Show cause notice interference and bank guarantee relief in excise proceedings: writ challenge rejected, conditional appeal security allowed.

High Court interference under Article 226 was held unwarranted at the show cause notice stage in an excise matter because the notice was based on investigation material, involved disputed facts and mixed questions of fact and law, and disclosed no lack of jurisdiction or legal authority. The challenge to the notice therefore failed. The Court also allowed a conditional arrangement for any future appeal against an adverse adjudication: the petitioners may furnish a bank guarantee from a nationalised bank for the duty and interest component, instead of making cash deposit, excluding any penalty. The writ petitions were dismissed, subject to that limited liberty.

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Issues: (i) whether the High Court should interfere under Article 226 of the Constitution of India at the stage of a show cause notice issued under the excise law; (ii) whether, in the event of an adverse adjudication and appeal, the petitioners should be permitted to furnish bank guarantee instead of depositing the adjudicated duty amount.

Issue (i): whether the High Court should interfere under Article 226 of the Constitution of India at the stage of a show cause notice issued under the excise law.

Analysis: The notice was founded on intelligence inputs and statements recorded during investigation, and the matters raised involved disputed facts as well as mixed questions of fact and law. Interference at the notice stage was held to be unwarranted, and the notice was found not to suffer from lack of jurisdiction or legal authority.

Conclusion: Interference was declined and the challenge to the show cause notice failed.

Issue (ii): whether, in the event of an adverse adjudication and appeal, the petitioners should be permitted to furnish bank guarantee instead of depositing the adjudicated duty amount.

Analysis: The Court accepted the request and permitted the appellants, if an appeal became necessary, to furnish a bank guarantee from a nationalised bank for the duty component together with interest, excluding penalty if any, in place of cash deposit.

Conclusion: The petitioners were granted liberty to furnish bank guarantee in lieu of deposit in the event of an appeal against an adverse adjudication.

Final Conclusion: The writ petitions were dismissed, while a conditional liberty was granted regarding security in the form of bank guarantee for any future appeal against an adverse adjudication.

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