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2011 (4) TMI 370 - HC - Central ExciseUndervaluation - Suppression of facts - Maintainability of writ petition before high court - Held that - As observed by the Hon ble Supreme Court in Titaghur Paper Mills Company Limited v. State of Orissa (1983 -TMI - 40023 - SUPREME Court), that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be availed of . This observation of the Hon ble Supreme Court applies more strictly in tax matters, wherein the Hon ble Supreme Court repeatedly held that the writ court should not slow in interfering in tax matters, when there is hierarchy of remedies provided by the statute. As referred to above, the only remedy available to the petitioner is to approach the Supreme Court under Section 35(L) of the Act. Without resorting to such remedy, filing of the present writ petition before this Court cannot be entertained.
Issues:
1. Maintainability of the writ petition before the High Court. 2. Allegations of suppression of facts and under-declaration of value by the petitioner. 3. Application of Central Excise (Valuation) Rules, 1975. 4. Invocation of extended period of limitation under Section 11A of the Central Excises and Salt Act, 1944. 5. Availability of alternative remedy under Section 35(L) of the Act. Issue 1: Maintainability of the Writ Petition: The High Court deliberated on the maintainability of the writ petition, emphasizing the petitioner's obligation to approach the Supreme Court under Section 35(L) of the Central Excise Act. The court noted that the dispute related to the valuation of goods, a matter falling within the exclusive jurisdiction of the Supreme Court. Despite the petitioner's prolonged pursuit before the High Court, the specific statutory restriction under Section 35(G) precluded the High Court from entertaining appeals concerning excise duty rates or goods' valuation. Consequently, the High Court deemed the writ petition as not maintainable due to the statutory limitation. Issue 2: Allegations of Suppression of Facts and Under-declaration: The petitioner faced allegations of collecting processing charges exceeding those disclosed in cost construction statements, resulting in the under-declaration of processed cotton fabric values. The Central Excise Department issued show cause notices under Section 11A, asserting the petitioner's suppression of facts and underpayment of excise duty. Despite the petitioner's contentions on the limitation of the notices and violation of natural justice, the authorities upheld the duty demand. The High Court affirmed the findings, dismissing the petitioner's claims of procedural irregularities and supporting the department's actions based on the alleged suppression. Issue 3: Application of Central Excise (Valuation) Rules: The petitioner contested the application of Central Excise (Valuation) Rules, 1975, arguing that the original authority misapplied these rules beyond the show cause notices' scope. However, the court found the authority's consideration of the Valuation Rules justified, given the petitioner's reliance on various judgments related to valuation practices. The court upheld the authority's decision to apply the rules and rejected the petitioner's contention of a mismatch between the notices and the authority's ruling. Issue 4: Invocation of Extended Period of Limitation: The show cause notices alleged suppression of facts, enabling the department to invoke the extended period of limitation under Section 11A. The authorities, including the Tribunal, concurred on the existence of suppression, justifying the extended limitation period. Despite the petitioner's objections, the court upheld the authorities' findings, emphasizing the validity of invoking the extended limitation period in cases of established suppression. Issue 5: Availability of Alternative Remedy: The court highlighted the petitioner's obligation to pursue the specific remedy provided by the Central Excise Act, namely approaching the Supreme Court under Section 35(L). Referring to precedents emphasizing the hierarchy of statutory remedies in tax matters, the court emphasized the petitioner's need to exhaust the prescribed remedy before seeking judicial intervention. Consequently, the court dismissed the writ petition, citing the petitioner's failure to demonstrate grounds for High Court interference and directing the petitioner to pursue the appropriate appellate avenue. In conclusion, the High Court ruled against the petitioner, upholding the authorities' decisions on excise duty demands, application of Valuation Rules, and invocation of extended limitation periods. The court deemed the writ petition as not maintainable due to statutory restrictions, emphasizing the petitioner's obligation to exhaust the prescribed appellate remedy before seeking judicial review.
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