1998 (12) TMI 91 - HC - Central Excise

Summary

Issues:
Jurisdiction of the Commissioner for Central Excise in issuing show cause notice dated 10-7-1998 challenged on grounds of lack of evidence.

Detailed Analysis:

1. Jurisdiction of Commissioner for Central Excise:
The petitioners, engaged in manufacturing various polyester products, challenged the jurisdiction of the Commissioner for Central Excise in issuing a show cause notice dated 10-7-1998. They argued that there was no evidence to support the notice, rendering it without jurisdiction. The petitioners had submitted a detailed classification declaration in 1995, classifying items under sub-heading 3926.90 of the Tariff Act. They later applied for a change in classification in 1998, which was allegedly ignored. The Commissioner sought to revise the classification based on an inspection and statements from the General Manager, which the petitioners claimed were misinterpreted.

2. Legal Precedents and Jurisdictional Challenges:
The petitioner's counsel cited legal precedents, including the case of Mafatlal Industries v. Union of India, emphasizing that errors of fact and law, especially if found on the basis of no evidence, could render a notice jurisdictionally flawed. They also referred to cases like Victory Glass and Industries v. Collector and Applied Industrial Products v. Collector, highlighting the importance of a prima facie case before interference at the show cause notice stage. The judgment in Renu Tandon v. Union further supported the idea that interference could be warranted if jurisdiction was being wrongly exercised without any basis.

3. Court's Consideration and Decision:
The Court deliberated on the maintainability of a writ under Article 226 of the Constitution when a notice is without jurisdiction. Referring to the case of Kiran Singh v. Chaman Paswan, the Court emphasized that a decree passed without jurisdiction is a nullity. In tax matters, the Court clarified that a defect in jurisdiction, whether pecuniary or territorial, cannot be cured even by consent of parties. The Court concluded that a notice could be considered without jurisdiction if there is no proper material to support it, and a writ under Article 226 could be issued in such cases.

4. Conclusion and Dismissal of Petition:
The Court held that while the authorities may ultimately reach a different conclusion, the existence of some material and a reasonable belief are sufficient for issuing a notice. The petitioners were given the opportunity to submit further evidence or clarification within six weeks. However, since some basis for the notice existed, the Court dismissed the petition, citing the need for a factual dispute regarding the existence of material for invoking the provisions. The judgment emphasized the importance of evidence and material in determining jurisdictional validity.