2014 (2) TMI 404 - HC - Central Excise

Rectification - Legality of order passed - Imposition of penalty equivalent to differential duty under Section 11(AC) - Invocation of extended period of limitation - Held that - There is a distinction between an erroneous order and an order which is par se illegal and without jurisdiction. An erroneous order is capable of being corrected by going higher but an order, which is par se without jurisdiction and a nullity, can be assailed in a collateral proceedings. Had it been a case of the petitioner that the show cause notice is issued by an authority, not competent under the statute and the entire proceedings is carried out by an authority not competent therefor, the proposition of law, as tried to be contended by the petitioner, could very well be accepted. This Court, therefore, feels that the said plea cannot be allowed to be reagitated by the petitioner. Furthermore, the principle of estoppel should also be made applicable. The plea which was available to the petitioner before the competent authority, and having taken so which did not yield fruitful and/or desired result, cannot be allowed to be re-agitated in another proceedings not originated from the original order - This Court, therefore, feels that if the plea, as tried to be taken by the petitioner, is allowed at this stage of the proceedings, it would open a Pandora box for all and the sundry and no lis could attain finality - Decided against assessee.

Summary

Issues:
Challenge to show cause notice, order, and notice of demand in writ petition.

Analysis:
The petitioner challenged a show cause notice, order, and notice of demand in a writ petition. The petitioner argued that the show cause notice was issued beyond the normal period of limitation but within the extended period. The petitioner contended that the notice was issued in a colorable exercise of power without fulfilling the necessary conditions, making it liable to be struck down. Despite a shortfall in duty payment, the petitioner paid the differential duty and interest. Subsequently, a show cause notice was issued for imposing a penalty for non-payment within the prescribed period. The petitioner replied to the notice and submitted to the authority's jurisdiction. An order was passed imposing a penalty equivalent to the differential duty. The petitioner's appeal before the Commissioner was rejected due to delay, which was affirmed by the Tribunal. The petitioner challenged the notice for penalty recovery and the show cause notice, alleging colorable exercise of power by the authorities.

The petitioner argued that the authorities abused their power, originating the show cause notice from disclosures and differential duty payments. The petitioner contended that the extended period should not have been applied without willful suppression of facts. Legal precedents were cited to support the argument. The Court noted that the petitioner's defense was available during the original proceedings but not adequately addressed by the authorities. It distinguished between erroneous orders and those without jurisdiction, stating the latter could be challenged collaterally. The Court found that the show cause notice was not issued by an incompetent authority, and the plea of abuse of power was not valid at that stage. The Court emphasized that once a dispute reaches finality through appeals, it cannot be reopened in subsequent proceedings.

The Court rejected the petitioner's plea, stating that allowing such challenges post-finality would disrupt legal certainty. It held that there was no merit in the writ petition and dismissed it, with no order as to costs.