2025 (1) TMI 933 - HC - Central Excise

Challenge to SCN issued u/s 11-A of the Central Excise Act - petitioners contended that petitioners are not the manufacturers and hence no notice could have been issued to them under Section 11-A of the Central Excise Act - HELD THAT - The judgment of the Apex Court in Supermax Personal Care Pvt. Ltd. Vs. Union of India Commissioner CGST CEX Audit-Thane Commissioner CGST CE Thane Commissionerate 2021 (4) TMI 368 - BOMBAY HIGH COURT has no applicability to the facts of the present case for the very reason that suspicious material was found at the place of the petitioners and it was found that petitioners were clandestinely involved in manufacturing of Cigarettes and even goods were being supplied which were actually relating to the manufacturing of Cigarettes. The law which emerges from the above judgment is that when an alternate efficacious remedy is available and there are disputed questions of facts the High Court should decide to decline jurisdiction in a writ petition. Present is a case where on search it was revealed that petitioners were indulged in clandestine supply of goods to manufacturers of Cigarettes in Bihar. Therefore in a manner petitioners were also involved in manufacturing of Cigarettes. Though this fact is disputed by the petitioners but since petitioners have only been given a show cause notice petitioners are free to raise all objections before the concerned Competent Authority in reply to the show cause notice. It is not inclined to entertain the present Civil Writ Petition and the same is accordingly dismissed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the issuance of the show cause notice under Section 11-A of the Central Excise Act to the petitioners was valid given their claim of not being manufacturers.
Whether the jurisdiction of the authorities at Jaipur to issue the show cause notice was appropriate, considering the manufacturers were stationed in Bihar.
Whether the writ petition is maintainable in light of the alleged lack of jurisdiction and the existence of an alternate remedy.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of the Show Cause Notice

Relevant legal framework and precedents: The petitioners challenged the show cause notice under Section 11-A of the Central Excise Act, arguing they were not manufacturers. They relied on precedents such as "M/S Radha Krishan Industries Vs. State of Himachal Pradesh & Ors." and "M/S Godrej Sara Lee Ltd. Vs. The Excise And Taxation Officer cum Assessing Authority & Ors." to support their claim.
Court's interpretation and reasoning: The court noted that suspicious material was found at the petitioners' premises, indicating involvement in the clandestine manufacturing of cigarettes. This evidence undermined the petitioners' claim of not being manufacturers.
Key evidence and findings: The court found evidence of the petitioners' involvement in manufacturing activities, which justified the issuance of the show cause notice.
Application of law to facts: The court applied the principles from the cited precedents, noting that the involvement in manufacturing activities warranted the notice under Section 11-A.
Treatment of competing arguments: The petitioners' argument of non-involvement was countered by evidence of clandestine activities, which the court found compelling.
Conclusions: The court concluded that the issuance of the show cause notice was valid given the evidence of manufacturing activities.

Issue 2: Jurisdiction of Authorities at Jaipur

Relevant legal framework and precedents: The petitioners argued that the Jaipur authorities lacked jurisdiction as the manufacturers were in Bihar. The court considered the jurisdictional aspect under the Central Excise Act.
Court's interpretation and reasoning: The court reasoned that the jurisdictional challenge could not be addressed at this stage and should be raised before the competent authority in response to the show cause notice.
Key evidence and findings: The court did not delve into jurisdictional evidence, focusing instead on procedural appropriateness.
Application of law to facts: The court deferred jurisdictional issues to the competent authority, emphasizing procedural adherence.
Treatment of competing arguments: The petitioners' jurisdictional challenge was deemed premature for writ jurisdiction.
Conclusions: The court concluded that jurisdictional issues should be addressed by the competent authority, not within the writ petition.

Issue 3: Maintainability of the Writ Petition

Relevant legal framework and precedents: The court reviewed the maintainability of the writ petition under Article 226 of the Constitution, considering precedents such as "M/S Radha Krishan Industries Vs. State of Himachal Pradesh & Ors."
Court's interpretation and reasoning: The court highlighted the principle that writ jurisdiction should not be exercised when an efficacious alternate remedy is available, especially in cases involving disputed facts.
Key evidence and findings: The court found that the petitioners had an alternate remedy through the competent authority.
Application of law to facts: The court applied the principle of exhaustion of statutory remedies, emphasizing the availability of alternate remedies.
Treatment of competing arguments: The petitioners' argument for writ jurisdiction was countered by the availability of alternate remedies and the presence of disputed facts.
Conclusions: The court concluded that the writ petition was not maintainable due to the availability of alternate remedies and the presence of disputed facts.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "The principles of law which emerge are that: (i) The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well; (ii) The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternate remedy is available to the aggrieved person."
Core principles established: The court emphasized the principle of exhausting statutory remedies before invoking writ jurisdiction, particularly in cases involving disputed facts.
Final determinations on each issue: The court upheld the validity of the show cause notice, deferred jurisdictional challenges to the competent authority, and dismissed the writ petition due to the availability of alternate remedies and disputed facts.

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