2014 (11) TMI 1039 - HC - Central Excise

Authority competent to issue show cause notice to the petitioner - Held that - It is well settled that ordinarily no writ lies against a show cause notice. A mere show cause notice does not infringe the right of any one. It is only when final order adversely affecting the party is passed, then the said party can be said to have any grievance. The writ jurisdiction is discretionary and hence, such discretion in the light of the law laid down by the Apex Court in catena of decisions under Article 226 of the Constitution of India, should not ordinarily be exercised by quashing a show cause notice. It is in very rare and exceptional cases, this Court can quash a show cause notice, if it is found to be absolutely without jurisdiction or for some other reason, if it is wholly illegal. It is well settled that in taxation matters, principles of res judicata is not applicable. In view of the above we are of the view that the learned authority is competent to issue show cause notice to the petitioner. The show cause notices in question are pertaining to the subsequent period. The petitioner is directed to respond to the show cause notice and take all stands highlighted in this writ petition and if any adverse order is passed, he may challenge the same by filing an appeal under the provisions of Section 35 of the Central Excise Act, 1944.

Summary

Issues Involved:
1. Quashment of show cause notices demanding Central Excise Duty.
2. Applicability of exemption notifications to intravenous fluids.
3. Jurisdiction of authorities to issue show cause notices.
4. Validity of show cause notices under Section 11A of the Central Excise Act.
5. Interpretation of exemption notifications and retrospective application.
6. Maintainability of writ petitions against show cause notices.

Detailed Analysis:

1. Quashment of Show Cause Notices Demanding Central Excise Duty:
The petitioner sought the quashment of show cause notices demanding Central Excise Duty on intravenous fluids manufactured by the petitioner/company, claiming exemptions under Notification No. 36/2000 and Notification No. 3/2001. The petitioner argued that the notices were without jurisdiction and contrary to previous court decisions.

2. Applicability of Exemption Notifications to Intravenous Fluids:
Intravenous fluids were initially chargeable to duty until 3-5-2000, but were exempted by Notification No. 6/2000, as amended by Notification No. 36/2000. Notification No. 3/2001 clarified that the exemption applied only to intravenous fluids used for sugar, electrolyte, or fluid replenishment. The court referenced various judgments indicating that such clarifications are deemed to have retrospective effect.

3. Jurisdiction of Authorities to Issue Show Cause Notices:
The petitioner challenged the jurisdiction of the authorities to issue the show cause notices, citing a Division Bench decision in the case of M/s. Pentagon Labs. Ltd. v. Union of India & Others. The court noted that the Commissioner lacked jurisdiction to issue notices under Section 11A of the Central Excise Act while the Tribunal's order was operative.

4. Validity of Show Cause Notices under Section 11A of the Central Excise Act:
The court discussed the necessity to determine whether the conditions stipulated under Section 11A were fulfilled to vest jurisdiction in the Commissioner to issue the notices. The court found that the show cause notices lacked justification as they were issued while the Tribunal's order was binding.

5. Interpretation of Exemption Notifications and Retrospective Application:
The court analyzed the interpretation of exemption notifications, referencing the Supreme Court's remand order which required the Tribunal to consider the effect of the 2002-2003 Budget restricting the definition of 'intravenous fluids'. The Tribunal's subsequent decision upheld the denial of exemption for periods post 1-3-2001, while granting exemption for periods prior to this date.

6. Maintainability of Writ Petitions Against Show Cause Notices:
The court emphasized that writ petitions against show cause notices are generally not maintainable unless the notices are issued without jurisdiction. The court cited several Supreme Court decisions, asserting that a mere show cause notice does not infringe rights and should not be quashed unless it is wholly illegal or without jurisdiction.

Conclusion:
The court dismissed the writ petition, directing the petitioner to respond to the show cause notices and pursue remedies under the Central Excise Act if any adverse order is passed. The court upheld the jurisdiction of the authorities to issue the notices and emphasized the limited scope of judicial intervention in taxation matters.