1990 (9) TMI 109 - HC - Central Excise

Issues Involved:

1. Validity of the notices dated 4-12-1980 and 9-12-1980.
2. Maintainability of writ petitions under Article 226 of the Constitution of India.
3. Jurisdiction of the authorities to issue show cause notices.
4. Applicability of the Exemption Notification No. 122/75, dated 5-5-1975.
5. Principles of natural justice and estoppel in tax matters.

Detailed Analysis:

1. Validity of the notices dated 4-12-1980 and 9-12-1980:

The appellants challenged the notices dated 4-12-1980 and 9-12-1980. The notice dated 4-12-1980 was claimed by the appellants to be a demand notice. However, the court found that it was not a demand notice but merely an intimation requesting the appellants to clear their products on payment of excise duty of 8% ad valorem under Tariff Item No. 68. The notice dated 9-12-1980 was a show cause notice asking the appellants to explain why they should not pay excise duty for the period from 10-6-1980 to 8-12-1980. The court concluded that both notices were not demands but preliminary steps in the adjudication process.

2. Maintainability of writ petitions under Article 226 of the Constitution of India:

The appellants argued that the notices could be questioned under Article 226 of the Constitution of India. The court, however, held that the writ petitions were filed prematurely. The court emphasized that a writ of prohibition could only be issued when there is a patent and total want of jurisdiction. Since the notices were part of the due process under the Act, the writ petitions were not maintainable at this stage.

3. Jurisdiction of the authorities to issue show cause notices:

The respondents contended that the show cause notices were issued by the competent authority under the Act and were not violative of any provisions. The court agreed, stating that the second respondent had the jurisdiction to issue the notices and that the process of law could not be stalled at the initial stages. The court reiterated that a writ of prohibition could only be issued in cases of total absence of jurisdiction, which was not the case here.

4. Applicability of the Exemption Notification No. 122/75, dated 5-5-1975:

The appellants claimed that their products were exempt under Notification No. 122/75, as they were products of the printing industry. However, the court noted that the exemption was initially granted under the impression that the printed papers were products of the printing industry. The show cause notice indicated that the products were classified as products of the packaging industry under Tariff Item No. 68, making them ineligible for the exemption. The court held that the issue required proper adjudication by the departmental authorities.

5. Principles of natural justice and estoppel in tax matters:

The appellants argued that the department could not change its earlier stand without cogent reasons. The court, however, held that in matters of levy and recovery of tax, each period constitutes a distinct unit, making principles of res judicata or estoppel inapplicable. The court cited the Supreme Court's decision in Elson Machines Pvt. Ltd. v. Collector of Central Excise, which stated that there can be no estoppel against the law. The court concluded that the authorities could not be precluded from adjudicating the issue based on earlier proceedings.

Conclusion:

The court dismissed the writ appeals, holding that the writ petitions were premature and that the authorities had the jurisdiction to issue the show cause notices. The court emphasized the need for proper adjudication of the facts by the departmental authorities and rejected the appellants' plea to prevent the authorities from proceeding with the adjudication process. The appeals were dismissed with costs of Rs. 1,000/- (one set).

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