2000 (6) TMI 402 - HC - Central Excise

Issues Involved:
1. Jurisdiction of the Commissioner to issue the show cause notice.
2. Applicability of the extended period of limitation under Section 11A of the Central Excise Act.
3. Whether PGHP is a related person to PGIL under Section 4 of the Central Excise Act.
4. Validity of the show cause notice based on alleged mis-statement or suppression of facts.
5. Whether the High Court should interfere under Article 226 of the Constitution considering the availability of alternative remedies.

Detailed Analysis:

1. Jurisdiction of the Commissioner to Issue the Show Cause Notice:
The petitioner argued that the Commissioner lacked jurisdiction to issue the show cause notice as it was beyond the prescribed time limit under Section 11A of the Central Excise Act. The respondent countered that the Commissioner had jurisdiction as the factory was within his territorial limits and that the notice was timely due to ongoing investigations revealing new facts.

2. Applicability of the Extended Period of Limitation under Section 11A of the Central Excise Act:
The petitioner contended that the extended period of limitation (five years) was not applicable as there was no collusion, mis-statement, or suppression of facts. They argued that all relevant information had been provided to the department by 1995. The respondent maintained that the extended period was applicable due to the deliberate suppression of facts and mis-statement by the petitioner, which was only fully revealed after a raid in 1998.

3. Whether PGHP is a Related Person to PGIL under Section 4 of the Central Excise Act:
The petitioner argued that PGHP was not a related person within the meaning of Section 4 of the Central Excise Act, as there was no mutuality of interest in the business of each other. The respondent asserted that PGHP was a related person due to common directors, shared premises, and the nature of the transactions, which indicated a special relationship beyond a principal-to-principal basis.

4. Validity of the Show Cause Notice Based on Alleged Mis-Statement or Suppression of Facts:
The petitioner claimed that the show cause notice was vague and did not specify the alleged mis-statement or suppression of facts, making it invalid. They cited various judicial precedents emphasizing the need for specific allegations in the notice. The respondent argued that the notice was clear and based on facts, including the agreement between PGIL and PGHP, which indicated under-valuation and suppression of the true relationship between the companies.

5. Whether the High Court Should Interfere under Article 226 of the Constitution Considering the Availability of Alternative Remedies:
The petitioner sought the High Court's intervention under Article 226 to quash the show cause notice, arguing that it was without jurisdiction and lacked a legal foundation. The respondent contended that the petitioner should exhaust alternative remedies available under the statute before approaching the High Court. The Court, referring to various precedents, noted that interference at the show cause notice stage is generally unwarranted unless the notice is palpably without jurisdiction or fails to meet statutory requirements.

Conclusion:
The Court declined to quash the show cause notices, directing the petitioners to file their replies and raise all contentions before the Commissioner. The Commissioner was instructed to objectively consider the preliminary objections and not to travel beyond the show cause notice. The petitions were disposed of, allowing the petitioners eight weeks to respond to the show cause notices.

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