The Delhi High Court issued the notice to the department in a petition assailing the jurisdiction to adjudicate the Show Cause Notice ( SCN ), which has not been adjudicated for nearly 14 years.
M/s Durga Trading Company and Othres, the petitioner/assessee is a manufacturer of Pan Masala containing tobacco commonly known as Gutkha, commercially engaging under the brand name “Pukar.”The searches were conducted at three premises of the petitioner by officers of the Directorate General of Central Excise Intelligence (DGCEI), Kanpur. The investigation culminated in the issuance of the SCN.
A SCN was issued by the Additional Director General, DGCEI New Delhi. The department directed the petitioners to show cause as to why Central Excise Duty amounting to Rs. 11,74,59,24 ought not be imposed.
The SCN directed the petitioners to show cause as to why interest under Section 11AB of the Central Excise Act 1944 and penalty under Section 11AC of the Central Excise Act 1944 read with Central Excise Rules 2002 ought not be imposed.
The adjudicating authority confirmed the entire demand as per the SCN and imposed a penalty of Rs. 11,74,59,024. The petitioners filed appeals under Section 35B of the Central Excise Act 1944 before the CESTAT.
The CESTAT quashed the order passed by the adjudicating authority. The matter was remanded back to the common adjudicator, who was already appointed to deal with matters arising out of the same set of investigations.
After the remand, no adjudication took place. After that a personal hearing letter was issued from the office of the Additional Director General (Adjudication), New Delhi, after 14 years.
It was contended that adjudication of the show cause notice is highly belated and now barred under Section 11(A) (11) of the Central Excise Act, 1944, which mandates that show cause notice should be adjudicated within a period of six months and, in certain circumstances, within the extended period of two years where it is possible to do so. Since the SCN has not been adjudicated for nearly 14 years, the jurisdiction to adjudicate the show cause notice ceases to exist.
While listing the matter on July 9, 2024, a division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja stayed the proceedings on the Show Cause Notice dated September 3, 2010 until the next date of hearing.
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