1979 (8) TMI 78 - HC - Central Excise

Show Cause Notice - Time Bar - Issue of Show Cause Notice - Scope - Applicability - Alternative remedy - Existence of

Summary

Issues:
1. Jurisdiction of the respondent to issue the show cause notice under Rule 40 of the Central Excise Rules.
2. Bar of limitation under Section 40 Clause (2) of the Central Excise Act.

Analysis:

Issue 1: Jurisdiction of the respondent to issue the show cause notice under Rule 40 of the Central Excise Rules:
The petitioner challenged the show cause notice issued by the Central Excise Integrated Divisional Office, Vijayawada, demanding duty on unmanufactured tobacco bits and midribs. The respondent alleged a contravention of Rule 40 based on the petitioner's receipt of tobacco without duty payment. However, the petitioner claimed to have purchased the tobacco under valid T.P. 1s, indicating duty payment. The court noted that the show cause notice lacked clarity on the validity of the T.P. 1s and failed to prove they were not issued by the Excise authorities. As a result, the court held the notice to be without jurisdiction as the contravention of Rule 40 was not established conclusively.

Issue 2: Bar of limitation under Section 40 Clause (2) of the Central Excise Act:
The petitioner contended that the show cause notice was time-barred under Section 40 Clause (2) of the Central Excise Act, which limits legal proceedings to six months from the accrual of cause of action. The court agreed with this argument, emphasizing that the notice was related to an alleged failure to pay duty in 1968, falling outside the limitation period. The court rejected the argument that the limitation bar did not apply to judicial or quasi-judicial proceedings, stating that the law of limitation applies to such cases. The court cited a Supreme Court judgment and a previous Bench decision to support its interpretation. Consequently, the court held the show cause notice to be issued without jurisdiction due to being time-barred.

Additional Observation:
The court expressed concern over the department's failure to verify duty payment and the issuance of T.P. 1s, leading to a loss of a significant amount. It directed a proper inquiry to determine responsibility for this oversight and recommended sending a copy of the judgment to the Central Board of Revenue, New Delhi. The court also rejected the argument of an alternative remedy through appeal due to its finding of no jurisdiction in issuing the notice.

In conclusion, the Writ Petitions were allowed, with costs awarded to the petitioner, highlighting the court's decision on the lack of jurisdiction and the limitation bar under the Central Excise Act.