A division bench of the Punjab and Haryana High Court has quashed two show-cause notices issued by the central excise department by holding that there is an inordinate delay of 13 years in adjudicating the notices.
The petitioner, M/s JBCL Limited was engaged in fabricating the bodies on chassis received from manufacturers of chassis. After carrying out the activity of body building, the petitioner was clearing the same as motor vehicles on payment of excise duty. Petitioner was also receiving chassis for fabrication of bodies from independent/private owners of the chassis. After manufacturing the bodies on such chassis, the petitioner cleared such motor vehicles without payment of excise duty claiming exemption under Notification No. 06/2006-CE dated 01.03.2006. Revenue, however, was of the view that petitioner has wrongly availed of the exemption inasmuch as Cenvat Credit on the input consumed in the manufacture of bodies manufactured on duty paid chassis received from independent owners of the chassis had been taken and the vehicles so manufactured had been cleared for payment of applicable central excise duty. Accordingly, two show cause notices dated 04.09.2008 for the period 01.08.2007 to 31.10.2007 amounting to Rs. 1,62,99,205/- and the second dated 12.11.2008 for the period 01.11.2007 to 31.03.2008 amounting to Rs. 2,43,05,657/- were served.
Justice Tejinder Singh Dhindsa and Justice Pankaj Jain observed that the impugned show cause notices were issued in the year 2008 and has not been adjudicated upon and the only explanation coming forth in the written statement is that the matter had been transferred to the Call Book as per CVIC guidelines issued from time to time.
“We find that no cogent basis or legal impediment has been offered which may be construed to be a plausible explanation for not adjudicating upon the show cause notices within the time prescribed. In view of the above and by following the dictum laid down in M/s Shree Baba Exports case (supra) and such view having been affirmed by the Hon’ble Supreme Court in SLP (C) No.12376 of 2022 (Commissioner CGST and Central Excise & Anr. vs. M/s Shree Baba Exports) vide order dated 29.07.2022 the impugned show cause notices cannot sustain as there has been an inordinate delay in adjudication of the same,” the Court observed.
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