2013 (9) TMI 819 - HC - Central Excise

Constructive Res Judicata - Validity of proviso to Rule 8 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - whether ulta-vires to section 3A - Held that - The challenge to the vires of the Rules in this second writ petition was barred by principles of constructive res judicata inasmuch as if the petitioner was aggrieved by the Rules, he could have challenged the Rules, when the Rules were notified or when the notice to show cause was served on him, and in any case in the first writ petition challenging the notice - The petitioner having failed to avail the opportunity and having raised all the points including the issue of the validity of the Rules before the Adjudicating Authority, cannot be allowed to file this writ petition challenging the vires, only to avoid filing the appeal - It was apparent that having failed to substantiate his case before the Adjudicating Authority, instead of filing the appeal the petitioner was taking a chance in the High Court to challenging the vires of the proviso Decided against Petitioner.

Summary

Issues:
Challenge to the validity of the first proviso to Rule 8 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 and the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008.

Analysis:
The petitioner, engaged in the business of manufacturing Pan Masala and Gutkha, received a notice from the Commissioner of Central Excise demanding excise duty, interest, and penalty. The petitioner challenged the notice in a writ petition three years later. Subsequently, an Order-in-Original was issued confirming the demand. The petitioner then filed a writ petition challenging the first proviso to Rule 8 of the Rules of 2008 and the Order-in-Original. The court noted that the petitioner had the opportunity to challenge the Rule in the initial writ petition, which was dismissed as infructuous after the Order-in-Original was passed. The court observed that the petitioner's challenge to the Rules in the second writ petition was barred by principles of constructive res judicata since the petitioner failed to challenge the Rules earlier. The court emphasized that the petitioner should have raised all issues before the Adjudicating Authority and cannot now file a writ petition solely to avoid filing an appeal.

The court highlighted that the petitioner's attempt to challenge the vires of the proviso in the High Court after failing to substantiate his case before the Adjudicating Authority was an improper course of action. The court emphasized that the petitioner could raise all grounds in an appeal and subsequently in the High Court under Section 35-G of the Act. The court made it clear that the petitioner could file a writ petition challenging the Rules at the appropriate stage. Ultimately, the court dismissed the writ petition, indicating that the petitioner should pursue available avenues of appeal rather than resorting to challenging the vires of the Rules in a writ petition.

In conclusion, the court dismissed the writ petition, emphasizing that the petitioner should have availed the opportunity to challenge the Rules earlier and raised all relevant issues before the Adjudicating Authority. The court advised the petitioner to follow the proper appellate process and reserved the right for the petitioner to challenge the Rules at the appropriate stage during the appeal process.