The Orissa High Court quashed the Adjudication Proceedings after 18 years of issuance of Show-Cause Notices against Maxcare Laboratories
The Petitioner, M/s. Maxcare Laboratories is a company carrying on business of manufacturing of perfumed hair oil and red tooth powder having its plant at Mancheswar Industrial Estate, Bhubaneswar. It is stated that the plant has been closed since long and the Petitioner has no business operation in the State of Odisha.
The first impugned show cause notice was issued by the Commissioner, Central Excise and Customs proposing a demand of excise duty in the sum of Rs.75,65,511 invoking the extended period of limitation in terms of the proviso to Section 11A(1) of the Central Excise Act, 1944 and Rules 9 (2) of the Central Excise Rules, 1944.
The SCN alleged that the Petitioner had suppressed production of perfumed hair oil and red tooth powder and removed surreptitiously the said excisable goods without payment of central excise duty during the year 1994-95. The SCN further stated that in course of verification of the RT-5 returns of the Petitioner for the year 1994-95. It was observed that the Petitioner had not shown the expected production as per the production norms which had been declared by letter dated 16th December, 1995. The suppressed quantity, according to SCN, works out to 3,19,961.00 liters of perfumed hair oil and 1,23,608 kg of red tooth powder which were in contravention of Rules 53, 173G and 226 of the CE Rules.
The Petitioner replied to the SCN on 16th December, 1995 submitting details of raw material/packing material as well as the tentative input-output ratio. According to the Petitioner, it had also submitted the statement on 3rd March, 2000 before the Superintendent, Central Excise, Bhubaneswar-I Range stating that “they do not have any fixed input output ratio due to wastage/variation in quality of raw material”.
The Petitioner did not hear anything from the Opposite Parties and all of a sudden, more than 17 years later on 28th December, 2017 received a fresh SCN on the same issue with reference to the earlier SCN dated 29th March, 2000 and stating that a personal hearing was fixed on 9th January, 2018.
Mr. Mr. Jagabandhu Sahoo, the counsel for the petitioner contended that ts case is being transferred to the ‘call book’, and then seeking to revive it after 18 years, the Opposite Parties have acted unreasonably particularly since the Petitioner could not have reasonably expected that the proceedings against it would be kept alive for these many years without any action being taken. Also, the Petitioner cannot be expected to preserve its records for these many years and to be able to answer a SCN after 18 years. No effective opportunity of defence can be afforded to the Petitioner in such proceedings.
The division bench headed by the Chief Justice S. Muralidhar and Justice S.K. Panigrahi ruled that it is not justified on part of the authorities to revive adjudication proceedings against the Petitioner after 18 years of issuance of the SCN. Accordingly, the impugned SCN and the notices are hereby quashed.
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