2012 (10) TMI 498 - HC - Central Excise

Benefit of exemption Notification No. 39/2001-C.E. whether the petitioner had made investment in plant and machinery in excess of Rs. 20 Crores or not; and whether the commercial production had actually commenced or not - allegations of irregularities and impropriety in the previous round of show cause notice and hearing proceedings Held that - From the very documents on record, admitted facts and circumstances and materials which were available before the previous committee, it was impossible to come to the conclusion that the petitioner had in fact made investment in plant and machinery in excess of Rs. 20 Crores, and further that the commercial production had commenced before 31st December 2005 - power of the respondents therefore to make thorough inquiry into the declarations made by the manufacturer cannot be curtailed - petition is dismissed.

Issues Involved:
1. Validity of the show-cause notice issued by the Joint Commissioner of Central Excise.
2. Compliance with the conditions of the exemption notification by the petitioner.
3. Jurisdiction and authority of the High Power Committee to issue a fresh show-cause notice.
4. Allegations of misrepresentation and improper conduct by the petitioner and the Committee.

Detailed Analysis:

1. Validity of the Show-Cause Notice:
The petitioner challenged the show-cause notice dated 18th October 2010 and Corrigendum dated 29th December 2010, arguing that the same set of materials was used as in the previous show-cause notice, which had been dropped after a detailed examination. The petitioner claimed that issuing a fresh show-cause notice without new material was beyond jurisdiction and should be quashed.

2. Compliance with Exemption Notification Conditions:
The petitioner, a company merged with Sunshine Oleochem Private Limited, sought Excise Duty exemption under Notification No. 39/2001-C.E., which required new industrial units in the Kutch region to commence commercial production before 31st December 2005 and invest over Rs. 20 Crores in plant and machinery. The petitioner claimed compliance, but the respondents argued that the petitioner had not met these conditions, citing misrepresentation of investment and production commencement dates.

3. Jurisdiction and Authority of the High Power Committee:
The petitioner argued that the High Power Committee had no authority to re-open the issue after previously granting exemption. They contended that the Department should have challenged the earlier decision through an appeal rather than issuing a fresh show-cause notice. The petitioner relied on several judicial precedents to support this contention, emphasizing that once a decision is made by a statutory authority, it cannot be re-opened without new evidence or jurisdictional grounds.

4. Allegations of Misrepresentation and Improper Conduct:
The respondents, supported by a detailed report from the Additional Director General (Vigilance), alleged that the petitioner had misrepresented facts regarding investment and commencement of production. They claimed that the Committee had not properly examined the material, leading to an incorrect grant of exemption. The respondents argued that the serious nature of these allegations justified re-examining the case, even if it involved reviewing the same set of documents previously considered.

Court's Observations and Decision:
The court acknowledged the importance of the exemption notification's conditions, emphasizing that the exemption was meant for new industries with specific investment and production timelines. The court noted the serious allegations of misrepresentation and improper conduct, which warranted a thorough re-examination by the respondents. The court held that it was not appropriate to terminate the proceedings at the show-cause notice stage, especially given the serious nature of the allegations and the need for a detailed inquiry.

The court cited several precedents to support its decision, emphasizing that courts should not interfere with show-cause notices unless there is a clear lack of jurisdiction. The court also highlighted the importance of allowing administrative authorities to conduct a full inquiry into disputed facts before judicial intervention.

Conclusion:
The court dismissed the petition, allowing the respondents to proceed with the inquiry. It clarified that the petitioner could raise all contentions before the Committee in response to the show-cause notice. The court did not express any opinion on the merits of the case, leaving all issues to be decided based on the evidence presented during the inquiry. The interim relief previously granted was extended until 30th November 2011, allowing the petitioner to cooperate with the proceedings while preventing the final order from being passed immediately.

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