Tata Steel Ltd. vs The Union of India (UOI) and Others

Challenging the demand and show cause notice dated 2.8.2006, this writ petition has been filed. It is contended by the Senior Counsel appearing for the petitioner that they applied for provisional assessment on 15.12.2005 and the same has been rejected on 19.1.2006 and subsequently, without making final assessment, show cause notice has been, issued while initiating proceeding u/s 11A of the Central Excise Act by the order dated 2.8.2006, which is illegal and without jurisdiction. Learned Senior Counsel appearing for the petitioner would cite the following authorities:

Madura Coats Ltd. Vs. Collector of Central Excise, Madurai-II,

M/s. Serai Kella Glass Works Pvt. Ltd. Vs. Collector of Central Excise, Patna,

The crux of the submission made by the Senior Counsel appearing for the petitioner is that the authority impugned has no jurisdiction to issue show cause notice without making final assessment and when there is lack of jurisdiction on the part of the authority issuing the show cause notice, the party concerned need not appear before the authority and questioning the jurisdiction of the authority in issuing the show cause notice, the petitioner is constrained to come to this Court under Article 226.

On the other hand, it is submitted by Dr. Gupta, learned Counsel appearing for the respondents, on the strength of the decision rendered in the case of State of H.P. and Ors. v. Gujarat Ambuja Cement Ltd. and Anr. 2005 AIR SCW 3727) and relying on paragraph Nos. 22, 25 and 28 thereof, submitted that only show cause notice has been given and as Rule 8 may not apply, the question of final assessment would not arise and when the show cause notice contains the wording giving opportunity to the party concerned to adduce evidence to defend their submission, it may not be proper for them to approach this Court bypassing all the remedies available to them.

We have carefully considered the submissions made by the learned Senior Counsel appearing for the petitioner as well as the learned Counsel appearing for the respondents.

At the outset, it may be mentioned that 19.1.2006 letter issued by the Deputy Commissioner, while rejecting the provisional assessment, would indicate that the steel materials belonged to the petitioner and were not used in the production or manufacture of other articles and hence Rule 8 of the Central Excise (Valuation) Rules, 2002, would not be applicable in case of the impugned clearances. It is now pointed out that only after hearing the parties and also on production of some documents, the authority concerned, by the order dated 2.8.2006, issued show cause notice. In the show cause notice, the petitioner is-asked by the Commissioner, Central Excise, to show cause as to why Central Excise Duty amounting to Rs. 5,44.94,625.02 (Rs. Five Crore Forty-four Lakh Ninety-four Thousand Six Hundred Twenty-five and Paisa Two only) should not be demanded under proviso to Section 11A of the Central Excise Act. It is also made clear that no demand as such is made and it is. only show cause notice for demand. It is also mentioned in the show cause notice as to why interest at the appropriate rate should not be recovered from them from the date on which duty at the correct was required to be paid. It is also noticed from the show cause notice that in case the petitioner wished to be heard, they should indicate this fact in the apply to show cause and that they were also to furnish the evidence upon which they intends to rely in support of their defence reply to the show cause and the cause was to be shown within 30 days of the receipt of the notice. It is clear from the show cause notice that the notice to show cause had been issued on the basis of the statement dated 28.9.2009 of Shri Nirmalya Sinha, Head - Indirect Taxation, M/s. Tata Steel, Jamshedpur, and the quantification chart.

The main contention urged by the learned Senior Counsel appearing for the petitioner is that without making final assessment, initiation of revenue proceeding by issuing a show cause notice is illegal and. as such, the authority has no jurisdiction to issue show cause notice.

On hearing the learned Counsel for the parties and also going through the particulars of the stand taken by the learned Senior Counsel appearing for the petitioner and the stand taken by the learned Counsel for the respondents that Rule 8 is not applicable, one question arises whether making final assessment is a condition precedent for Section 11A. When such stand has been taken by the authority in the letter dated 19.1.2006, it may not be proper for this Court, sitting under Article 226, to hold that Rule 8 alone would apply and final assessment has to be made before issuing show pause notice. In the light of wordings contained in the show cause notice, it is proper for the petitioner to produce all the materials before the authority concerned and convince the authority stating that issuance of show cause notice may not be proper in absence of final assessment. It is also the bounded duty of the petitioner to convince the authority that Rule 8 would apply and as such, they are entitled to request the authority to make final assessment. Without doing that, the petitioner cannot directly come to this Court and request this Court to hold that the Commissioner, Central Excise, has no jurisdiction to pass such an order. Therefore, while holding that there is no valid ground to entertain this petition, we are giving liberty to the petitioner to approach the authority which issued the show cause notice by producing all the materials available to it to convince the authority that Rule 8 would apply and final assessment is a condition precedent. It is open to the petitioner to approach the authority concerned within 30 days from the date of this order by filing reply statement and also by filing documents to establish their defence.