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2003 (4) TMI 97 - SC - Central ExciseWhether the High Court is justified in quashing Paragraphs (14) to (18) of the impugned show cause notice dated June 30, 1995? Held that - In the instant case, it is not pointed out to us that there is anything to suggest in Paragraphs (14) to (18) that either the buyer was a related person or that the price was not the sole consideration or there was other vitiating circumstance to doubt the normal price of the wholesale trade. If that be so, recourse to Clause (b) of sub-section (1) of Section 4 could not be had. There being no valid foundation for ignoring the price under Clause (a) of sub-section (1) of Section 4, the authority lacks jurisdiction to issue notice calling upon the assessee to show cause in the matter. There can be no doubt that in matters of taxation, it is inappropriate for the High Court to interfere in exercise of jurisdiction under Article 226 of the Constitution either at the stage of show cause notice or at the stage of assessment where alternative remedy by way of filing a reply or appeal, as the case may be, is available but these are the limitations imposed by the Courts themselves in exercise of their jurisdiction and they are not matters of jurisdictional factors. Had the High Court declined to interfere at the stage of show cause notice, perhaps this Court would not have been inclined to entertain the special leave petition; when the High Court did exercise its jurisdiction, entertained the writ petition and decided the issue on merits, we do not think it appropriate to upset the impugned order of the High Court under Article 136 of the Constitution on a technical ground. Appeal dismissed.
Issues:
1. Jurisdiction of High Court in quashing paragraphs of show cause notice. 2. Interpretation of Section 4(1)(a) of the Central Excise Act for valuation of excisable goods. 3. Applicability of Section 11A of the Act for serving notice on chargeable persons. Analysis: Issue 1: Jurisdiction of High Court The Supreme Court addressed the appeal against the High Court's judgment quashing paragraphs of a show cause notice issued by the Revenue. The show cause notice demanded duty on the grounds of clandestine removal and incorrect valuation of goods. The High Court dismissed the writ petition concerning clandestine removal but quashed paragraphs related to valuation. The appellant contended that the High Court should not have decided on the merits at the show cause notice stage. However, the respondent argued that valuation must follow specific provisions and the High Court rightly intervened. The Court emphasized that interfering at the show cause notice stage might not be appropriate in tax matters but upheld the High Court's decision on valuation issues. Issue 2: Interpretation of Section 4(1)(a) for Valuation The Court delved into the interpretation of Section 4(1)(a) of the Central Excise Act regarding the valuation of excisable goods. It clarified that excise duty is chargeable based on the normal price at which goods are sold in wholesale trade, provided certain conditions are met. The Court highlighted that if the normal price is ascertainable and meets the specified criteria, valuation should be based on that price. The judgment emphasized that in this case, the authority lacked jurisdiction to issue a notice based on valuation under Clause (b) of Section 4(1) as the requirements of Clause (a) were fulfilled. Issue 3: Applicability of Section 11A for Serving Notice The Court examined the applicability of Section 11A of the Act, which empowers Central Excise Officers to serve notices on persons liable for unpaid duty. It was argued that the authority had the power to inquire into matters related to incorrect valuation. However, the Court rejected this argument, stating that if an authority lacks jurisdiction in one aspect, it cannot proceed with inquiries beyond its jurisdiction. The judgment reiterated that once valuation is accepted under Clause (a) of Section 4(1), no recourse can be made to Clause (b) without valid reasons. Consequently, the Court dismissed the appeal, emphasizing the settled legal position on valuation under the Act. In conclusion, the Supreme Court dismissed the civil appeal, upholding the High Court's decision to quash paragraphs of the show cause notice related to valuation issues. The judgment provided a detailed analysis of the jurisdictional aspects, interpretation of valuation provisions, and the applicability of relevant sections of the Central Excise Act in the case at hand.
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