Civil suit maintainable against excise action where the notice lacked jurisdiction and was unsupported by evidence of extra collections.

A civil suit challenging excise action was treated as maintainable where the plaint alleged want of jurisdiction, illegality and breach of mandatory procedure, despite the statutory remedy scheme. Non-joinder was not fatal because the Union of India was already before the court and the departmental acts could be adjudicated without adding the issuing officers as parties. On the merits, the notice and consequential order were set aside because there was no material that the assessee had collected anything beyond the invoice price; the department had not applied the governing valuation principle, and the notice was held to suffer from non-application of mind and want of jurisdiction.

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Issues: (i) Whether the civil suit was maintainable in view of the Central Excises and Salt Act, 1944 and the Rules; (ii) Whether the suit was bad for non-joinder of necessary and proper parties; (iii) Whether the show cause notice dated 27 March 1986 and the order dated 29 January 1988 were liable to be set aside.

Issue (i): Whether the civil suit was maintainable in view of the Central Excises and Salt Act, 1944 and the Rules.

Analysis: The jurisdiction of the civil court is excluded where the statute provides a complete remedial scheme, but that exclusion does not extend to cases where the authority acts without jurisdiction or in breach of the fundamental principles of judicial procedure. A challenge based on want of jurisdiction is maintainable even if the statute provides appeals and other remedies. The plaint alleged illegality, lack of jurisdiction and violation of procedure, and the court treated the suit as maintainable on that basis.

Conclusion: The suit was maintainable and the finding was in favour of the plaintiff.

Issue (ii): Whether the suit was bad for non-joinder of necessary and proper parties.

Analysis: The authority who issued the notice was not treated as a necessary party because the Union of India was already on record and the challenged acts were attributable to the department as a whole. The presence of the Collector of Central Excise, New Delhi, or the Directorate of Anti-Evasion, New Delhi, was not considered necessary for complete adjudication of the dispute.

Conclusion: The suit was not bad for non-joinder, and the finding was against the defendants.

Issue (iii): Whether the show cause notice dated 27 March 1986 and the order dated 29 January 1988 were liable to be set aside.

Analysis: The court found no material showing that the plaintiff company or its directors had collected any extra amount over the invoice price. The material indicated, at most, personal dealings by the sales executive, while the great majority of transactions reflected sales at the declared invoice price. On that factual footing, the court held that the department had not complied with the governing valuation principle and that the notice suffered from non-application of mind and want of jurisdiction. Once the notice was held invalid, the consequential order could not stand.

Conclusion: The notice and the consequential order were set aside, and the finding was in favour of the plaintiff.

Final Conclusion: The suit succeeded in substance, the impugned departmental notice and consequential adjudication were annulled, and the plaintiff obtained declaratory and injunctive relief.

Ratio Decidendi: A civil suit remains maintainable against excise action where the impugned notice or order is shown to be without jurisdiction or contrary to the mandatory procedure, and a demand cannot be sustained on extraneous receipts not shown to form part of the assessee's normal sale price.

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