2007 (10) TMI 704 - HC - Central Excise

Summary

Issues involved: Challenge to show cause notice u/s Rule 25 of Central Excise Rules, 2002; Validity of circular issued by Central Board of Excise and Custom on 01.02.2007; Jurisdiction of High Court to interfere at show cause notice stage.

Challenge to show cause notice: The petitioner Company challenged the show cause notice issued by the Department, alleging non-payment of excise duty amounting to &8377; 2709213/- on finished goods due to wrongly availing benefits of Notification No. 30/2004 CE. The petitioner approached the Court without replying to the notice, citing a circular issued by the Central Board of Excise and Custom on 01.02.2007 as sealing their defense before the adjudicating authority.

Validity of circular: The Department contended that the circular was clarificatory and not intended to dilute established law, asserting that the petitioners wrongly availed credit under the said circular. The petitioner argued that the adjudicating authority would be bound by the circular, making it unnecessary to reply to the show cause notice. The petitioner maintained that they did not wrongly avail credit and challenged the circular's validity, seeking Court intervention at the show cause notice stage.

Jurisdiction of High Court: The Court cited a Supreme Court decision emphasizing reluctance to interfere at the show cause notice stage unless the issuing authority lacks jurisdiction. It was noted that the authority must adjudicate in accordance with the law, and the Court should not disrupt proceedings based on a circular issued after the show cause notice. The Court declined to quash the notice, directing the authority to decide based on evidence and legal provisions.

Precedents and Final Decision: Reference was made to legal precedents regarding availing credit and exemption notifications. The Court highlighted that the present case required the authority to consider specific circumstances before making a final decision. Ultimately, the writ petitions were dismissed with costs imposed on the petitioners, who were directed to deposit the amount before the adjudicating authority within two weeks.