2007 (11) TMI 21 - SC - Central Excise

Show cause notice Where a SCN is issued without jurisdiction, certainly in instant case, the HC court can interfere even at the stage of issuance of SCN Impugned SCN is re-opening the issue which has already been concluded Impugned SCN is just repetition of earlier SCN Appeal rejected

Summary

Issues Involved:
1. Jurisdiction and validity of the show cause notice issued by the Commissioner of Customs and Central Excise.
2. Classification of products as "cosmetics" or "ayurvedic medicines".
3. Finality of prior judicial decisions.
4. High Court's interference at the show cause notice stage.

Issue-wise Detailed Analysis:

1. Jurisdiction and Validity of the Show Cause Notice:
The respondent challenged the show cause notice dated 29th April 2005 on the grounds that it sought to re-open and re-litigate issues already concluded by prior decisions of the High Court and the Supreme Court. The High Court quashed the notice, deeming it an abuse of process and without jurisdiction. The appellants argued that the notice was issued based on liberty granted by the Supreme Court in a prior case, allowing for factual adjudication under the correct legal framework.

2. Classification of Products:
The respondent's products, Vicco Vajradanti and Vicco Turmeric, were initially classified as "cosmetics" by the Commissioner in 1977, which was later overturned by the Civil Judge, Senior Division, Thane, and upheld by the High Court and the Supreme Court, classifying them as "ayurvedic medicines". Despite this, subsequent show cause notices (2nd SCN in 1987 and 3rd SCNs in 1997) attempted to reclassify the products as "cosmetics" under Chapter 33 of the Central Excise Tariff Act, 1985. The High Court and this Court had consistently ruled in favor of the respondent, affirming the classification as "ayurvedic medicines".

3. Finality of Prior Judicial Decisions:
The High Court and the Supreme Court had previously concluded that the respondent's products were "ayurvedic medicines". The Supreme Court's order dated 19th April 1993 affirmed the Bombay High Court's judgment with a modification regarding the refund of amounts paid, subject to Section 11B of the Central Excise and Salt Act, 1944. The appellants' attempts to reclassify the products through subsequent show cause notices were seen as attempts to re-open issues already settled by judicial decisions.

4. High Court's Interference at the Show Cause Notice Stage:
While the general rule is that courts should not interfere at the show cause notice stage, exceptions exist where notices are issued without jurisdiction or as an abuse of process. The High Court found that the impugned show cause notice was a repetition of earlier notices and not based on any new grounds or different tests. Therefore, it concluded that the notice was an abuse of process and quashed it. The Supreme Court upheld this view, noting that the notice was essentially a repetition of earlier ones and did not present any new factual or legal basis.

Conclusion:
The appeal was dismissed as it lacked merit. The Supreme Court affirmed that the High Court had rightly quashed the show cause notice, recognizing it as an attempt to re-litigate settled issues. The classification of the respondent's products as "ayurvedic medicines" was upheld, and the High Court's interference at the show cause notice stage was deemed appropriate given the circumstances.