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COMMISSIONER OF CENTRAL EXCISE, HALDIA v. M/S. KRISHNA WAX (P)LTD. - (Supreme Court) (14 Nov 2019)

Writ petition should normally not be entertained against mere issuance of show cause notice

MANU/SC/1567/2019

Excise

Present Appeal under Section 35L of the Central Excise Act, 1944 arises out of Order passed by the Customs, Excise and Service Tax Appellate Tribunal, Kolkata (‘the Tribunal’) dismissing Appeal preferred by the Appellant herein. A search was conducted at the registered office as well as the factory premises of the Respondent herein by the officers of the Central Excise Commissionerate on the basis that, the Respondent manufactured Foots Oil, Pressed Wax, Pressed Paraffin Wax without observing the mandatory procedure and clearing Excise Duty. Soon thereafter, Writ Petition was filed by the Respondent before the High Court submitting that, the Assistant Commissioner of Central Excise had no authority to proceed in the matter as no manufacturing activity was undertaken by the Respondent.

A Show Cause Notice was issued by the office of the Commissioner of Central Excise, which stated that in terms of the aforesaid directions of the High Court, the Assistant Commissioner of Central Excise had considered the preliminary objection and decided to proceed in the matter. Manufacturing activity was being undertaken by the Respondent without following due procedure and without paying any Excise Duty.

The Respondent again approached the High Court by filing Writ Petition. Without filing any reply to the Show Cause Notice and, adopting the course in tune with the observations of the High Court in its Order, the Respondent chose to file Appeal before the Commissioner of Central Excise (Appeals-I) challenging the Internal Order. It was submitted that no manufacturing process was being undertaken by the Respondent. An objection was taken on behalf of the Appellant that the Appeal was completely premature as the matter was not yet gone into; no reply to the Show Cause Notice was filed by the Respondent and there was, as a matter of fact, no adjudication by the concerned authority. The objections were rejected by the Appellate Authority observing that an appeal could lie against any order passed under the Act by a Central Excise Officer lower in rank to the Commissioner. The appeal was thus allowed by the Appellate Authority vide order The Appellant, being aggrieved, filed Appeal before the Tribunal, which came to be dismissed by order.

The scheme of Section 11A of Act, does not contemplate that before issuance of any show cause notice, there must, prima facie, be: (a) a preliminary determination that the process or activity undertaken in the matter amounts to manufacture; and (b) before arriving at such preliminary determination, any hearing to the concerned person is contemplated. In other words, there is no segregation of the matter at different stages and all the possible contours of the matter including whether the process in question amounts to manufacture or not are to be gone into while considering the response to the show cause notice itself. It is only after considering all the relevant aspects of the matter that the final determination under sub-section 10 of Section 11A of the Act is to be arrived at.

It must be noted that 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.

It has been laid down by this Court that 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. It is thus well settled that 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.

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. It is directed that, the proceedings pursuant to show cause notice be taken to logical conclusion. Appeal allowed.

Tags : SHOW CAUSE NOTICE   ADJUDICATION   MAINTAINABILITY  

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