TaxTMI 
TaxTMI 
2008 (11) TMI 269
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.... Central Excise duty by under pricing the cars exported to its associate enterprises in the foreign countries and that in spite of such malpractice being brought to the notice of the concerned authorities, no steps have been taken to unearth such corrupt practice. 3. In the affidavit filed in support of the writ petition sworn to by the General Secretary of the petitioner's Trust, it is alleged that by misdeclaring and under valuing the cost of production of the export products, the profits of the 5th respondent have been drained illegally by its parent organisation in Korea and such mis-declaration has caused and continue to cause several hundred crores of loss in foreign exchange earnings to the State exchequer and that the reduced profits of the 5th respondent also caused loss in corporate tax payment. According to the petitioner, the 5th respondent thus violated Section 4 of the Central Excise Act, 1944, Section 14 of the Customs Act, 1962, and Sections 6(3)(g) and 7(1)(a) of FEMA. It is further stated that the then jurisdictional Range Officer of Central Excise took up the issue initially in his communication dated 9-8-2004 and 16-12-2004 and that instead of initiating p....
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....herefore every effort should be taken to check the mala fide and unfair system being carried out at the instance of the respondents. 7. On behalf of the respondents 1 to 4, the Commissioner of Central Excise and Service Tax, Large Taxpayer Unit, Chennai has sworn to a counter-affidavit. In the said counter affidavit, it is stated that Mr. Sameul C. Wilson, superintendent of Central Excise presently attached to the Ministry of Commerce and posted as Authorised Officer in the Special Economic Zone at SIPCOT, Sriperumbudur is the person behind the present litigation and the petitioner has been used as a tool by the said Mr. Sameul C. Wilson. It is stated that the petitioner never made any representation to the concerned authorities about the issue raised in this writ petition and that the petitioner has used various communications addressed by the said Mr. Sameul C. Wilson who was the Range Officer working within the jurisdiction of the 5th respondent unit. It is therefore contended on behalf of the respondents 1 to 4 that since based on the relevant enquiries held into the allegations raised by Mr. Sameul C. Wilson it was found out that there was no basis in any of the allegations....
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....on that accrued to the 5th respondent, while exporting cars and that it is a prevalent practice adopted by most of the manufacturers/exporters to price their export goods at a competitive price, which is lesser than the domestic sector since the units would have already obtained break-even and gained profits on the domestic sector and that only variable cost has to be met. 10. In paragraphs 12 & 13 of the counter affidavit, it is pointed out that the export of cars by the 5th respondent had increased to 40% of its total production, that there was no allegation in the petition that the credit taken on the inputs or input service is wrong and that the credit earned was allowed to be adjusted as against the duty payable on the final products cleared by the manufacturer. The benefits availed by the 5th respondent by virtue of high percentage of exports made by it by invoking Rules 3 and 5 of the Cenvat Credit Rules as well as Rule 19 of the Central Excise Rules were stated to be well in order and therefore the same cannot be found fault with. 11. In paragraph 14, it is specifically stated that there was no under valuation or revenue loss as alleged by the petitioner, in paragraph....
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....res, the exports to Non Associated Enterprises during the said period ranged between Rs. 995.25 crores to Rs. 3356.44 crores. In the same paragraph, the 5th respondent has also shown that the prices of the Santro model cars manufactured by it are exported to its related party KIA Motor was US$ 4423 while the exports to unrelated party at Algeria and South Africa was US$ 4116 and US$ 4036, respectively. It is further stated that the price were all based on market driven factors and the allegations of Mr. Sameul C. Wilson which has been the basis for the petitioner's present writ petition were all highly imaginary and were not based on relevant factors. 14. In paragraph 10, the 5th respondent has pointed out that its Santro base model cars which was priced ex-showroom at Rs. 3.49 lakhs in 1998 is even now offered at Rs. 3.54 lakhs in 2008 after 10 long years. In paragraph 17, the 5th respondent has stated that its accounts were audited both by internal audit and the CERA periodically and the CERA audit was conducted between 3-2-2006 and 17-3-2006 covering the financial year 2004-05 and neither of the audit parties have found any irregularity in the pricing of export cars by the 5t....
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.... Its contributions is stated to have been carried out in the Community Development Programme which includes health, cultural exchange programme and heritage scholarship programmes, natural calamities and disasters relief programmes. 17. While the pleadings of the respective parties are as stated above, we also heard Mr. K.M. Vijayan, learned Senior Counsel appearing for the petitioner, Mr. M. Ravindran, learned Additional Solicitor General of India appearing for the respondents 1 to 4 and Mr. N. Venkataraman, learned Senior Counsel appearing for 5th respondent. 18. Mr. K.M. Vijayan, learned Senior Counsel appearing for the petitioner in his submissions while reiterating the contention that valuable foreign exchange to the tune of several hundred crores were lost due to the misfeasance committed by the 5th respondent also contended that the jurisdictional Commissioner report was blindly followed by all the higher authorities up to the Ministry level without verifying the relevant documents. 19. It is stated that the 5th respondent failed to produce the cost statement of different cars produced by them nor the cost audit conducted by the relevant authorities in order to asce....
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.... 5th respondent, its market strategy, its relationship with its owners and shareholders, its purchase information, its approved audit plan by Additional Commissioner of Central Excise, future expansion plan as well as the evaluation of internal controls etc. 21. The learned Additional Solicitor General of India also referred to the subsequent report of the Commissioner of Central Excise, Chennai-IV dated 24-8-2006, addressed to the Chief Commissioner of Central Excise, wherein the various allegations levelled against the 5th respondent by Mr. Samuel C. Wilson were enquired into and stated that all his allegations were false, baseless and motivated and that the whole episode was stage managed by Mr. Samuel C. Wilson, to wreck vengence as he was shifted from a sensitive post to an insensitive post. The learned Additional Solicitor General submitted that the …. Commissioner also recommended for initiating appropriate disciplinary action against Mr. Samuel C. Wilson for the various acts unbecoming of a Government Servant listed out in paragraph 5 of the letter. 22. The learned Additional Solicitor General of India further contended that the attempt of the petitioner in resortin....
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.... us, we are of the view that the petitioner failed to make out a case for consideration for the grant of relief as prayed for in the writ petition. 25. At the outset, we have to point out that for filing this writ petition, the petitioner solely relied upon the statements and allegations of Mr. Samuel C. Wilson, who is presently working in the Department of Central Excise and who was the Range Officer in the year 2004 in the Zone were the 5th respondent factory is situated. 26. In fact in the counter affidavit of the 5th respondent, it has been specifically averred in paragraph 38 that Mr. Samuel C. Wilson has been acting as the Chennai Co-ordinator of the petitioner. Though rejoinder has been filed by the petitioner on 28-10-2008, the above statement of the 5th respondent has not been specifically denied. That apart, a perusal of the affidavit filed in support of the writ petition as well as the rejoinder makes it amply clear that every one of the statement of the petitioner was based on various communications of Mr. Samuel C. Wilson and the petitioner did not take any independent effort to examine the correctness or otherwise of the allegations made by Mr. Samuel C. Wilson.....
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.... other angle, it should be left to the intelligence Agencies to examine the issue. Mr. Samuel C. Wilson was also advised to ascertain the correctness of the documents, based on which the allegations were made. Mr. Samuel C. Wilson, sent a further communication to the Deputy Commissioner of Central Excise dated 15-2-2006, reiterating his allegations against the 5th respondent. 30. In the meantime, the Income tax department made an assessment and passed its order of assessment dated 15-3-2005 and 9-3-2006 for the assessment years 2002-03 and 2003-04, respectively. 31. Mr. Samuel C. Wilson continued to maintain his allegations by forwarding the complaint to the Office of the Prime Minister on 29-7-2006, as well as to the Director, Department of Revenue, Ministry of Finance, in the meantime, the 5th respondent had its income-tax assessment made for the assessment year 2004-05 in the proceedings dated 18-12-2006. The Prime Minister's Office by communication dated 25-4-2007, informed Mr. Samuel C. Wilson that necessary information had already been furnished to him and no further action was called for. He approached the Commissioner of Central Excise by his letter dated 5-5-2007 and....
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....ns. 34. Having considered the above materials we find that the authorities who were concerned with the assessment of the Excise Duty, Income Tax and Custom Duty had considered the various allegations of Mr. Samuel C. Wilson and found that none of those allegations brought out any misfeasance on the part of the 5th respondent in order to cause any further investigation to proceed against the 5th respondent, in fact in the document produced by the respondents 1 to 4, at the earliest point of time when cost audit was held on the 5th respondent, the same was held under the leadership of Mr. Samuel C. Wilson, under whom three other inspectors constituted the Audit Team. In the working papers submitted by the said team, it has been specifically stated that the export value per car of the 5th respondent was consistently less than the domestic sale value of the vehicle, when differential value was studied, it revealed that the same was attributable to the duties and taxes foregone. 35. Further in the said report a detailed analysis was stated to have been made with reference to the total volume of production of cars, spares, exports as well as the domestic sale made by the 5th respon....
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.... of PIL. Therefore, there is a need to re-emphasize the parameters within which PIL can be restored to by petitioner and entertained by the Court. This aspect has come up for consideration before this Court and all we need to do is to recapitulate and re-emphasize the same." In 2003 (7) SCC 546 [Guruvayoor Devaswom Managing Committee v. C.K. Rajan], the Supreme Court has laid down several broad guidelines which are the principles evolved by the Supreme Court in relation to public interest litigations. As many as 11 principles have been set out in paragraph 50. Of the said principles laid down, principles "i", "vii", "viii" and "x" are relevant for our present purpose which are as under : (i) The Court in exercise of powers under Article 32 and Article 226 of the Constitution can entertain a petition filed by any interested person in the welfare of the people who is in a disadvantaged position and, thus, not in a position to knock the doors of the court. The Court is constitutionally bound to protect the fundamental rights of such disadvantaged people so as to direct the State to fulfil its constitutional promises. (vii) ....
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....ourts and having their grievances redressed, the busybodies, meddlesome interlopers, wayfarers or officious interveners having absolutely no public interest except for personal gain or private profit either of themselves or as a proxy of others or for any other extraneous motivation or for the glare of publicity break the queue muffling their faces by wearing the mask of public interest litigation and get into the courts by filing vexatious and frivolous petitions and thus criminally waste the valuable time of the courts and as a result of which the queue standing outside the doors of the court never moves, which piquant situation creates frustration in the minds of genuine litigants and resultantly, they lose faith in the administration of our judicial system. (Emphasis added) 12. Public interest litigation is a weapon which has to be used with great care and circumspection and the judiciary has to be extremely careful to see that behind the beautiful veil of public interest an ugly private malice, vested interest and/or publicity-s....
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....asis added)" In 2005 (1) SCC 590 [Dattaraj Nathuji Thaware v. State of Maharashtra] the Supreme Court has held as under : "Public interest litigation is a weapon which has to be used with great care and circumspection and the judiciary has to be extremely careful to see that behind the beautiful veil of public interest, an ugly private malice, vested interest and/or publicity-seeking is not lurking. It is to be used as an effective weapon in the armoury of law for delivering social justice to citizens. The attractive brand name of public interest litigation should not be used for suspicious products of mischief. It should be aimed at redressal of genuine public wrong or public injury and not be publicity-oriented or founded on personal vendetta. As indicated above, Court must be careful to see that a body of persons or member of the public, who approaches the Court is acting bona fide and not for personal gain or private motive or political motivation or other oblique considerations. The Court must not allow it process to be abused for oblique considerations by masked phantoms who monitor at times from behind. Some persons with vested interest indulge in the pastime of meddli....
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....ear 2004 and have reported that there was no basis in his complaints and in one such audit team, the said Mr. Samuel C. Wilson himself was the leader and the report of which team did not find any malpractice on the part of the 5th respondent. In the abovesaid background, we can only construe the present litigation as vexatious one and was launched purely with a view to wreck vengeance on the 5th respondent, it is relevant to note that even Mr. Samuel C. Wilson has not alleged any mala fide either personal or official as against any of the official respondents in regard to the complaints made by him as against 5th respondent, in a public interest litigation unless a strong case is made out as regards the irregularity or illegality in the action of any party against whom such a complaint is raised and such a complaint discloses that illegality or irregularity was carried out against public interest or the interest of the nation, it would be travesty of justice if the Courts were to still countenance such a prayer of the petitioner and order any roving investigation to be made by any public authority. 38. Apart from the various reports submitted by the authorities at different leve....