Court rules on jurisdiction, duty collection, res judicata & liability in excise duty matter

The court held that the Commissioner of Central Excise, Shimla had jurisdiction over the matter, not the Thane Commissionerate. It found no evidence of duty collection by the petitioner, rejecting the applicability of Section 11D and 11A(4) of the Central Excise Act. The court upheld the principle of res judicata, stating the impugned notice was an impermissible attempt to revisit a concluded matter. Ownership in job work agreements did not entail liability for excise duty. Consequently, the court deemed the notice jurisdictionally flawed, quashing it and allowing the writ petition.

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Issues Involved:
1. Jurisdiction of the Commissioner of Central Goods and Services Tax and Central Excise, Thane to issue the show cause-cum-demand notice.
2. Applicability of Section 11D and Section 11A(4) of the Central Excise Act.
3. Principle of res-judicata in the context of the previous adjudication.
4. Ownership and liability for excise duty under job work agreements.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Commissioner of Central Goods and Services Tax and Central Excise, Thane:
The petitioner challenged the jurisdiction of the Thane Commissionerate to issue the show cause-cum-demand notice dated 26.05.2020. The court noted that the goods in question were manufactured by Tigaksha at Una, Himachal Pradesh. The taxable event for central excise is the manufacture of excisable goods, and the jurisdiction lies with the Commissioner of Central Excise, Shimla, who oversees the entire State of Himachal Pradesh. The court held that neither respondent No.2 nor respondent No.3 had the territorial jurisdiction to issue any notice for levy of central excise duty on such products.

2. Applicability of Section 11D and Section 11A(4) of the Central Excise Act:
The court examined the provisions of Section 11D, which requires any amount collected as representing duty of excise to be deposited with the central government. The adjudicating authority in the previous order dated 20.11.2019 found no evidence that the petitioner collected any amount as representing duty of excise. This finding was undisturbed and conclusive. The court also discussed Section 11A(4), which allows for an extended period of limitation in cases involving fraud, collusion, willful misstatement, or suppression of facts. The court found no basis for invoking this provision as there was no evidence of such conduct by the petitioner.

3. Principle of Res-judicata:
The petitioner argued that the impugned show cause-cum-demand notice was hit by the principle of res-judicata, as the same issue had been conclusively decided in the order dated 20.11.2019. The court agreed, noting that the basic premise for issuing both notices remained the same. The earlier notice was based on the assumption that the maximum retail price (MRP) of goods included central excise duty, which was collected but not deposited. This assumption was found to be unsupported by evidence. The court held that the impugned notice was an attempt to reopen an issue already concluded, which is not permissible.

4. Ownership and Liability for Excise Duty Under Job Work Agreements:
The court examined the job work conversion agreement dated 01.04.2015, which stated that the ownership and all other rights in the product remained with the petitioner. The respondents argued that this made the petitioner the principal manufacturer responsible for discharging the central excise duty. However, the court reiterated that the taxable event for central excise is the manufacture of goods, not ownership. Since the manufacturing process took place at Tigaksha's factory in Himachal Pradesh, the liability for excise duty did not rest with the petitioner.

Conclusion:
The court concluded that the impugned show cause-cum-demand notice dated 26.05.2020 was without jurisdiction and an attempt to reopen an issue already decided by the adjudicating authority. The notice was set aside and quashed, and the writ petition was allowed.

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