TaxTMI 
TaxTMI 
2010 (4) TMI 304
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....ment of excise duty. Excise duty payable on the total value of clearance was exempted to an extent of Rs.30,00,000/ for the period 1995-2000 and to the extent of Rs.50,00,000/ from 2000 onwards. The petitioner is also entitled to duty credit via modvat and cum-duty benefits. Her husband Mr. Nilanjan Deshpande has started Dagger International a Concern involved in retailing the Die Cutting Knives. The first respondent Commissioner of Central Excise, Chennai II Commissionerate issued show cause notice dated 19.5.2000 claiming duty for the period from 1995-96 to 2000-2001. The duty has been claimed for the transactions that took place during the years 1995-96. The petitioner countered the claim of excise duty in the show cause notice issued by the first respondent by giving reply to the show cause notice. The first respondent passed an order dated 10.4.2001 confirming the duty demand of Rs.47,73,201/ against the petitioner in terms of proviso to section 11A of the Central Excise Act, 1944. Penalty was also imposed invoking the provision under section 11A of the Central Excise Act, 1944 and Rule 173Q of the Central Excise Rules, 1944. The petitioner took up the matter in appeal before ....
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....gation that M/s. Dagger International was a 'related person' is totally untenable. Therefore, the impugned order is liable to be quashed. 4. Learned Senior Central Government Standing Counsel appearing for the respondents would submit that the power of judicial review under Article 226 of the Constitution of India conferred on this court is very limited. 5. Per contra, learned counsel appearing for the petitioner would submit that in a case where a perverse order has been passed by the authority concerned, this court has ample power under Article 226 of the Constitution of India to go through the entire materials to test whether the order impugned is a perverse one. 6. The Supreme Court in BACHAN SINGH v. UNION OF INDIA ((2008) 9 SCC 161) has held as follows:- "It is well-known and well-settled proposition of law that in proceedings under Article 226 of the Constitution, the High Court cannot sit as a court of appeal over the findings recorded by the GCM. Judicial review under Article 226 of the Constitution is not directed against the decision but is confined to the decision-making process. Judicial review is not an appeal but a review of the manner in which the decisi....
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....g the powers of judicial review under Article 226 of the Constitution of India. 9. Learned Senior Central Government Standing Counsel appearing for the respondents would submit referring to the provision under section 35-L of the Central Excise Act, 1944 that the final order passed by the second respondent is subject to appeal before the Supreme Court. When the statute provides for appeal, this court has no jurisdiction to entertain the writ petition filed overlooking the appeal remedy available for the petitioner before the Supreme Court, he would submit. 10. Per contra, the learned counsel appearing for the petitioner would submit that section 35-L of the said Act has no application to the facts and circumstances of this case. Even otherwise, when a certiorari remedy has been sought for on the ground that there was violation of principles of natural justice also this court has every authority to entertain the writ petition under Article 226 of the Constitution of India. 11. An order passed by the Appellate Tribunal relating to determination of any question having a relation to the rate of duty of excise or to the value of goods for the purpose of assessment shall be chal....
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....f the High Court had not entertained his petition, Hirday Narain could have moved the Commissioner in revision, because at the date on which the petition was moved the period prescribed by Section 33-A of the Act had not expired. We are unable to hold that because a revision application could have been moved for an order correcting the order of the Income-tax Officer under Section 35, but was not moved, the High Court would be justified in dismissing as not maintainable the petition, which was entertained and was heard on the merits." 16. Applying the above ratio, the court finds that even assuming for the sake of argument that an appeal before the Supreme Court would lie under section 35-L of the Central Excise Act, 1944, if the High Court had not entertained the writ petition filed under Article 226 of the Constitution of India, the petitioner would have very well moved the Supreme Court. Therefore, there is no justification for this court to dismiss the writ petition as not maintainable after a lapse of seven years from the date of admission of the writ petition before this court. 17. Following the aforesaid decision of the Supreme Court, the Madhya Pradesh High Court in T....
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....sought for on the ground that the principles of natural justice were violated, even if the statute provides for an appeal remedy, the party aggrieved for such violation can invoke the jurisdiction of the judicial review under Article 226 of the Constitution of India. 22. The Supreme Court has ruled in WHIRLPOOL CORPORATION v. REGISTRAR OF TRADE MARS, MUMBAI AND OTHERS ((1998) 8 SCC 1) as follows:- "If an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged." 23. Where any of the fundamental rights is sought to be enforced, or violation of principles of natural justice is sought to be set right or the jurisdiction to pass an order by the authority concerned or the vires of the Act itself is under challenge, the plea that there ....
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....peal is available under the statute, the High Court shall not entertain the writ petition. 27. That was a case where there was no allegation of violation of principles of natural justice. Further, it is not clear whether the remedy of certiorari was prayed for in the said case. In view of the above, I find that the above decision will not apply to the facts and circumstances of this case. 28. This court in DEVALA TEA FACTORY v. CENTRAL BOARD OF EXCISE & CUSTOMS, NEW DELHI (2009(242) E.L.T. 219 (MAD.) has held as follows:- "More so, admittedly, as against the order impugned in this Writ Petition, the petitioner has an appeal remedy before the Commissioner of Customs and Central Excise (Appeals), which is not availed of by it. Nothing also prevented the petitioner from availing such remedy. Without availing the said remedy, the petitioner has directly approached this Court under Article 226 of the Constitution of India by way of this Writ Petition, which is not maintainable." 29. Firstly, the court had found in the said case that appeal would lie before the Commissioner of Customs and Central Excise as against the order impugned. Secondly, there was no allegation in the s....
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....SUPERINTENDENT OF CENTRLA EXCISE (1993 (68) E.L.T. 514(CAL.)) 35. The extended period of five years is inapplicable for some failure or negligence of the manufacturer to take out licence or pay duty when there was scope for doubt that the goods were not dutiable. There should be a specific charge that there was suppression of goods with an intention to evade duty. (PADMINI PRODUCTS v. COLLECTOR OF CENTRAL EXCISE (1989 (43) E.L.T. 195 (S.C.)). 36. In the instant case, it has been alleged in the show cause notice that the petitioner failed to take licence under Rule 174 of the Central Excise Rules, 1944. As per the law laid down by the Honourable Supreme Court, mere failure to take licence is not a ground for availing the extended period of limitation by the Revenue. 37. The extension of the period of limitation entails both civil and criminal consequences and therefore the acts of fraud or suppression must be specifically pleaded in the show cause notice. The allegation in regard to suppression of facts must be clear and explicit so as to enable the noticee to reply thereto effectively. In the absence of specific statement, the court is entitled to raise the inference that ....
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.... that the essential ingredients of the proviso under section 11A of the Central Excise Act, 1944 are not present in this case to issue the subject show cause notice. 42. On a perusal of the order passed by the second respondent, it is found that he had looked into additional grounds which were not found in the show cause notice issued to the petitioner on 9.5.2000. The petitioner is bound to answer only the grounds alleged in the show cause notice issued to him. If any additional grounds are introduced by the authorities behind the back of the petitioner, the petitioner may not be in a position to putforth its defence. Therefore, the introduction of additional grounds after the issuance of show cause notice is against the principles of natural justice. 43. The second respondent has referred to the fact that the petitioner as well as M/s. Dagger International had a common Auditor which exhibits common interest between the parties. It appears that the second respondent has also introduced another ground that M/s. Dagger International had no working capital of its own and it was surviving only on the credit period granted by the petitioner. It has also been observed by the secon....
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.... correspondence sent by the petitioner to its bank. (4) There was no written agreement between the parties regarding terms of sale. (5) M/s. Dagger International was not paying the petitioner the purchase prices on a bill-to-bill basis but was paying on a lumpsum basis at intervals. (6) An internet advertisement placed by the petitioner referred to Mr.Deshpande as person providing Technical Assistance to petitioner. (7) Address of Dagger International was the residence of the couple Mr.and Mrs. Deshpande. (8) The couple had a joint account in ANZ Grindlays Bank other than the individual concern accounts. (9) A computer and a xerox machine belonging to M/s. Dagger International were found at the premises of the petitioner. 48. It is found that the following additional allegations were suddenly raised by the second respondent in the course of disposal of the appeal:- (1) That the two concerns had common auditors - held shows common interest between the parties. (2) M/s.Dagger International had no working capital of its own, hence it was surviving only due to the credit period granted by the petitioner - held proves financial accommodation between the partie....
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....ny excisable goods with reference to value, such value shall be deemed to be the normal price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, but in such cases the buyer shall not be a related person as per section 4 of the Central Excise Act, 1944. Where the assessee so arranges that the goods are generally not sold by him in the course of wholesale trade except to or through a related person, the normal price of the goods sold by the assessee to or through such related person, shall be deemed to be the price at which they are ordinarily sold by the related person in the course of wholesale trade at the time of removal to dealers. As per section 4(1)(a)(iii) of the said Act. A 'related person' means a person who is so associated with the assessee that they have interest directly or indirectly in the business of each other and includes a relative. The term relative shall have the meaning as found in the Companies Act, 1956. 53. The Bench of the Bombay High Court in RALLIWOLF LTD. v. UNION OF INDIA (1992 (59) E.L.T. 220 (BOM.) has held that to invoke the third proviso to section 4 o....
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....hpande had acted as Chief Executive Officer on a gratuitous basis, will not establish that there was mutuality of interest. 58. It appears that xerox machine of M/s. Dagger International was found installed in the office of the petitioner. But, quite unfortunately, the plausible explanation given by the petitioner that the xerox machine of M/s. Dagger International was found in the petitioner's premises in view of the renovation work taken place in the premises of M/s. Dagger International was not seriously considered by the respondents. 59. The Supreme Court has held in UNION OF INDIA v. ATIC INDUSTRIES LTD. (1984 (17) E.L.T. 323 (S.C.)) as follows:- "What the first part of the definition requires is that the person who is sought to be branded as a "related person" must be a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other. It is not enough that the assessee has an interest, direct or indirect, in the business of the person alleged to be a related person nor is it enough that the person alleged to be a related person has an interest, direct or indirect, in the business of the assessee. It is essen....