2002 (3) TMI 68 - HC - Central Excise

Summary

Issues Involved:

1. Applicability of the proviso to Section 11A of the Central Excise Act, 1944.
2. Jurisdictional error and misdirection in law by the Appellate Tribunal.
3. Violation of principles of natural justice.
4. Alternative remedy under Section 35C of the Act.

Summary:

1. Applicability of the Proviso to Section 11A of the Central Excise Act, 1944:

The petitioner, a partnership firm engaged in the manufacture of shoes, was issued a notice by the Commissioner on 18-7-1996 to show cause why central excise duty amounting to Rs. 85,13,523/- should not be demanded under Rule 9(2) of the Central Excise Rules, invoking the extended period of limitation under the proviso to Section 11A of the Central Excise Act, 1944. The petitioner contended that the proviso was misinterpreted and misapplied by the Appellate Tribunal, arguing that the extended period of limitation could not be invoked in the absence of fraud, collusion, or wilful misstatement.

2. Jurisdictional Error and Misdirection in Law by the Appellate Tribunal:

The High Court noted that the Appellate Tribunal failed to pose the correct question regarding whether the duty of excise was not levied or paid due to fraud, collusion, or suppression of facts. The Tribunal's reliance on the Commissioner's findings, which were inconsistent and contradictory, amounted to a misdirection in law. The High Court emphasized that jurisdictional facts must exist for the statutory authority to exercise its jurisdiction, and the burden of proof lies with the Revenue.

3. Violation of Principles of Natural Justice:

The petitioner argued that the refusal to permit cross-examination of workers whose evidence was relied upon violated the principles of natural justice. The High Court agreed, citing precedents that emphasize the right to cross-examine as a fundamental aspect of proving the correctness or completeness of returns. The Tribunal's decision, partly based on irrelevant factors and without considering the refusal of cross-examination, was deemed unsustainable.

4. Alternative Remedy under Section 35C of the Act:

The respondents contended that the petitioner had an alternative remedy by filing an application before the Appellate Tribunal for reference of the question of law to the High Court under Section 35C of the Act. However, the High Court held that the existence of an alternative remedy does not bar the exercise of jurisdiction under Article 226 of the Constitution, especially when jurisdictional issues and violations of natural justice are raised.

Conclusion:

The High Court set aside the impugned order and remitted the matter back to the Appellate Tribunal for fresh consideration. The Tribunal was directed to independently arrive at its decision based on the materials on record and any additional evidence produced by the parties. The petitioner was also instructed to produce the agreement with M/s. Bata India Limited to determine if any unlawful gain was made by evading excise duty. The petition was disposed of without any order as to costs.