Show-cause notice under central excise law quashed for lack of provisional assessment basis, limitation, and natural justice breach

A show-cause notice under central excise law was held unsustainable where provisional assessment had not been validly initiated by a written request, yet the notice purported to finalise such assessment without statutory basis. The notice was also treated as time-barred because it was issued beyond the limitation period and sought to reopen the same period and subject matter already covered earlier, with no valid ground for extended limitation. Non-supply of relied upon documents was found to breach natural justice, and the availability of an alternative remedy did not bar writ relief where the notice was patently without jurisdiction.

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Issues: (i) whether a show-cause notice could be issued for finalisation of assessment when provisional assessment had not been validly initiated and the statute contained no provision for such notice; (ii) whether the impugned notice was barred by limitation and impermissible for covering the same period and same subject matter as an earlier notice; (iii) whether non-supply of relied upon documents and the availability of an alternative remedy barred writ interference.

Issue (i): whether a show-cause notice could be issued for finalisation of assessment when provisional assessment had not been validly initiated and the statute contained no provision for such notice.

Analysis: Rule 7 of the Central Excise Rules, 2002 permits provisional assessment only on a written request by the assessee. The record disclosed no such request. The notice itself was treated as one under section 11A of the Central Excise Act, 1944 in substance, while also purporting to finalise provisional assessment. The Court held that the Act and the Rules did not provide for a separate show-cause notice merely for finalisation of provisional assessment, and the notice suffered from patent inconsistency and non-application of mind.

Conclusion: The notice was invalid and unsustainable on this ground, in favour of the petitioner.

Issue (ii): whether the impugned notice was barred by limitation and impermissible for covering the same period and same subject matter as an earlier notice.

Analysis: Section 11A of the Central Excise Act, 1944 requires notice within one year from the relevant date, with the extended period available only for fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade duty. The notice was issued long after the relevant periods and sought to reopen the same controversy already covered by an earlier notice and appellate proceedings. The Court relied on the settled position that extended limitation cannot be invoked where the Department already knew the facts or had earlier proceeded on the same subject matter, and that two assessments or notices cannot stand for the same period.

Conclusion: The notice was barred by limitation and could not be sustained, in favour of the petitioner.

Issue (iii): whether non-supply of relied upon documents and the availability of an alternative remedy barred writ interference.

Analysis: The respondents did not supply the relied upon materials despite a prior direction of the Court. Non-disclosure of documents relied upon in a show-cause notice amounted to breach of natural justice. In addition, where the authority lacked jurisdiction to issue the notice, and the notice was patently unsustainable, the existence of an alternative remedy did not preclude writ relief.

Conclusion: The writ petition was maintainable and the objection based on alternative remedy failed, in favour of the petitioner.

Final Conclusion: The impugned notice and all proceedings founded on it were quashed, and the writ petition succeeded.

Ratio Decidendi: A show-cause notice under the central excise law cannot be sustained where it is issued beyond the permissible limitation, seeks to reopen the same period and subject matter already covered earlier, and is unsupported by lawful provisional assessment or disclosure of relied upon documents.

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