The Punjab and Haryana High Court quashed a decade-old Show Cause Notice proposing to recover the deficit in payment of excise duty.
The petitioner, M/s Swati Menthol & Allied Chemicals Ltd. is engaged in the manufacture of Menthol Crystal/Powder/Solution, falling under Chapter Sub-Heading 2906 1100 and Dementholised Oil (DMO), peppermint oil, terpenes, etc. falling under Sub-heading 330125 90 of the First Schedule of the Central Excise Tariff Act, 1985. The Managing Director of the company between 2005-2010, the petitioner purchased raw material for manufacturing final products from suppliers based out in Jammu & Kashmir.
During 2008-2010, investigations were carried out by the respondent-department against various units in Uttar Pradesh engaged in the manufacture of Menthol Crystal/Powder/Solution, falling under Chapter Sub-Heading 2906 1100 and Dementholised Oil (DMO), peppermint oil, terpenes, etc. falling under Sub-heading 330125 90 of the 1985 Act. The unit of the petitioner was also investigated.
Upon investigation by the officer of Central Excise of Meerut-II, Commissionerate, issued show cause notices to the petitioner and its managing director alleging that the petitioner has been availing cenvat credit on inputs, namely, “Menthol/Menthol flakes and Mentholised Oil (DMO), Deterpinated Menthol and like inputs” against fake invoices issued by the J&K and North East based units by showing the supply of raw materials without supply of goods, and that the petitioners were utilizing the Cenvat Credit so availed, towards the payment of Central Excise duty on their final products for domestic as well as for export of goods and thereafter were claiming the rebate of duty so paid on the exported goods. Vide these show cause notices dated March 2, 2010, the respondents proposed demand of Rs.11.26 crore of Cenvat credit along with interest and penalty.
The letter dated October 10, 2018, it was informed to the petitioners that personal hearing fixed in the show cause notices before the Commissioner, Central GST Commissionerate, Chandigarh has been adjourned sine die for time being and next date of hearing will be informed later on. Aggrieved by the non-adjudication of the show cause notices issued to the petitioners for more than 10 years, the petitioners have approached the Court by way of present petition.
The division bench of Justices Jaswant Singh and Sant Parkash held that where no period of limitation is provided for exercise of any power, any notice issued more than five years thereafter was held to be unreasonable.
Therefore, the court held that impugned show cause notices having been issued long back more than a decade are not sustainable in the eyes of law, and thus, deserve to be quashed.
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