2014 (9) TMI 293 - HC - Central Excise

Clandestine clearance of the goods - Evasion of Central Excise Duty - Held that - Private note book maintained by a person containing unauthorized entries is not a dependable record for proving clandestine removal unless it is corroborated by other evidences, viz. consumption of raw material, manufacturing of goods and its clandestine sale. The authorities have elaborately and extensively indicated the information derived from the pen drive as well as other registers seized during search. The authorized persons were called to explain such discrepancy and the statements were recorded and the same are depicted in the said show cause notice. There was no satisfactory explanation offered therein. The show cause notice, running in several pages, cannot, at any rate, be said to be lacking material particulars if otherwise proved for commission of offence - This Court does not find any ground to interfere with the show cause notice. - Decided against the assessee.

Issues Involved:
1. Legitimacy of the show cause notice issued for alleged evasion of Central Excise Duty.
2. Jurisdiction of the authority to issue the show cause notice.
3. Sufficiency of material particulars and corroborative evidence in the show cause notice.
4. Applicability of judicial review under Article 226 of the Constitution of India.
5. Compliance with judicial precedents and Tribunal decisions.

Detailed Analysis:

Legitimacy of the Show Cause Notice:
The petitioner challenged the show cause notice dated 30th April 2013, issued by the Commissioner, Central Excise, Bolpur, alleging evasion of Central Excise Duty through clandestine clearance of goods without recording productions in the Daily Stock Account Register. The notice was based on incriminating documents recovered during a search and seizure operation, including a pen drive containing data that did not match the factory's Daily Stock Account Register, suggesting excess production without payment of excise duty.

Jurisdiction of the Authority:
The petitioner argued that a writ court generally does not interfere with the issuance of a show cause notice unless it is ex facie or based on admitted facts that do not disclose the alleged offence, is without jurisdiction, suffers from incurable infirmity, or is contrary to judicial decisions. The respondent contended that the High Court should not exercise its extraordinary jurisdiction under Article 226 of the Constitution to challenge a show cause notice, as the authority had not yet adjudicated the issue, and all points could be addressed in the reply to the notice.

Sufficiency of Material Particulars and Corroborative Evidence:
The petitioner asserted that the show cause notice lacked material particulars and corroborative evidence relating to the alleged clandestine manufacturing and clearance. It was argued that there was no evidence of purchase of raw materials, sale of finished goods, or variance in electricity consumption, which are essential to prove clandestine removal of goods. The petitioner relied on various Tribunal decisions, emphasizing that mere suspicion does not raise a presumption of offence without corroborative evidence. The respondent countered that the show cause notice contained detailed information derived from the pen drive and other seized registers, and the authorized persons' statements were recorded, indicating discrepancies.

Applicability of Judicial Review:
The court examined the scope of judicial review against a show cause notice. It was noted that judicial review under Article 226 could be exercised if the notice was issued without jurisdiction, did not disclose any offence, suffered from incurable infirmity, or was contrary to judicial decisions. However, the court should not decide factual disputes at this stage but should allow the authority to adjudicate the matter. The petitioner had already submitted to the jurisdiction of the authority and requested documents to prepare a detailed reply.

Compliance with Judicial Precedents and Tribunal Decisions:
The petitioner cited several judicial precedents and Tribunal decisions to support the argument that the show cause notice should be quashed. However, the court observed that these cases involved challenges after the assessee had fully disclosed its stand and the authorities had adjudicated the matter. In the present case, the petitioner had only challenged the issuance of the show cause notice, and the court found that the notice contained sufficient material particulars to justify the commission of an offence.

Conclusion:
The court concluded that the show cause notice did not lack material particulars and was not contrary to settled judicial decisions. The petitioner was directed to file a reply to the show cause notice after receiving the requested documents, and the authorities were instructed to decide the issues on merit as expeditiously as possible. The writ petition was disposed of, and the prayer for a stay of the order was rejected.

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