2015 (9) TMI 878 - HC - Central Excise

Challenge to the show cause notice - petitioner have shown the less production in ER-7 returns when the capacity of the kiln is to produce 72,000 metric tonnes - Held that - From the perusal of the show cause notice, it appears that the authority have prima facie opined that the petitioner have shown the less production in ER-7 returns when the capacity of the kiln is to produce 72,000 metric tonnes. On the basis of such prima facie finding, a show cause notice is issued upon the petitioner as to why the Central Excise Duty amounting to Rs. Twenty five crores and odd have not recovered together with the penalty and the interest. - Since the authority have not decided the issue finally as the petitioner was invited to give defence to the allegations made in the show cause notice, this Court does not feel that any case within the parameters, as set forth in the noted report, has been made out. - Since the time to file reply to a show cause notice, has expired, as the petitioner decided to challenge the said show cause notice before this Court, this Court feels that the petitioner should be given another opportunity to file reply thereto. - Petition disposed of.

Summary

Issues: Challenge to show cause notice under Article 226 of the Constitution of India.

Analysis:
1. The petitioner challenged a show cause notice issued by the Commissioner of Central Excise and Service Tax, alleging underproduction based on ER-7 returns.
2. The petitioner argued that the authority had already made up their mind, making it futile to submit a defense. However, the court disagreed, stating that a show cause notice does not imply finality and the authority must consider the defense.
3. The court emphasized that statements in a show cause notice are tentative, and the authority must decide after considering the defense and providing a hearing, which could lead to a different conclusion.
4. Referring to a previous case, the court highlighted that judicial review under Article 226 can be exercised if the notice is issued without jurisdiction or lacks evidence of an offense committed.
5. The court cited the Supreme Court's stance that interference at the show cause notice stage should be rare, only warranted if issued without jurisdiction or as an abuse of process of law.
6. As the petitioner missed the deadline to respond to the notice, the court granted an opportunity to file a reply within three weeks.
7. The adjudicating authority was urged to conclude the proceedings promptly.
8. The court clarified that its order should not influence the merit of the case, allowing the authority to decide independently.
9. The writ petition was disposed of with no costs awarded.