The Madurai Bench of Madras High Court (HC) has held that Writ Court can entertain a show-cause notice issued on lack of Jurisdiction.
Sanmar Foundries Limited, the appellant manufactures steel castings where the principal raw material for the final product is metal scrap. The factory premises of the appellant was inspected by the Anti-Evasion Wing of the respondent and in pursuance of such an investigation, the appellant had paid a sum of Rs.7.53 Crores to the respondent on various dates. The appellant claimed that this payment was made under threat or duress and that, they were not obligated to pay the amount and had filed a writ petition in W.P(MD)No.2026 of 2013, seeking for refund of the amount of Rs.7.53 Crore.
As against the order of the Single Judge, an Intra Court appeal was filed in which, a coordinate Bench had held that the respondents will have no authority to receive the payment when no ascertainment of the duties has been made by the Central Excise Officer and allowed the writ appeal and directed for a refund of the sum of Rs.7.53 Crores.
After the disposal of the writ petition in W.P(MD)No.2026 of 2013, the respondents issued a show-cause notice, dated 29.11.2013, based on the directions issued in W.P(MD)No.2026 of 2013, calling upon the appellant to show cause as to why penalty should not be imposed on them under Rules 25 and 26 of the Central Excise Rules, 2002, for contravention of Rule 11 of Central Excise Rules, 2002 and Rule 9 of the Cenvat Credit Rules, 2004,
It was contended that the investigation conducted by the respondent itself is premeditated since the same has not been taken to its logical conclusion and that it is an attempt to justify the earlier arbitrary recovery of Rs.7.53 Crores from M/s.Sanmar.
Mrs L.Maithili, counsel for the appellant and Mr R. Nanda Kumar, Senior Panel Counsel, assisted by Mrs S.Ragaventhre, Standing Counsel appeared on behalfof the respondent.
Justice M S Ramesh and Justice N Anand Venkatesh of HC observed that the scope of interference to a show-cause notice by a writ Court exercising its power under Article 226 of the Constitution of India, is very limited, barring few exceptions, like lack of jurisdiction or abuse of process of law, etc.
The HC observed that the present case had a flaw which dispossess the jurisdiction of the respondent in proceeding further with the show-cause notice. The impugned show-cause notice itself was on the strength of the directions issued by the Single Judge in W.P(MD)No.2026 of 2013, dated 08.11.2013, wherein the Investigating was called upon to complete the investigation and thereafter, the Commissioner of Central Excise was granted liberty to proceed further with the adjudication after granting the sufficient opportunity to the appellant
The Bench had further held that to invoke sub-section 3 of Section 11(A), the Excise Officer should form an opinion and that the respondents have issued a show-cause notice after the order of the learned Single Judge, which is not in terms of Section 11(A)(3) and therefore, the payment of Rs.7.53 Crores made by the appellant cannot be said to be in terms of 11(A)(1)(b) of the Central Excise Act. With these observations, the Bench had allowed the writ appeal and ‘set aside the order of the Single Judge.
The HC bench held that when the order of the learned Single Judge itself has been set aside, then the show-cause notice issued was without any authority and the impugned show-cause notice No.22/2013-Central Excise, dated 29.11.2013, was quashed. The writ appeal was allowed.
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