Whether excessive delay between conclusion of hearing and delivery of judgment justified?

PJ/Case Law/2013-14/2097

Case:- EMCO LTD Vs THE UNION OF INDIA AND OTHERS

Citation:- 2014-TIOL-222-HC-MUM-CX

Brief facts:- By the petition under Article 226 of the Constitution, the Petitioner had challenged the order dated 31 July 2013 passed by the Additional Commissioner of Central Excise. By the impugned order dated 31 July 2013, a demand of duty of Rs.4,09,455/- had been confirmed under Section 11A(2) of the Central Excise Act, 1944 ('Act') and an equivalent penalty had also been imposed under Section 173Q(bb) of the Central Excise Rules, 1944 ('Rules').

Appellant’s contentions:- The grievance of the Petitioner was that the impugned order was passed almost nine months after the conclusion of the hearing. This delay in passing the impugned order, the Petitioner submitted, had led to serious prejudice to it. This was so as the impugned order did not discuss and/or consider the various submissions made by the Petitioner during the hearing leading to a demand which itself was not sustainable. Their attention was particularly drawn to an application for additional grounds made before the Tribunal on 18 January 2010, which was a part of the proceedings before the Adjudicating Authority. In the application, evidence was annexed of the fact that goods sent to job workers were received back within 180 days. However, the same was not taken into account while confirming the notice and imposing the penalty. The Petitioner submitted that the Central Board of Central Excise and Customs had itself issued a circular dated 5 August 2003 directing the authorities under the Act to issue orders expeditiously after conclusion of hearing and not beyond a period of fifteen days. He also placed reliance on the decision of this Court in Shivsagar Veg. Restaurant Vs. Assistant Commissioner of Income Tax, Mumbai {2009 (13) S.T.R. 11 (Bom) = (2008-TIOL-579-HC-MUM-IT) and the decision of Apex Court in the matter of Anil Rai Vs. State of Bihar 2009 (13) S.T.R. 465 (SC) = (2002-TIOL-659-SC-MISC). In the above view, the learned counsel for the Petitioner states that the impugned order dated 31 July 2013 be set aside and the Adjudicating Authority be directed to pass a fresh order after giving a personal hearing to the Petitioner.

Respondent’s contentions:- As against this, the learned counsel for Revenue submitted that the impugned order dated 31 July 2013 was well considered order and no prejudice had been caused to the Petitioner on account of delay in passing the impugned order by the Adjudicating Authority. Besides, it was submitted that the Petitioner had a remedy of preferring an appeal under the Act against the impugned order. Therefore, the petition be dismissed.

Reasoning of judgment:- The Bench after hearing the learned counsel for the Parties held that in the present case, the personal hearing was concluded on 17 September 2012 and the written submissions were filed by the Petitioner on September 2012. The impugned order was passed on 31 July 2013 i.e. almost nine months after the hearing. This delay had resulted in the Petitioner's submissions of goods being returned within days not being considered. This evidence was sought to be brought on record before the Tribunal but not allowed. However, the Court by its order dated 14 September 2010, while remanding the matter to the Adjudicating Authority, had left all issues open. Therefore, the above evidence, which was available before the Adjudicating Authority and also relied upon by the Petitioner at the time of hearing, was not considered in the impugned order, then the same could only be attributed to the delay in passing the order. This delay does appear to have caused prejudice to the Petitioner. The Court in the matter of Shivsagar Veg. Restaurant (supra) has, after considering the various decisions of the Apex Court, laid down that undue delay (four months) in delivery of judgment by the ITAT after the hearing was in itself sufficient to set aside the impugned order without considering the merits of the order. The Apex Court in the matter of Anil Rai (supra) had reiterated the observations made by an earlier Bench of Apex Court in R. C. Sharma Vs. Union of India {(1976) 3 SCC 574}, which reads as under :
“… … Nevertheless an unreasonable delay between hearing of arguments and delivery of judgment, unless explained by exceptional or extraordinary circumstances, is highly undesirable even when written arguments are submitted. It is not unlikely that some points which the litigant considers important may have escaped notice. But, what is more important is that litigants must have complete confidence in the results of litigation. This confidence tends to be shaken if there is excessive delay between hearing of arguments and delivery of judgments."
(emphasis supplied)
In view of the above, it was very clear that the authorities under the Act were obliged to dispose of proceedings before them as expeditiously as possible after the conclusion of the hearing. This alone would ensure that all the submissions made by a party were considered in the order passed and ensure that the litigant also had a satisfaction of noting that all his submissions had been considered and an appropriate order had been passed. It was most important that the litigant must have complete confidence in the process of litigation and that this confidence would be shaken if there was excessive delay between the conclusion of the hearing and delivery of judgment.
Therefore, in this case, we find that the delay by the Adjudicating Authority in rendering its order nine months after the conclusion of the hearing had caused prejudice to the Petitioner as it had not considered the evidence produced in respect of return of goods within 180 days.
The Bench had not relegated the Petitioner to the alternate remedy of filing an appeal under the Act, as they found that the impugned order was against the parameters laid down by this Court in Shivsagar Veg. Restaurant (supra).
In the aforesaid circumstances, they set aside the impugned order dated 31 July 2013 and direct the Additional Commissioner of Central Excise and Customs to pass a fresh order after granting the Petitioner an opportunity of personal hearing. It further added that the resultant adjudication order would be passed within a reasonable time after the conclusion of the hearing granted to the Petitioner.
Petition was allowed in the above terms. No order was passed as to costs.

Decision:- Petition allowed.

Comment:- The basic idea behind the case lies in the fact that excessive delay between the conclusion of the hearing and delivery of judgment is highly unjustified as it is likely that some points which the litigant considers important may have escaped notice which may shake the confidence of the litigant in the process of litigation. Also, the circular dated 5 August 2003 issued by Central Board of Central Excise and Customs directed the authorities under the Act to issue orders expeditiously after conclusion of hearing and not beyond a period of fifteen days. Thus, a delay of nine months is highly unjustified and the impugned order was set aside only on the basis that it was passed after as substantial period of time. This is a very good case that is favourable to assessee as it is commonly observed that there is much gap between the date of hearing and the passing of the order in original.

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PJ/Case Law/2013-14/2097

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