DUNCANS INDUSTRIES LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) Whether the show cause notice dated 30-9-1986 issued by the Collector of Central Excise, Guntur, the second respondent herein, was validly served upon the petitioner - M/s. Duncan Industries Limited - is the question at issue in this writ petition. The petitioner is a public limited company registered under the Companies Act, 1956, having its registered office at No. 31, Netaji Subhas Road, Calcutta. National Tobacco Company had a factory at Agarpara in the State of West Bengal and another factory at Biccavolu in Andhra Pradesh and engaged in the manufacture and sale of cigarettes and smoking mixtures. The National Tobacco Company was amalgamated with Birpara Tea Company pursuant to a scheme of amalgamation sanctioned by the Calcutta High Court in January, 1978. With effect from the date of merger i.e., 1-3-1977, the name of Birpara Tea Company was changed to Duncans Agro Industries Limited (DAIL). DAIL carried on the business of manufacture and sale of cigarettes through its tobacco division at two factories - one situate at Biccavolu in the State of Andhra Pradesh known as Duncan Tobacco Company and another at Agarpara in West Bengal known as National Tobacco Company. Another company by name M/s. New Tobacco Company which had its registered office at Nos. 1 and 2, Old Court House Corner, Calcutta, with effect from 1/04/1984, was merged with the Tobacco Division of DAIL by virtue of the orders of the Calcutta High Court. The corporate entity, according to the averment in the affidavit filed by the petitioner in support of the present writ petition, was renamed as Duncans Industries Limited.

(2.) In the impugned show-cause notice issued by the Collector of Central Excise, Guntur, it was alleged inter alia that the tobacco division of DAIL and New Tobacco Company Limited, Calcutta, during the period September, 198 1/02/1983, manufactured cigarettes, that the two companies were managed by a Board of Directors and several senior executives and that a large amount of central excise duties leviable on cigarettes aggregating Rs. 28,13,77,765.50 (mentioned therein) were evaded contrary to certain provisions of the Central Excise Rules by wilfully mis-declaring the assessable values of cigarettes for the above period. Shri Gouri Prasad Goenka was the Chairman of DAIL and the show cause notice mentioned the names of Shri Goenka and certain other Directors as involved in the fraud. The show cause notice was served on Sri Goenka at his residential address on 3-10-1986 and he sent a reply on 27-10-1986 stating that the notice was without jurisdiction, he was only a non-executive Director of DAIL and as Chairman, he presided over the meetings of the Board of Directors and was "not in any manner connected with the day to day working of the said company". He also sought inspection of the documents relied upon in the show cause notice. M/s. Gagret and Co., a firm of Advocates, issued a notice to the Directorate of Audit, Customs and Central Excise, on behalf of Sri G. P. Goenka admitting that the notice was received by Sri Goenka but "no notice has been issued to DAIL or to any of its other Directors" and that a careful reading of the show cause notice disclosed that it was only addressed to M/s. New Tobacco Co. Ltd., and two other companies and persons with whom Sri Goenka had no connection. The Advocates' notice sought withdrawal of the show cause notice on the above grounds.

(3.) An addendum to the show cause notice was issued on 17-3-1987 containing certain corrections, deletions and additions. The third respondent, the Collector of Central Excise, New Delhi, who has taken over, for the sake of administrative convenience, the responsibility of adjudicating the matter, issued a notice on 15-3-1995 to DAIL and four other companies directing them to appear before him on 18-4-1995 at 10.30 AM