Jay Kumar Lohani vs Commissioner of Central Excise, Indore

Shantanu Kemkar, J.—Heard on the question of admission. By this petition under Article 226/ 227 of the Constitution of India, the petitioners have challenged the show cause notice dated 6-1-2012 (Annexure P-1) issued by the first respondent Commissioner invoking provisions of Section 11A of the Central Excise Act, 1944 (for short, the Act).

By the impugned notice, the petitioners have been asked to show cause as to why excise duty and penalty as mentioned in the said notice should not be jointly and severally demanded and recovered from them by invoking extended period of 5 years.

According to the petitioners, prior to issuance of the impugned show cause notice the respondents had issued a notice dated 19-8-2011 (Annexure P-8) on the basis of the same allegations which have been levelled in the impugned notice, calling upon the petitioners to show cause as to why the goods seized (branded manufactured tobacco, branded roasted cut supari and unbranded roasted cut supari) be not confiscated and penalty for the same be not imposed. It is stated by the petitioners that a reply to the said earlier show cause notice dated 19-8-2011 (Annexure P-8) was submitted by them on 21-11-2011 (Annexure P-9) and before taking any decision in respect of the said earlier show cause notice, by pre-judging the issue involved in the matter the Commissioner Central Excise has issued the impugned show cause notice dated 6-1-2012 about recovery of duty and penalty.

Shri P.M. Choudhary, learned counsel for the petitioners contended that the Commissioner has pre-judged the issue and therefore, submission of reply to the impugned show cause notice would be futile. In the circumstances he submitted that the interference at the stage of show cause notice is called for and the reliefs claimed in the petition deserves to be granted. In support, he placed reliance on the judgment passed by High Court of Madras in the case of Madurai Metal Industries Vs. Union of India, and on the judgment passed by the Supreme Court in the case of ORYX Fisheries Private Limited Vs. Union of India (UOI) and Others, . He submitted that either the show cause notice be quashed or an order be passed prohibiting the Commissioner from proceeding further with the impugned show cause notice till the final adjudication of the question involved in earlier show cause notice which is regarding validity of the seizure, the proposed confiscation and the excisability of the goods in question.

In order to appreciate the submissions made by the learned counsel for the petitioners, we have gone through the relevant provisions of the Act and the case law cited by him. In the case of Madurai Metal Industries v. Union of India (supra), we find that the show cause notice was bearing the passage :-

Thus it is proved beyond any shadow of doubt that the dealers have been clandestinely indulging in massive purchases and sales suppressions by manoeuvring and manipulating their accounts deliberately and wilfully not only to evade payment of Excise duty, but also the tax legitimately due to the Commercial Taxes Department.

(emphasis supplied)

In the case of ORYX Fisheries Private Limited v. Union of India (supra), the show cause notice was contending following reasons :-

It has been proved beyond doubt that you have sent substandard material to M/s. Cascade Marine Foods, LLC, Sharjah.

You have dishonoured your written agreement with M/s. Cascade Marine Foods, LLC, Sharjah to settle the complaint made by the buyer as you had agreed to compensate to the extent of the value of defective cargo sent by you and have now evaded from the responsibility.

This irresponsible action have brought irreparable damage to India''s trade relation with UAE.

(emphasis supplied)

Whereas, we find that in the impugned show cause notice, it has been mentioned that -

Further, the Noticee No. 1 had neither obtained registration from the department nor filed any return in respect of the goods manufactured and cleared by them and thus appear to have wilfully suppressed the facts of manufacture and clearance of branded manufactured tobacco and therefore, the provisions of extended period as provided under proviso to the Section 11A(1) of the Central Excise Act, 1944 appears to be invokable for the recovery of the Central Excise duty not paid by them and the noticee No. 1 also appear liable to penalty under the provisions of Section 11AC of the Central Excise Act, 1944.

(emphasis supplied)

Having regard to the aforesaid language of the show cause notice, we are of the view that the contentions of the learned counsel for the petitioners are of no merit. It is very clear from the impugned show cause notice dated 6-1-2012 that only a prima facie view has been expressed in regard to the allegations about wilful suppression of the facts of manufacture and clearance of branded manufactured tobacco and roasted cut Supari. In the circumstances the show cause notice which has been challenged in this petition cannot be labelled to have been issued after pre-judging the question involved in the matter. Therefore, the judgments on which reliance has been placed by the learned counsel for the petitioners are of no help to the petitioners as the language employed in those show cause notices is quite different from the impugned show cause notice.

So far as the petitioners'' reliance on the judgment of Padmini Products Vs. Collector of Central Excise, Bangalore, (S.C.)] is concerned, the question as to whether the provision of extended period of 5 years is applicable to the petitioners'' case or not can be very well raised and objected by the petitioners in reply to the show cause notice. The petitioners can put forward their representations against the impugned show cause notice before the Commissioner and it is for the Commissioner to decide the relevant aspects while deciding whether to impose or not to impose the duty and penalty on the petitioners. It is also clear from the scheme of the Act that after the decision being taken by the Commissioner, it is appealable before the authorities established under the Act. Having regards to this, we see no justification for issue of a writ of prohibition restraining the authority from proceeding further with the impugned show cause notice. As observed it is for the petitioners to put forward their defences as may be available to them before the Commissioner and pursue him in accordance with law. Our view finds support from the judgment of the Supreme Court in the case of Standard Chartered Bank and Others Vs. Directorate of Enforcement and Others,

In the case of Dr. Soumyendra Chandra Gooptu alias Dr. Soumyendra Chandra Gupta Vs. Income Tax Officer and Others, , the Division Bench of Calcutta High Court declined to interfere in the show cause notice issued under Sections 140A(3) and 271(1)(c) of the income tax Act in which the challenge was made on the ground that the assessment had not been made within the prescribed time-limit. The Calcutta High Court observed that it is not a case of inherent lack of jurisdiction, as the question as to bar of limitation is a mixed question of fact and law. It further observed that the very purpose of the show cause notice was to afford an opportunity of hearing to assessee and only thereafter decision could be taken by respondent authority, interference before that stage would be pre-mature. It held that the assessee was not remediless as in terms of statutes itself there is remedy available in the form of appeal/revision as against any order passed by the assessing officer.

The contention raised by learned counsel for the petitioners that before deciding the objections raised in reply to the earlier show cause notice dated 19-8-2011 (Annexure P-8), the impugned show cause notice dated 6-1-2012 could not have been issued by the first respondent is wholly misconceived. Learned counsel for the petitioners could not point out any legal provision requiring the authorities to first adjudicate the notice issued regarding confiscation and then only they could have issued the impugned show cause notice regarding recovery of dues and penalty.

In the circumstances, having regard to the fact that it is not a case of prejudging of the issue and that it is not a case of the show cause notice being without jurisdiction, we find no case for making interference in the show cause notice. Accordingly, the writ petition deserves to be and is hereby dismissed in limine