2022 (11) TMI 860 - HC - Central Excise

Seeking refund of amount paid under threat or duress in pursuance of an investigation - authority to receive the payment when no ascertainment of the duties has been made by the Central Excise Officer - HELD THAT - It is no doubt true that the scope of interference to a show-cause notice by a writ Court exercising its power under Article 226 of the Constitution of India, is very limited, barring few exceptions, like lack of jurisdiction or abuse of process of law, etc. In the instant case, there is a major flaw, which dispossess the jurisdiction of the respondent in proceeding further with the show-cause notice - The Bench had further held that in order to invoke sub-section 3 of Section 11(A), the Excise Officer should form an opinion and that the respondents have issued a show-cause notice after the order of the learned Single Judge, which is not in terms of Section 11(A)(3) and therefore, the payment of Rs.7.53 Crores made by the appellant cannot be said to be in terms of 11(A)(1)(b) of the Central Excise Act. With these observations, the Bench had allowed the writ appeal and 'set aside' the order of the learned Single Judge. Though the original issuance of the show-cause notice may be in terms of the directions of the writ Court, any further contemplation of proceeding with the show-cause notice, would be without any authority, in view of the subsequent order passed. Thus, the consequential notice could be termed to be without any jurisdiction and would amount to an abuse of the process of law, as held by the Hon'ble Supreme Court in Vicco Laboratories's case( 2007 (11) TMI 21 - SUPREME COURT ). Hence, the appellant would be entitled to succeed. The impugned show-cause notice is quashed - appeal allowed.

Summary

Issues:
1. Challenge to the order passed in W.P(MD)No.4296 of 2014 regarding refund of Rs.7.53 Crores.
2. Validity of the show-cause notice issued post the disposal of W.P(MD)No.2026 of 2013.

Analysis:

Issue 1: Challenge to the order passed in W.P(MD)No.4296 of 2014 regarding refund of Rs.7.53 Crores
The appellant, a company manufacturing steel castings, challenged an order for payment of Rs.7.53 Crores to the respondent, claiming it was made under threat or duress. A learned Single Judge disposed of the writ petition by issuing directions for investigation and show-cause notice issuance. An intra Court appeal held that the respondents had no authority to receive payment without ascertaining duties. The appeal was allowed, directing refund of the amount. The Court found that the payment did not fall under statutory provisions, thus rejecting the claim that it was authorized by law. The order directed refund within four weeks, failing which interest at 6% per annum would apply.

Issue 2: Validity of the show-cause notice issued post the disposal of W.P(MD)No.2026 of 2013
After the disposal of the initial writ petition, a show-cause notice was issued to the appellant based on the directions of the learned Single Judge. The appellant challenged this notice in a subsequent writ petition. The Court noted that the show-cause notice was issued in line with the Single Judge's directions but was challenged in a different appeal, which was allowed. As the original order was set aside, any further action based on the directions of the disposed writ petition was deemed without authority and an abuse of process of law. Consequently, the Court quashed the show-cause notice and allowed the writ appeal, setting aside the order of the learned Single Judge.

In conclusion, the High Court set aside the order passed in W.P(MD)No.4296 of 2014 and quashed the subsequent show-cause notice, ruling in favor of the appellant.