Show cause notice under excise law survives where exemption and limitation depend on factual inquiry before the authority.
Show cause notices under excise law were not quashed at the threshold where entitlement to exemption depended on disputed facts about the product, manufacturing process, and applicability of the notification; those matters had to be examined by the departmental authorities in the statutory enquiry, so the notice was not treated as lacking jurisdiction merely because exemption was asserted. The Court also rejected the contention that the demand had to be confined to six months, holding that the relevant assessable period and commencement of manufacture were questions for determination by the excise authorities. The writ petition was dismissed, with liberty to raise exemption and limitation objections before the competent authority.
Issues: (i) Whether the show cause notice issued for central excise duty could be quashed at the threshold on the ground that the petitioner's paper was covered by the exemption notification and that the notice disclosed no jurisdictional basis; (ii) Whether the notice was liable to be confined to a period of six months prior to its issue.
Issue (i): Whether the show cause notice issued for central excise duty could be quashed at the threshold on the ground that the petitioner's paper was covered by the exemption notification and that the notice disclosed no jurisdictional basis.
Analysis: The petition challenged only a show cause notice, while the disputed questions concerned the nature of the product, the manufacturing process, and whether the end product fell within the exemption under Notification No. 68/76-C.E. The Court held that such matters required evidence and enquiry by the excise authorities under the statutory scheme and could not be decided merely on correspondence or on the materials then placed before the Court. In view of the power conferred by the excise law to issue notice where duty had not been levied or short-levied, the notice could not be treated as lacking jurisdiction merely because the petitioner asserted exemption.
Conclusion: The challenge to the show cause notice failed and the writ was not maintainable at that stage; the petitioner was directed to raise all objections before the departmental authorities.
Issue (ii): Whether the notice was liable to be confined to a period of six months prior to its issue.
Analysis: The Court rejected the contention that the demand could not extend beyond six months. It read the excise provisions as empowering the authorities to examine the relevant period for which duty had escaped collection and held that the commencement of manufacture and the assessable period were matters for determination by the authorities in the statutory enquiry.
Conclusion: The six-month restriction argument was rejected.
Final Conclusion: The writ petition was dismissed, while leaving the petitioner free to file a reply to the show cause notice and pursue all available objections before the excise authorities.
Ratio Decidendi: A show cause notice under the excise law will not be quashed at the threshold where the dispute turns on factual questions requiring statutory adjudication, and the assessee must ordinarily raise exemption and limitation objections before the competent authority.
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