SHAKTI ME DOR LIMITED QUTBULLAPUR MANDAL Vs. COMMISSIONER OF CUSTOMS CENTRAL EXCISE AND SERVICE TAX HYDERABAD

JUDGEMENT

(1.) The practice of entertaining Writ Petitions questioning the legality of a show-cause notice, stalling the proposed enquiry and retarding the investigative process to ascertain facts with the participation and in the presence of the parties, must be deprecated. Unless the High Court is satisfied that the show-cause notice is non-est Writ Petitions should not be entertained for the mere asking, and as a matter of routine, and the petitioner should, invariably, be directed to respond to the show-cause notice and take all stands, highlighted in the Writ Petition, therein. Special Director v. Mohd. Ghulam Ghouse, 2004 3 SCC 440; Divisional Forest Officer v. M. Ramalinga Reddy, 2007 9 SCC 286; Saravani Impex Pvt. Ltd. v. Additional Director General, Directorate of Revenue Intelligence, Chennai, 2010 1 ALD 40; M/s Vasavi Business Combines v. Commissioner of Customs Judgment of A.P.H.C. D.B in W.P. No. 16170 of 2010 dated 28.7.2010; M/s Jasper Industries Pvt. Ltd. v. Commercial (CT), (Audit), Hyderabad Judgment of A.P.H.C.D.B. in W.P. No. 18725 of 2010 dated 27.8.2010) A show-cause notice does not give rise to any cause of action as it is not an adverse order which affects the rights of a party. It is quite possible that, after considering the reply to the show-cause notice, the authority concerned may drop the proceedings and/or hold that the allegations are not established. A show-cause notice does not infringe the rights of anyone. It is only when a final order, adversely affecting him, is passed that the said person can be said to have any grievance. Union of India v. Kunisetty Satyanarayana, 2007 1 SCJ 102; Saravani Impex Pvt. Ltd., 2010 1 ALD 40.

(2.) When a show-cause notice is issued under a statutory provision calling upon a person to show-cause he must, ordinarily, place his case before the authority by showing cause. The purpose of issuing a show-cause notice is to afford an opportunity of hearing to the person concerned, and Courts should be reluctant to interfere at that stage as it would be premature. (State of U.P. v. Shri Brahma Datta Sarma, 1987 AIR(SC) 943; M/s Vasavi Business Combines Judgment of A.P.H.C. D.B in W.P.No.16170 of 2010 dated 28.7.2010; M/s Jasper Industries Pvt. Ltd. Judgment of A.P.H.C.D.B. in W.P.No.18725 of 2010 dated 27.8.2010). The appropriate course for the recipient is to reply to the show-cause notice enabling the authorities to record their findings and then, if necessary, the matter can be carried in appeal to the Tribunal and, thereafter, to this Court. (Union of India v. Bajaj Tempo Limited, 1998 9 SCC 281; M/s Vasavi Business Combines Judgment of A.P.H.C. D.B in W.P.No.16170 of 2010 dated 28.7.2010; M/s Jasper Industries Pvt. Ltd. Judgment of A.P.H.C.D.B. in W.P.No.18725 of 2010 dated 27.8.2010). Interference would be justified only when the notice is ex-facie a 'nullity' or non-est in the eye of the law for absolute want of jurisdiction of the authority to even investigate into the facts, or totally "without jurisdiction" in the traditional sense of that expression i.e., even the commencement or initiation of the proceedings on the face of it, and without anything more, is totally unauthorised. In all other cases, it is only appropriate that the party shows cause before the authority concerned and takes up the objection regarding jurisdiction therein. (Executive Engineer, Bihar State Housing Board v. Ramesh Kumar Singh, 1996 1 SCC 327; Mohd. Ghulam Ghouse, 2004 3 SCC 440; M. Ramalinga Reddy, 2007 9 SCC 286; Saravani Impex Pvt. Ltd., 2010 1 ALD 40. Whether the show cause notice was founded on any legal premise is a jurisdictional issue which can even be urged by the recipient in his reply to the notice, and such an issue can also be initially adjudicated by the authority, issuing the very notice, before the aggrieved can approach the Court. (Mohd. Ghulam Ghouse, 2004 3 SCC 440; M. Ramalinga Reddy, 2007 9 SCC 286; Saravani Impex Pvt. Ltd., 2010 1 ALD 40; M/s Vasavi Business Combines Judgment of A.P.H.C. D.B in W.P.No.16170 of 2010 dated 28.7.2010; M/s Jasper Industries Pvt. Ltd. Judgment of A.P.H.C.D.B. in W.P.No.18725 of 2010 dated 27.8.2010). Abstinence from interference at the stage of issuance of the show-cause notice, in order to relegate parties to the proceedings before the authorities concerned, is the normal rule. However the said rule is not without exception.Where a show-cause notice is issued either without jurisdiction, or is an abuse of process of law, the Writ Court would not hesitate to interfere even at the stage of issuance of the show-cause notice. (Union of India v. VICCO Laboratories, 2007 13 SCC 270. The High Court has the power to issue, in a fit case, an order prohibiting an authority from acting without jurisdiction. Where such an action of the authority, acting without jurisdiction, subjects or is likely to subject a person to lengthy proceedings, and unnecessary harassment, the High Court will issue appropriate orders or directions to prevent such consequences. The existence of an alternative remedy is not always a sufficient reason for refusing a party relief by a Writ or Order prohibiting an authority, acting without jurisdiction, from continuing such action. (Calcutta Discount Co. Ltd. v. Income Tax Officer, Companies District I, Calcutta, 1961 AIR(SC) 372). Where the threat of prejudicial action is wholly without jurisdiction, a person cannot be asked to wait for injury to be caused to him before seeking the Court's protection. If, however, the authority has the power in law to issue the show cause notice it would not be open to the person, asked to show cause, to approach this Court under Article 226 of the Constitution at the stage of notice. (Chief of Army Staff v. Major Dharam Pal Kukrety, 1985 2 SCC 412; Saravani Impex Pvt. Ltd., 2010 1 ALD 40).

(3.) The petitioner's factory, located in Survey No. 198, Gagillapur, Ranga Reddy district of Andhra Pradesh, is registered under the Central Excise Act. The petitioner manufactures special type of fire resistant doors against specific orders placed on them by various Indian and International corporate clients. In this Writ Petition, the petitioner questions the proceedings, in O.R. No. 29/2010-Adjn.(Commr.) dated 07.04.2010, whereby they were called upon to show cause, within thirty days, why the doors/door frames etc manufactured by them, along with their essential/integral parts i.e., hardware items, should not be treated as pre-fabricated housing material classified under Chapter Sub-Heading No. 94060091 of the Central Excise Tariff Act, 1985; the steel toilet product should not be classified under Chapter Sub-Heading No. 94060099; Rs.14,54,66,228/-, (including Education Cess and Secondary and Higher Education Cess), being duty payable on hardware items valued at Rs. 103,27,89,375/-, (which are essential/ integral parts of the doors/door frames etc., supplied directly from their unregistered premises during the period March, 2005 to February, 2010), should not be demanded from the petitioner under the proviso to Sub-section (1) of Section 11A of the Central Excise Act, 1944 read with Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000; interest, at the applicable rates, on the duty should not be demanded under Section 11AB of the Central Excise Act, 1944; penalty, equal to the duty demanded, should not be imposed on them under Section 11AC of the Central Excise Act, 1944 for suppression of facts that resulted in short-payment of duty; penalty, under Rule 25(d) of the Central Excise Rules, 2002, should not be imposed on them for contravention of the Rules; and why the impugned goods should not be confiscated in terms of the said Rule. The Managing Director of the Petitioner Company was also called upon to show cause why penalty should not be imposed on him under Rule 26 of the Central Excise Rules, 2002. The Petitioner Company and its Managing Director were asked to produce evidence in support of their defence; and to specify in their reply whether they wished to be heard in person by the adjudicating authority.