MEGHALAYA PLYWOODS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) Upon hearing the learned counsel on both sides it appears to me that the petitioner, namely Meghalaya Plywoods Ltd. made a prayer in this writ petition for a direction to the respondents to refund to the writ petitioner-Company forthwith the sum of Rs. 5 lacs alongwith interest at the rate of 18 percent per annum thereon so far deposited by the writ petitioner with the respondents on 12.12.86, and for direction to the respondents to cancel, rescind and/or withdraw the impugned Show Cause Notice dtd. 8.12.86 bearing No. V-44/lAdj/86 issued by the Collector, Customs and Central Excise, Shillong- the 2nd respondent herein, and for passing further or other order or orders which this Court deems it proper in the facts and circumstances of the case.

(2.) According to the writ petitioner it is a Registered Company registered under the Companies Act, 1956 (Act I of 1956) having its registered office at Bawri Mansions, Dhankheti, Shillong, Meghalaya; and factory at Burnihat, within the State of Meghalaya, and the writ petitioner has been dealing in manufacturing plywoods and is the only industrial concern of the nature within the State of Meghalaya and is engaged in dealing with the manufactured products throughout India and they are manufacturing the same under Central Excise Licence L-4 No. 1/Meghalaya/Plywood/ II/Class/SH/74 and presently with registration No. 13/SH/92 dtd. 18.11.72 and that since its inception in 1973, it has been dealing with the said business paying regularly the leviable duties to the concerned authorities without any blemish whatsoever and they have been following and adhering strictly to the relevant Rules and procedures prescribed by law. It is also the case of the writ petitioner that to their utter astonishment and surprise, the respondents had illegally made search in the premises of the Head Office of the writ -petitioner-Company as well as of their factory premises simultaneously on 25th February, 1986 and the respondents seized almost all the documents of the writ-petitioner-Company so as to harass the writ-petitioner unnecessarily for reasons best known to them, and, rather, the respondents have gone to the extent of publishing in the newspapers stating therein that the petitioner-company evaded excise duties in terms of lacs of rupees just to defame the petitioner and mar the goodwill and reputation of the petitioner-Company with its constituent clients and public in general. Thereafter the petitioner-Company has been served with a Show-Cause Notice under the impugned order/Notice dated 8.12.1986, as in Annexure-I to the writ petition, by the respondents by invoking the provisions of law laid down under Sec. 11A of the Central Excise and Salt Act, 1944 read with Rule 233-A of the Central Excise Rules, 1944 made under the said Act, and directed the writ petitioner to show cause as to why the Central Excise Duties should not be realised and penalty should not be imposed and the land, building, plant, machinery, materials etc. should not be confiscated under the relevant provisions of the Central Excise Act. The petitioner went on to contend that the said Show Cause Notice and the proceedings initiated by the respondents are wholly illegal and invalid and it was done without jurisdiction and also in excess of jurisdiction. According to the writ petitioner, the demands so far made by the respondents is barred by limitation as the same was made after expiry of six months from the relevant date in view of the provisions laid down u/s 11A of the Act. The main contention of the writ petitioner is that on the own admission of the Collector, Customs and Central Excise, Shillong - 2nd respondent herein - under his office letter dated 11.12.86, as in Annexure-II to the writ petition, that the said Show Cause Notice was signed and issued without application of mind and before going through the annexures thereof which has been sent to him only after issuance of the impugned show Cause Notice ; the 2nd respondent indicated that there could not be sufficient evidence for proving under-valuation unless the bills indicating "representative sale of the goods are included" ; and the 2nd respondent further directed the 3rd respondent to look into this aspect and ensure in future that the Show Cause Notice complete in all respect is sent to him for signature thereby exonerated the writ petitioner virtually annulling purported show cause Notice dated 8.12.86, as in Annexure-I to the writ petition. According to the writ petitioner, the impugned Show Cause Notice was issued before the completion of inquiry or investigation in the matter, and as such, the impugned Show Cause Notice is illegal, without jurisdiction, null and void and ab-initio. The respondents, particularly the respondent No. 3, forced the writ petitioner to deposit a sum of Rs. 5 lacs on 12.12.86 under a related Cheque No. 0004764 dated 12.12.86 immediately after the impugned Show Cause Notice dated 8.12.86 was issued and despite the orders passed on 11.12.86 by the 2nd respondent as stated above. Having no alternative, the writ petitioner deposited a sum of Rs. 5 lacs on 12.12.86 and the same has not yet been refunded to the writ petitioner, thereby causing immense loss and financial hardship to the writ petitioner. Despite repeated reminders and letters sent by the writ petitioner, the respondents had failed to refund the said sum of Rs. 5 lacs to the writ petitioner and that the respondents withhold the said sum of Rs. 5 lacs without any justification till today. According to the writ petitioner, the alleged search and seizure made by the respondents was in complete violation and infraction of the provisions of the law laid down u/s 12 and 18 of the Central Excise and Salt Act and Sections 103,105(i) 110, 165, 210 and 353 of the Code of Criminal Procedure. As the respondents had failed to refund the said sum of Rs. 5 lacs so far deposited by the writ petitioner and rather, failure on the part of the respondents to give an effective opportunity of inspection of the illegaly seized documents and failure to supply copies of the said documents so far seized by them, the petitioner filed a Civil Suit being Title Suit No. 10(H)88 in the Court of the learned Munsiff at Shillong. The petitioner also challenged the validity of the entire action of the respondents in the matter under this writ petition and sought for a direction to the respondents to refund the aforesaid sum of Rs. 5 lacs and also for quashing the impugned Show Cause Notice dtd. 8.12.86, as in Annexure-I to the writ petition, and for restraining and prohibiting the respondent No. 2 from proceeding with the matter under the impugned Show Cause Notice dated 8.12.86.

(3.) The case of the writ petitioner-Company is resisted and contested by the respondent Nos. 1 to 5 by filing counter affidavit and contending interalia that the writ petitioner had filed a Civil Suit before the learned Munsiff at Shillong vide Title Suit No. 10(H) of 1988 for the same relief sought for by the writ petitioner in the present writ petition, and as such, the present writ petition is not maintainable at all. According to the contesting respondents, upon intelligence report to the fact that the writ petitioner has been systematically evading the Central Excise Duties by manipulating the Central Excise Gate Passes by cunning devices and in gross violation of Rules 9(1), 52(A) ; 173/C, F.G. and 221 of the Central Excise Rule of 1944 and are supplying their manufactured plywoods in different parts all over India, the Preventive Branch of the Central Excise Department made an action plan and simultaneously raided the relevant places all over India including the office premises of the writ petitioner on 25.2.1986 and seized large number of incriminating documents which clearly revealed that a systematic evasion of a total sum of Rs.64,13,941.70p. of Central Excise Duties. After proper scrutiny of the seized documents, the respondents drew up a proceeding as provided under the Central Excise and Salt Act, 1944 against the writ pet tioner and served a statutory Show Cause Notice u/s 11A of the Central Excise and Salt Act, 1944 read with Rule 233-A of the Central Excise Rules vide impugned Show Cause Notice dated 8.12.86 requiring the writ petitioner to show cause within 30 days from the date of receipt of the notice as to why the evaded Central Excise duties amounting to Rs. 64,13,941.70P. should not be realised from the writ petitioner, and, as to why the penalty should not be imposed as provided under the law, and also to state if the petitioner desires to be heard in person. It is also the case of the respondents that after receipt of the aforesaid Show Cause Notice dated 8.12.86 the writ petitioner paid a sum of Rs.5 lacs towards Excise Duties payable by the writ petitioner but did not submit the required Show Cause, instead, the petitioner began to take time for as many as seven/eight times, that is, on 27.1.87, 7.5.87, 6.7.87, 17.9.87, 18.12.87, 30.6.88 and finally on 20.8.88, and thereafter the writ petitioner filed the civil Suit being Title Suit No. 10(H) of 1988 in the Court of learned Munsiff at Shillong and obtained an injunction order stalling the entire proceedings till today, and thereafter the writ petitioner filed this writ petition for the same relief sought for by the writ petitioner in the said Civil Rule for refund of the said sum of Rs. 5 lacs paid towards Central Excise Duties.