1995 (1) TMI 188 - HC - Central Excise

Court dismisses challenge on Modvat credit disallowance & penalty imposition, emphasizes statutory forums

The court dismissed the petition challenging a notice to show cause regarding Modvat credit disallowance, excise duty recovery, and penalty imposition. ... Writ jurisdiction not exercisable at show cause notice stage Issues:Challenge to notice to show cause regarding Modvat credit disallowance, recovery of excise duty, and imposition of penalty under Central Excise Rules.Analysis:1. The petitioner sought to quash a notice to show cause issued by the Collector, questioning the Modvat credit taken wrongly and utilized for payment of duty on Sodium Sulphate. The petitioner argued that Circular No. 24/90 allowed such credit, and the notice was without jurisdiction, violating Section 37-B of the Act. The petitioner also contended that the notice was barred by limitation. The respondent, however, argued against these contentions, stating that Circular P/6 did not restrict the adjudicating authority's power and that the petition was premature. The court stayed further proceedings on the notice.2. The judgment emphasized the importance of statutory forums for specific grievances and discouraged entertaining such matters under Article 226 of the Constitution. Referring to previous Supreme Court decisions, the court highlighted the need to test orders of assessment under the relevant Act. It cautioned against using writ jurisdiction when alternative solutions are available within the statute. The court stressed the need for authorities to act responsibly and explore all options before taking action.3. The court underscored the significance of tax laws in promoting honesty and discouraging evasion. It emphasized the need for a rational and just approach in legal proceedings. The judgment highlighted the role of show cause notices as a starting point, not a conclusive action. It encouraged fairness, stating that authorities and assesses should work together within the legal framework. The court noted that the issue raised was not complex and that a balanced and thoughtful approach was necessary.4. Ultimately, the court declined to admit the petition and dismissed it summarily, allowing the petitioner to file a reply to the notice by a specified date. The judgment maintained that all contentions raised by both parties remained open for further litigation. The interim order issued earlier was vacated, and no costs were awarded. The judgment aimed to ensure a fair and transparent process while upholding the principles of justice and legal procedure.