PGO PROCESS Vs. ADDITIONAL COMMISSIONER

JUDGEMENT

(1.) THE petitioner company claiming to be entitled to the benefit conferred by Notification No. 36/98, dated 10 -12 -1998, which came into force from 16 -12 -1998 filed a declaration dated 16 -12 -1998 with the Assistant Commissioner, Central Excise Division, Gandhi Nagar, Bhilwara stating that the petitioner had started working under the said notification as independent processor from 16 -12 -1098. The petitioner company also submitted to the Assistant Commissioner a declaration under Notification No. 42/98, dated 10 -12 -1998 giving the required details. It appears that the petitioner company started clearing the goods availing the benefit of Notification No. 36/98 from 16 -12 -1998 onwards. On 3042 -1998 office of the Commissioner of Central Excise, Jaipur -II wrote to the petitioner in response to the declaration given by the petitioner on 16 -12 -1998 that the Process House for which the declaration was made was owned by M/s. Suzuki Textile Ltd., a Company having proprietary interest in weaving of fabrics also and as the preliminary enquiries conducted by the Department revealed that M/s. Suzuki Textile Ltd. are the processor of fabrics in the factory, till the matter was settled, the request of the petitioner company for determination of the Annual Production in their favour under the scheme could not be entertained. On the same day, the Superintendent, Central Excise, Range -II, Bhilwara wrote to the petitioner enclosing a copy of the letter of the Commissioner's office and advising the petitioner company to follow the directions given in the letter and to clear the excisable goods accordingly. The short levy, if any, on the past clearance was also demanded to be deposited.

(2.) ON 4 -1 -1999 the petitioner filed this petition challenging the aforesaid direction given by the Central Excise Authorities and praying that the impugned letter dated 30 -12 -1998 of the Additional Commissioner and the letter dated 30 -12 -1998 of the Superintendent, Central Excise, Range -II, Bhilwara be quashed. A writ of mandamus directing the Additional Commissioner, respondent No. 1 to entertain the declaration filed by the petitioner and to determine the annual capacity of production of the petitioner's Process House in its favour was also claimed with a prayer that the petitioner be allowed to clear goods availing the benefit of Notification No. 36/98, dated 10 -12 -1998. An interim order was sought from and granted by this court allowing the clearance under the Notification on condition that the petitioner shall keep true and correct accounts of the clearance of goods to enable the respondents to realise the differential duty in case the petition fails. The respondents moved an application under Article 226(3) for vacation of the interim order. When the arguments on the application were being heard, the parties agreed that the case be disposed of finally by hearing arguments at that stage only. This is how the case was finally heard by us.

(3.) IN reply it is contended on behalf of the respondents that the petitioner could claim to be covered under Notification No. 36/98 only after its declaration was accepted by the department and not before that. It was submitted that the department had, on investigation, found out material to support the contention that the petitioner company was not independent processor as it had virtually no capital assets, it did not own any land, building, plant or machinery and all these have been taken on lease from M/s. Suzuki Textile Ltd. It was also contended that the entire goods processed by the petitioner company either belong to M/s. Suzuki Textile Ltd. or goods of other manufacturers sent for processing by M/s. Suzuki Textile Ltd. to the petitioner company for processing. It is submitted that the petitioner company is only an instrumentality of M/s. Suzuki Textile Ltd. and is used only as a facade for the purpose of avoiding excise duty.