18 Years Delay in De Novo Adjudication: CESTAT sets aside Order Demanding Excise Duty [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), set aside order demanding excise duty taking into consideration that there was a delay of eighteen years in de-novo adjudication.

It was found that the appellant, K.L. Hakkim, was liable to pay duty of Rs.17,96,241/-. Accordingly, show cause notice was issued to them proposing to demand duty, interest and for imposing penalties. After due process of law, the Collector of Central Excise, Madurai confirmed the demand of Rs.16,95,289/- being the duty not paid during the years 1984-85 and 1985-86 and ordered for appropriation of Rs.50,000/- already paid by them. Penalty of Rs.4 lakhs was imposed on the appellant and a personal penalty of Rs.1 lakh was imposed on K.L. Hakkim, Managing Partner under rule 173Q of Central Excise Rules, 1944.

Against such order, the appellant filed appeal. The Tribunal vide Final Order dated 31.08.1995 set aside the impugned order and remanded for de novo consideration. Thereafter, the matter was taken up for de novo consideration and the impugned order was passed by the adjudicating authority on 25.09.2013 again confirming the demand of Rs.16,95,289/- and imposing penalty of Rs.4 lakhs on M/s.Galaxy Rubber Industries under Rule 173Q and further penalty of Rs.1 lakh on K.L. Hakkim.

The counsel for the appellant submitted that the adjudicating authority has passed the impugned order after 18 years of the remand order by the Tribunal. It was also noted by the adjudicating authority that there is no show cause notice available on the file and the said authority has proceeded to pass the order on the basis of the original order earlier passed in the matter.

It was further submitted that the adjudication has been done after huge delay and without perusing any documents. The show cause notice or the relied upon documents were not available with the adjudicating authority. The entire order has been passed by relying on the earlier order dt. 28.12.90 which has been already set aside by the Tribunal while remanding the matter. It is thus submitted by the learned counsel that there is complete violation of principles of natural justice.

A Two-Member Bench comprising CS Sulekha Beevi, Judicial Member and Vasa Seshagiri Rao, Technical Member observed that “In the present case, it is not a situation of the show cause notice transferred to call book. It is a case in which there is delay in taking up the matter for de novo adjudication after the remand by the Tribunal (earlier known as CEGAT). The department has not been able to explain the delay of about 18 years in completing the de novo adjudication.”

Quashing the excise duty demand the Bench concluded by noting that the matter was remanded by the Tribunal on 31.08.95 and the remand order of de novo adjudication has been passed only on 29.09.2013. The delay is humongous and unexplained. The documents were also not available for perusal by the adjudicating authority who has been fair enough to record the same in the order and that there was complete violation of principles of natural justice.

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