Central Excise Act, 1944 – ss.3, 4, 6, 11A and 35L – Search conducted at the registered office and the factory premises of the Respondent by the officers of the Central Excise Commissionerate on the basis that the Respondent manufactured Foots Oil, Pressed Wax etc. without observing the mandatory procedure and clearing excise duty – Writ petition filed by the Respondent inter alia objecting that the department had no authority to proceed in the matter as no manufacturing activity was undertaken – Direction to decide the preliminary objection first – Show Cause Notice issued by the office of the Commissioner of Central Excise, Haldia, inter alia stating that after considering the preliminary objection, the Assistant Commissioner of Central Excise decided to proceed in the matter and called upon the respondent to show cause as to why inter alia the amount specified in the notice be not demanded – Respondent filed writ petition stating that the notice was issued without deciding the preliminary objection – Direction to furnish copy of the Internal Order dated. 15.03.2006 to the respondent by which the preliminary objection was decided – Furnished – Respondent filed appeal challenging the said Order – Appeal allowed – Appellant filed appeal before the Tribunal – Dismissed – Held: Respondent had not registered itself and was not paying any excise duty on the products that it was manufacturing – Search conducted led to the recovery of certain material on the basis of which the Department was considering the matter – At that stage, in the writ petition the order was passed directing the appellant to decide the preliminary objection whether the Department had jurisdiction to proceed in the matter before deciding any other issue on merits – Provisions of the Act do not contemplate any such prima facie determination to be arrived at and requiring that copy of such determination be submitted to the concerned person and only thereafter to proceed in the matter – Merely because the Internal Order was communicated to the respondent, it would not afford it a cause of action to file appeal against said Order – Communication of Internal Order was only in obedience of the directions issued by the High Court –Department justified in not communicating the Internal Order on its own – It was not a decision or determination which was arrived at in terms of s.11A(10) – Respondent therefore could not have preferred any appeal against said Order – Appellate Authority and the Tribunal failed to appreciate this basic distinction – Appellate order and the order under appeal, set aside – Proceedings pursuant to show cause notice be taken to logical conclusion – Respondent entitled to put in its response to said show cause notice within three weeks from the date of this judgment and also entitled to place such material on which it seeks to place reliance, in support of its case – Matter shall thereafter be proceeded in accordance with law – Constitution of India – Art.226 – Excise Duty.
Central Excise Act, 1944 – s.11A – Scheme of – Discussed.
Constitution of India – Art.226 – Jurisdiction under, in matters relating to excise law – Held: Excise law is a complete code in itself and writ petition should normally not be entertained against mere issuance of show cause notice – Concerned person must first raise all the objections before the authority who issued show cause notice and the redressal in terms of the existing provisions of the law could be taken resort to if an adverse order was passed against such person – Excise Duty. Allowing the appeal, the Court
HELD: 1. In the present case, the respondent had not registered itself and was not paying any excise duty on the products that it was manufacturing. The search conducted by the Department at the registered office and the factory premises of the respondent led to the recovery of certain material on the basis of which the Department was considering the matter. At that stage, a writ petition was filed in which an order was passed by the High Court on 28.11.2005 directing the appellant to decide whether the Department had jurisdiction to proceed in the matter before deciding any other issues on merits. The provisions of the Act do not contemplate any such prima facie determination to be arrived at and requiring that a copy of such determination to be submitted to the concerned person and only thereafter to proceed in the matter. Nonetheless, since a direction was issued by the High Court, the Department in deference to such direction did consider the matter and by an Internal Order dated 15.03.2006 prima facie recorded an opinion that the authorities under the Act had jurisdiction to proceed in the matter. Since the provisions of the Act do not contemplate any prima facie determination which must be communicated to the concerned person, the Department was justified in not communicating the Internal Order on its own. The matter was correctly assessed by the High Court on the next occasion when in spite of having directed that a copy of the Internal Order be supplied, it acknowledged that the remedy of the respondent lied in submitting reply to the show cause notice, in which reply it would be open to the respondent to take objections to the jurisdiction of the appellant to proceed against the respondent under the provisions of the Act. Merely because the Internal Order was communicated to the respondent, it would not afford the respondent a cause of action to file an appeal against said Internal Order. The communication of said Internal Order was only in obedience of the directions issued by the High Court. It was not a decision or determination which was arrived at in terms of sub-section 10 of Section 11A. The respondent therefore could not have preferred any appeal against said Internal Order dated 15.03.2006. The Appellate Authority as well as the Tribunal completely failed to appreciate this basic distinction. While issuing a show cause notice under Section 11A of the Act, what is entertained by the Department is only a prima facie view, on the basis of which the show cause notice is issued. The determination comes only after a response or representation is preferred by the person to whom the show cause notice is addressed. As a part of his response, the concerned person may present his view point on all possible issues and only thereafter the determination or decision is arrived at. In the present case even before the response could be made by the respondent and the determination could be arrived at, the matter was carried in appeal against said Internal Order. The appellant was therefore, justified in submitting that the appeal itself was pre-mature. [Paras 9-11] [594-G-H; 595-A-H; 596-A]
1.2 The excise law is a complete code in itself and it would normally not be appropriate for a Writ Court to entertain a petition under Article 226 of the Constitution and that the concerned person must first raise all the objections before the authority who had issued a show cause notice and the redressal in terms of the existing provisions of the law could be taken resort to if an adverse order was passed against such person. Writ petition should normally not be entertained against mere issuance of show cause notice. In the present case no show cause notice was even issued when the High Court had initially entertained the petition and directed the Department to prima facie consider whether there was material to proceed with the matter. [Para 12] [596-B-C-F]
1.3 In the present case, there was no assessment and computation of any duty element. The matter had not gone beyond the Show Cause Notice. The questions in the matter pertained to the correctness of the view whether there was any adjudication in the matter and whether the appeal at the instance of the Respondent was maintainable. The issues involved in the matter do not strictly come within the confines of the Circular issued by Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs (Judicial Cell). The appellate order dated 10.01.2007 and the order under appeal is set aside and it is directed that the proceedings pursuant to show cause notice dated 21.03.2006 be taken to logical conclusion. The respondent shall be entitled to put in its response to said show cause notice within three weeks from the date of this judgment and shall also be entitled to place such material on which it seeks to place reliance, in support of its case. The matter shall thereafter be proceeded with in accordance with law. [Paras 15, 16] [598-E-G]
GKN Driveshafts (India) Ltd. v. Income Tax Officers and Others (2003) 1 SCC 72 : [2002] 4 Suppl. SCR
359 ; Reliance Industries Ltd. v. Collector of Central Excise 1987 (11) ECR 287 (Tri.-Mumbai) –
distinguished.
Union of India and Another v. Guwahati Carbon Limited (2012) 11 SCC 651 ; Malladi Drugs and Pharma Ltd. v. Union of India 2004 (166) ELT 153 (S.C.) – relied on.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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