TaxTMI 
TaxTMI 
2010 (11) TMI 623
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....Forest Officer v. M. Ramalinga Reddy [(2007) 9 SCC 286]; Saravani Impex Pvt. Ltd. v. Additional Director General, Directorate of Revenue Intelligence, Chennai [2010 (1) ALD 40 (DB)]; M/s. Vasavi Business Combines v. Commissioner of Customs [Judgment of A.P.H.C. D.B. in W.P. No. 16170 of 2010, dated 28-7-2010]; M/s. Jasper Industries Pvt. Ltd v. Commercial (CT), (Audit), Hyderabad [Judgment of A.P.H.C. D.B. in W.P. No. 18725 of 2010, dated 27-8-2010]. A show-cause notice does not give rise to any cause of action as it is not an adverse order which affects the rights of a party. It is quite possible that, after considering the reply to the show-cause notice, the authority concerned may drop the proceedings and/or hold that the allegations are not established. A show-cause notice does not infringe the rights of anyone. It is only when a final order, adversely affecting him, is passed that the said person can be said to have any grievance. [Union of India v. Kunisetty Satyanarayana [(2007) 1 SCJ 102]; Saravani Impex Pvt. Ltd. [2010 (1) ALD 40 (DB)]. 2. When a show-cause notice is issued under a statutory provision calling upon a person to show-cause he must, ordinarily, place his....
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....0 of 2010, dated 28-7-2010]; M/s. Jasper Industries Pvt. Ltd. [Judgment of A.P.H.C. D.B. in W.P. No. 18725 of 2010, dated 27-8-2010]. 3. Abstinence from interference at the stage of issuance of the show-cause notice, in order to relegate parties to the proceedings before the authorities concerned, is the normal rule. However the said rule is not without exception. Where a show-cause notice is issued either without jurisdiction, or is an abuse of process of law, the Writ Court would not hesitate to interfere even at the stage of issuance of the show-cause notice. (Union of India v. Vicco Laboratories [(2007) 13 SCC 270 = 2007 (218) E.L.T. 647 (S.C.)]. The High Court has the power to issue, in a fit case, an order prohibiting an authority from acting without jurisdiction. Where such an action of the authority, acting without jurisdiction, subjects or is likely to subject a person to lengthy proceedings, and unnecessary harassment, the High Court will issue appropriate orders or directions to prevent such consequences. The existence of an alternative remedy is not always a sufficient reason for refusing a party relief by a Writ or Order prohibiting an authority, acting without j....
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....f the Central Excise Rules, 2002, should not be imposed on them for contravention of the Rules; and why the impugned goods should not be confiscated in terms of the said Rule. The Managing Director of the Petitioner Company was also called upon to show cause why penalty should not be imposed on him under Rule 26 of the Central Excise Rules, 2002. The Petitioner Company and its Managing Director were asked to produce evidence in support of their defence; and to specify in their reply whether they wished to be heard in person by the adjudicating authority. 5. Sri S.R. Ashok, Learned Senior Counsel appearing on behalf of the petitioner, would submit that the taxable event in respect of excise duty is manufacture; the expression 'manufacture' means bringing into existence a new article having a distinctive name, character or use; excise duty is payable when the goods are cleared from the factory; any subsequent event, after the sale, has no bearing on excise duty; the duty chargeable on excisable goods is with reference to their value at the time of clearance from the factory; the classification list, giving details of the goods, was filed in the year 1995 which was duly verified....
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....or their representation; and the impugned proceedings are without jurisdiction and are liable to be set aside. 6. On the other hand, Sri A. Rajasekhar Reddy, Learned Senior Standing Counsel for Central Excise & Customs, would submit that the petitioner has an effective remedy of filing his explanation to the show cause notice raising all grounds which are available to them; the question, whether the commodity is to be classified under one head or the other attracting higher or lower duty, is to be decided in the facts arising in each case; after introduction of the new 8-digit tariff heading from 28-2-2005 the scope of Chapter Heading 9406 has been widened by providing separate sub-headings for pre-fabricated housing material and residuary entries; the petitioner's product, which was earlier classified under Chapter Heading 73083000, is now more appropriately classifiable under Chapter Heading 94060091; the different types of doors and products manufactured by the petitioner must be linked/fixed/attached with the said hardware items to make it a complete door/partition for the purpose of general doors, fire doors etc; in order to fix/attach the hardware items certain aperture....
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....titioner's manufacturing process; they neither entered the petitioner's factory premises nor were they cleared from their factory; and they were supplied directly to the customers from the petitioner's godown located at a distance far away from the factory premises. The jurisdiction of the High Court, under Article 226 of the Constitution, should not be permitted to be invoked in order to challenge a show-cause notice unless, accepting the facts stated therein to be correct, the show-cause notice is, ex facie, without jurisdiction (State of U. P. v. Anil Kumar Ramesh Chandra Glass Works [(2005) 11 SCC 451]). Mere assertion by the petitioner that a notice is without jurisdiction would not suffice. It should, prima facie, be established to be so. Where factual adjudication is necessary interference is, ordinarily, ruled out. (Vicco Laboratories [(2007) 13 SCC 270 = 2007 (218) E.L.T. 647 (S.C.)]; Saravani Impex Pvt. Ltd. [2010 (1) ALD 40 (DB)]). It is, therefore, necessary to briefly refer to the contents of the show cause notice. The show cause notice dated 7-4-2010 records that a study of the manufacturing process of the petitioner revealed that the different types of doors and prod....
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.... under-valuation of excisable goods; they had also failed to declare the existence of a store/godown where essential/ integral parts of doors are stocked/stored; and the purchase orders were 'composite' in nature i.e., for supply of manufactured items along with the hardware items. 8. It is not in dispute that the petitioner's godown, from which the bought-out items were supplied directly to the customers is located far away from the petitioner's factory premises; and these bought-out items neither entered the petitioner's factory premises nor were they cleared therefrom. The case of the respondents, in short, is that these bought-out items form an integral part of the manufactured items i.e., stainless steel and other doors, and excise duty is liable to be paid thereupon. In order to relegate the petitioner to the remedy of filing a reply to the show cause notice this Court must be satisfied, prima facie, that the contentions urged on behalf of the department, is not without merit; and the bought-out items, which allegedly form an integral part of the manufactured items, are also liable to be subjected to excise duty even though such bought-out items never entered the petiti....
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....ot classification....... ........As stated above, the concept of "classification" is different from the concept of "valuation"....... In the present matter, along with the "stand-alone" compressor, the assessee has supplied fly wheel, safety valve and filter to its buyers. They have also supplied bought-out items like V. belt, motor, pulley, belt guard, gauge, gauge board, angle valve, M. S. male flange, C. A. F. Gasket, set of tools, bolts and nuts, etc. to their buyers, as a package. Therefore, on the question of valuation, the Commissioner should have examined the pricing aspect of the entire package supplied by the assessee to its buyers. For example, when a ceiling fan is sold to the buyer, apart from the parts of the ceiling fan, there may be a remote which is a part of the package supplied to the buyer. That remote is fan-specific in matter of valuation since the remote is an additional feature provided with the ceiling fan its value has also to be taken into account. This is because the remote which operates the fan may be an accessory but still it makes value addition and, therefore, its value is liable to be included in the assessable value of the ceiling fan. These aspe....
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....d, and on further investigation, the authorities were of the view that excise duty is leviable on the hardware items. The matter relating to commodity classification, whether it falls under one heading or the other or attracts higher or lower duty, has to be decided on the facts arising in each case. Even though a decision may have been taken earlier, the matter may have to be re-examined on further investigation, on discovery of new facts or where the law has changed. It is not proper for the High Court to interfere in such matters at the stage of a show cause notice. (Commissioner of Cus. & C. Ex. v. Charminar Nonwovens Ltd. [2004 (167) E.L.T. 372 (S.C.)]; M/s. Vasavi Business Combines [Judgment of A.P.H.C. D.B. in W.P. No. 16170 of 2010, dated 28-7-2010]). 12. Sri S.R. Ashok, Learned Senior Counsel, would further submit that, while demanding duty beyond one year, the onus is on the department to prove that non-payment or short payment of duty was due to fraud, collusion, willful mis-statement or suppression of facts; the notice does not give any evidence in support of such allegations; on the contrary, the facts were known to the department through audits and balance sheet....