2008 (6) TMI 220 - HC - Central Excise

Show cause notice - Jurisdiction - Appeal to High Court - 3rd respondent asking the Company to clear the central excise dues to a tune of ₹ 4,27,23,256/- - Held that - After carefully considering the contentions raised by the learned counsel for appellants and the learned Assistant Solicitor General, we are of the clear opinion that an appeal against the order of CESTAT lies only to the apex Court under Section 35L of the Act. The decisions referred , instead of rendering any help or assistance to the Company, in fact, support the contention of the revenue that the appeal against the impugned order lies only to the Supreme Court but not to the High Court. Appeal dismissed.

Issues Involved:
1. Maintainability of appeals in the High Court.
2. Validity of show cause notices issued without prior approval of the Chief Commissioner of Central Excise.
3. Alleged clandestine manufacture and removal of excisable goods.
4. Denial of cross-examination and principles of natural justice.
5. Imposition of penalties and confiscation orders.
6. Issuance of writ to restrain enforcement of adjudicating authority's orders.

Issue-wise Detailed Analysis:

1. Maintainability of Appeals in the High Court:
The primary contention was whether the appeals against the order of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) were maintainable in the High Court. The court concluded that the appeals were not maintainable in the High Court under Section 35L of the Central Excise Act, 1944, as the issues pertained to the determination of the rate of duty or the value of goods for assessment purposes. According to Section 35L, such appeals lie only to the Supreme Court. The court cited relevant case law, including "Commissioner of Customs v. Indian Oil Corpn. Ltd." and "Collector of Central Excise v. Maruti Foam (P) Ltd.," to support its conclusion.

2. Validity of Show Cause Notices Issued Without Prior Approval:
The appellants argued that the show cause notices were invalid as they were issued without the prior approval of the Chief Commissioner of Central Excise, as required by the second and third provisos to Section 11A of the Act. The court noted that these provisos were omitted by Act 32 of 2003 with effect from 14-5-2003. As the show cause notices were issued after this date, the court held that the notices were valid and did not require the prior approval of the Chief Commissioner. The court referenced "Pahwa Chemicals (P) Limited v. Commissioner of Central Excise" to support this interpretation.

3. Alleged Clandestine Manufacture and Removal of Excisable Goods:
The appellants contended that there was no evidence of clandestine manufacture or removal of excisable goods and that the findings were based on mere surmises and conjectures. The court found that the adjudicating authority and CESTAT had considered the evidence and contentions raised by the appellants. The court emphasized that the burden of proof was on the revenue to establish excess production or possibility of excess production, which the revenue had done to the satisfaction of the adjudicating authority and CESTAT.

4. Denial of Cross-Examination and Principles of Natural Justice:
The appellants argued that the denial of cross-examination of witnesses and investigating officers constituted a violation of principles of natural justice. The court referred to "Swadeshi Polytex Ltd. v. Collector of Central Excise" and "Haroom Haji Abdulla v. State of Maharashtra" to highlight the importance of cross-examination. However, the court noted that the Managing Director and other Directors had admitted to the malpractices, and thus, the question of violation of natural justice did not arise.

5. Imposition of Penalties and Confiscation Orders:
The appellants challenged the imposition of penalties and confiscation orders. The court observed that penalties are contingent upon the finding of duty evasion. Since the court concluded that the appeals were not maintainable in the High Court, it did not delve into the merits of the penalties and confiscation orders.

6. Issuance of Writ to Restrain Enforcement of Adjudicating Authority's Orders:
The appellants sought a writ of mandamus to restrain the enforcement of the adjudicating authority's orders. The court dismissed the writ petition, stating that no writ could be issued to restrain officers from enforcing orders confirmed by CESTAT. The court emphasized that the officers were bound to enforce the orders of the adjudicating authority and CESTAT.

Conclusion:
The court dismissed all the appeals and the writ petition with costs, concluding that the appeals were not maintainable in the High Court and that the writ petition could not restrain the enforcement of the adjudicating authority's orders.

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