Patna High Court Refuses To Quash Central Excise Show Cause Notices Against ITC Despite Delay In Adjudication

The Patna High Court has recently refused to quash multiple Central Excise show cause notices issued to ITC Limited, holding that the company could not seek quashing solely on the ground of delayed adjudication when it had not participated in hearings despite repeated opportunities.

“For one reason or another, the petitioner did not participate in the hearing. In such circumstances, prima facie, we agree with the submissions of the learned counsel for the Central Excise that the delay in the adjudication cannot be solely attributed to the department.”

A bench of Justice Rajeev Ranjan Prasad and Justice Soni Shrivastava held that disputed issues relating to valuation, classification, and differential duty must first be examined by the adjudicating authority and could not be decided in writ jurisdiction at this stage.

The issue before the High Court was whether long-pending adjudication of five show cause notices issued in 2008 could be quashed on the ground that revival of proceedings after several years caused prejudice to ITC because of non-availability of records.

The dispute arose from classification and valuation of packaging materials including shells, slides, hinged lid packets and cardboard outers manufactured by ITC at its Munger unit for captive consumption in cigarette manufacturing. Due to disputes over valuation and classification, provisional assessments for the period between 1982-83 and 2004-05 remained unresolved for years.

According to ITC, five show cause notices issued in 2008 sought to raise substantial differential excise duty demands by alleging wrongful availment of exemption notifications.

ITC argued that adjudication could not be revived after such extraordinary delay, contending that the proceedings were barred by limitation and had become untenable because of the passage of time.

The company also argued that issues relating to valuation and duty rates had already travelled through appellate proceedings and were ultimately decided by the CESTAT, Kolkata in 2023, making continuation of adjudication unsustainable.

ITC relied on decisions of the Bombay High Court and Calcutta High Court where delayed adjudication proceedings had been interfered with.

However, the department opposed the petitions, arguing that ITC had been repeatedly called for personal hearings since 2008, but had raised preliminary objections and sought adjournments instead of participating in adjudication.

The department also argued that connected litigation arising from provisional assessments continued until the CESTAT's October 9, 2023 order, and therefore the delay could not be blamed entirely on the revenue.

The High Court accepted that contention, noting that the factual background of the Bombay and Calcutta decisions cited by ITC was materially different.

In the Bombay case, adjudication had already concluded before the challenge was mounted.

In the Calcutta case, relevant documents had not been supplied to the assessee.

Referring to the Supreme Court's ruling in Bharat Petroleum Corporation v. N.R. Vairamani, the bench reiterated that precedents cannot be applied mechanically without comparing factual backgrounds.

Accordingly, the court dismissed all three writ petitions while granting ITC liberty to appear before the adjudicating authority within four weeks and raise all available contentions, including on limitation and merits.

For Petitioner: Advocates L. Mathili, Sachindra Kumar Tiwary, Nivedita R. Mehta, Manisha Shandily (in Civil Writ Jurisdiction Case No. 5664 of 2026); Advocate Sachindra Kumar Tiwary (in Civil Writ Jurisdiction Case No. 5870 of 2026); Advocate Sachindra Kumar Tiwary (in Civil Writ Jurisdiction Case No. 5962 of 2026)

For Respondents: Senior Standing Counsel Anshuman Singh (CGST & CX)