, under the provisions of Rule 209A of the Central Excise Rules, 1944 read with the provisions of Section 38A of the Central Excise Act, 1944 read with Rule 26 of the Central Excise Rules, 2001/2002. 3. The core contention of the petitioner is that initially the show cause notice was issued dated 10.02.2005, for which, the reply was submitted on 28.11.2006. Thereafter, there was no progress in the matter. But surprisingly after 19 years, the petitioner’s company shocked to receive intimation dated 01.02.2024 from the 3rd respondent to appear for personal hearing on 08.02.2024 before the authorities of the 2nd respondent in respect of the show cause notice dated 10.02.2005. The petitioner’s company did not have any records, in whatsoever manner, which are more than 19 years old and under such circumstances, they sought time from the 3rd respondent. Then the 3rd respondent sent another intimation dated 09.02.2024 fixing personal hearing before the 1st respondent dated 22.02.2024. In the absence of any documents without any clue, the petitioner’s company was constrained to seek adjournment. Through another intimation letter dated 23.02.2024, the 3rd respondent directed the petitioner to appear for personal hearing before the 2nd respondent on 06.03.2024. 5 HBKM,J & HVN,J W.P.No.15361 of 2024 4. He further submits that the subject show cause notice was issued demanding Customs as well as Excise Duties on some alleged infraction of the conditions of the notifications issued during the relevant period. The revival of the show cause notice for adjudication after a lapse of 19 years by the respondents is completely against the principles of natural justice and the initiation of proceedings is nothing but a perverse act. Aggrieved by the issuance of the above said notices for hearing, the petitioner’s company filed W.P.SR.No.9584 of 2022, which was returned with certain objections. However, the same was informed to the 3rd respondent on 05.03.2024 and requested adjournment for hearing. Without giving any further opportunity or without going into the abnormal delay of continuation of the proceedings pursuant to the above said show cause notice dated 10.02.2005, the 2nd respondent passed the impugned order dated 23.04.2024. Aggrieved by the same, this writ petition is filed. 5. He further submits that the continuation of the proceedings by the respondent-department is not sustainable and cannot be maintained on the simple ground of abnormal delay pursuant to the issuance of show cause notice and submission of the reply thereon. 6. On the other hand, the learned Standing Counsel appearing for the respondents relying upon the counter affidavit of the respondents submits that the show cause notice dated 10.02.2005 was kept in call book on 10.12.2006, which is disputed by the petitioner and he further submits that it is well known 6 HBKM,J & HVN,J W.P.No.15361 of 2024 to the tax payer that the show cause notice is not adjudicated and it was kept in call book. The letter of the 3rd respondent dated 15.02.2021 discloses that the show cause notice dated 10.02.2005 was kept in call book by maintaining the entry date as 30.07.2019. 7. However, admittedly, it was not informed to the petitioner at any point of time even at the time of issuing the above said notices fixing the date of hearing. 8. The learned Standing Counsel also submits that even against the impugned order of the 2nd respondent, the petitioner has got the alternative remedy of appeal. Hence, the petitioner can be relegated to the appellate authority. 9. The learned counsel for the petitioner relies upon the decision of the High Court of Bombay in Parle International Limited Vs. Union of India and Others dated 26.11.2020, wherein at Para No.21 and 23, it was held as under:- 21. Firstly, this Court held that a show-cause notice issued a decade back should not be allowed to be adjudicated upon by the revenue merely because there is no period of limitation prescribed in the statute to complete such proceedings. Larger public interest requires that revenue should adjudicate the show-cause notice expeditiously and within a reasonable period. What would be the reasonable period would depend upon the facts and circumstances of each case but certainly a period of 13 years cannot be termed as a reasonable period. Secondly, regarding keeping the show-cause notice in the dormant list or the call 7 HBKM,J & HVN,J W.P.No.15361 of 2024 book, this Court held that such a plea cannot be allowed or condoned by the writ court to justify inordinate delay at the hands of the revenue. To accept such a contention would defeat the rule of law itself. Taking cognizance of such an aspect would amount to giving credence to extraneous matters. In any case such a procedure internally adopted by the respondents is not binding on the Court. 23. In the present case, it is evident that the delay in adjudication of the show-cause notices could not be attributed to the petitioner. The delay occurred at the hands of the respondents. For the reasons mentioned, respondents have kept the show-cause notices in the call book but without informing the petitioner. Upon thorough consideration of the matter, we are of the view that such delayed adjudication after more than a decade, defeats the very purpose of issuing show-cause notice. When a show-cause notice is issued to a party, it is expected that the same would be taken to its logical consequence within a reasonable period so that a finality is reached. A period of 13 years as in the present case certainly cannot be construed to be a reasonable period. Petitioner cannot be faulted for taking the view that respondents had decided not to proceed with the show-cause notices. An assessee or a dealer or a taxable person must know where it stands after issuance of show-cause notice and submission of reply. If for more than 10 years thereafter there is no response from the departmental authorities, it cannot be faulted for taking the view that its reply had been accepted and the authorities have given a quietus to the matter. As has been rightly held by this Court in Raymond Limited (supra), such delayed adjudication wholly attributable to the revenue would be in contravention of procedural fairness and thus violative of the principles of natural justice. An action which is unfair and in violation of the principles of natural justice cannot be sustained. Sudden resurrection of the show-cause notices after 13 years, therefore, cannot be justified. 8 HBKM,J & HVN,J W.P.No.15361 of 2024 10. Subsequently the said judgment in Parle International Limited Vs. Union of India and Others was also followed, in the matter of Ata Freight Line (I) Pvt. Ltd. Vs. Union of India and 3 others by the High Court of Judicature at Bombay in W.P.No.3671 of 2021 dated 24.03.2022, which was confirmed by the Hon’ble Supreme Court in S.L.P.(Civil) Diary No.828 of 2023 dated 10.02.2023. 11. In view of the above said facts and circumstances and the settled legal position, the continuation of the proceedings before the 2nd respondent is not sustainable and accordingly it is quashed by allowing the writ petition. 12. In the result, this Writ Petition is allowed. There shall be no order as to costs. As a sequel, Interlocutory Applications pending, if any, shall stand closed. __________________________ JUSTICE B. KRISHNA MOHAN ________________________ JUSTICE NYAPATHY VIJAY 13.02.2025 PGT