2018 (11) TMI 19 - HC - Central Excise

Validity of Show Cause notice - Demand of Excise duty in excess of ₹ 50 lakhs - Section 11A of the Central Excise Act, 1944 - SCN was not preceded by pre show cause notice consultative procedure as directed by the Central Board of Excise and Customs. Held that - Our attention is invited to Instructions dated 8th July, 2016, 13th July, 2016 and Master Circular dated 10th March, 2017 issued by the Central Board of Excise and Customs. In the aforesaid circulars, the Chief Commissioners / Commissioners have been advised that before issuing a show-cause notices raising a demand in excess of ₹ 50 lakhs, there must be pre show-cause notice consultation with the assessee by the adjudicating authority. This as the instruction notes is with a view to promote voluntary compliance and also reduce necessity of issuance of show-causes notices. In this case, admittedly, both the notices are in excess of ₹ 50 lakhs and the averment of the petitioner that there was no pre show-notice consultation in terms of the circular has not been disputed by the Revenue till date - prima facie the impugned notices appear to be without jurisdiction, warranting our interference. At the request of the Revenue petition is adjourned to 29th November, 2018.

Summary

Issues:
Challenging show-cause notices for excise duty under Section 11A of the Central Excise Act, 1944 without pre-consultative procedure as directed by the Central Board of Excise and Customs.

Analysis:
The petition challenges two show-cause notices demanding excise duty totaling &8377; 58.98 crores and &8377; 113.93 crores for the period April 2016 to June 2017. The petitioner argues that the notices are without jurisdiction as they were not preceded by the pre-show cause notice consultative procedure as directed by the Central Board of Excise and Customs. The circulars issued by the Board mandate pre-show cause notice consultation for demands exceeding &8377; 50 lakhs to promote voluntary compliance and reduce the necessity of issuing show-cause notices. The petitioner's claim of lack of pre-show notice consultation has not been disputed by the Revenue. This raises a prima facie concern regarding the jurisdiction of the impugned notices, warranting the court's interference.

The court is inclined to take up the petition for final disposal at the admission stage due to the apparent lack of jurisdiction in the show-cause notices. However, the court acknowledges the Revenue's interest in ensuring that the pre-consultation process does not lead to a part of the demand becoming time-barred. Balancing the equities, appropriate directions or protection may be necessary. The respondent Revenue's counsel expresses unreadiness to assist the court for final disposal at the present stage, citing potential unnecessary delay in admitting the petition and granting a stay on the impugned notices. The court notes that the controversy is limited in scope, and further delay may be avoided.

Considering the circumstances, the court adjourns the petition to 29th November 2018 at the request of the Revenue. Parties are informed that the petition is likely to be finally disposed of at the admission stage. As the adjournment is requested by the respondent, the proceedings consequent to the impugned show-cause notices will be kept in abeyance until the next date. Stand over to 29th November 2018 for further proceedings.