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TMI Blog2012 (10) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... se, Ahmedabad in the following factual background. 3. Since some of the transactions; as already noted, were executed by M/s. Sunshine Oleochem Private Limited, and thereafter upon its merger with the present company, by such company, they shall be referred to as "the industry" at the appropriate place in this order. 4. The industry seeks benefit of exemption notification issued by the Central Government granting exemption on all excisable goods cleared from the industrial units located in Kutch region of the State of Gujarat; subject to certain conditions. Such exemption Notification No. 39/2001-C.E. was issued on 31st July 2001. Such exemptions were granted primarily bearing in mind the devastating earthquake which took place in the region on 26th January 2001. 5. The Notification provides that on all goods, other than those specified in the Annexure appended to the notification and cleared from a unit located in Kutch district of Gujarat would be exempt from payment of excise or additional duty of excise leviable thereon on the manufacture of goods, other than the amount of duty paid by utilization of CENVAT credit. 6. Para 2 of the Notification provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cleared, if any, in excess of twice the actual value of original investment in each of the year during which exemption has been claimed under this notification along with interest @ 24% per annum, as if no exemptions were available to those clearances under this notification. (vi) The exemption shall apply for a period not exceeding [five] years from the date of commencement of commercial production by the unit." 7. The industry applied for grant of Central Excise Registration on 18th July 2005. Such registration was granted on 25th September 2005. On 29th December 2005, the industry intimated to the Central Excise Department that the commercial production had commenced on 29th December 2005 and that the investment in the plant and machinery was valued at Rs. 35.65 crores. On 19th January 2006, a certificate of the Chartered Accountant was submitted certifying the investment in the plant and machinery at Rs. 39.66 Crores. On 31st January 2006, a team of the officials of Central Excise Department visited the unit of the petitioner-industry to verify its claim with respect to investment made and the commencement of the commercial production on 29th December ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31st December 2005 were not at large before the Tribunal. 11. Having once granted the request of the petitioner for exemption under the said Notification No. 39/2001-C.E., it appears the authorities were of the opinion that the entire claim of the petitioner was not sustainable, since the petitioner had not made investment in the plant and machinery in excess of Rs. 20 Crores and commenced commercial production before the last date. The Committee, which previously processed the claim of the petitioner, had misdirected itself. In fact, a detailed report was drawn by the Additional Director General [Vigilance], Western Regional, unit-Mumbai, who in his detailed investigation report noted several irregularities in the claim of the petitioner. He was of the opinion that the Committee did not examine the material on record properly and thereby wrongly accepted the claim of the petitioner for exemption. 12. A fresh show cause notice dated 18th October 2010 was therefore issued calling upon the industry to show cause why exemption application should not be rejected. On 20th December 2010, the petitioner replied to the show cause notice and raised strong objection to any such p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use notice was issued. It was in this background the decision is rendered. Reliance was placed on the decision in the case of Jai Hind Oil Mills & Company v. Union of India, [1994 (71) E.L.T. 902 (Bom.)] wherein, the show cause notice and the order passed thereon were set aside on the ground that the order passed by the Collector (Appeals) on the assessee's appeal had become final. As is apparent, this was also a case wherein, the Collector (Appeals), in exercise of statutory powers, had ruled in favour of the assessee. The Department, without challenging the decision of the Collector (Appeals) before the Tribunal, had sought to raise demands contrary to such an order. It was in this background, held and observed that once the order of the Collector (Appeals) has become final and binding, show cause notice could not be issued which could undo the effect of the Collector's order. Reliance was placed in case of Associated Cement Companies Limited. v. Union of India - 1996 (88) E.L.T. 348 (Kar.) wherein the Karnataka High Court deprecated the practice of issuing repeated show cause notices, after completion of the adjudication process. This was also a case wherein the proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that the petitioner does not satisfy the conditions of the exemption notification. He submitted that the petitioner's investment in plant and machinery was less than Rs. 20 Crores. The commercial production had not commenced by the last date envisaged i.e., 31st December 2005. There was voluminous evidence to come to such a conclusion, despite which, wholly wrongfully the petitioner was granted benefit of exemption. He submitted that the Committee did not look into the voluminous evidence to demonstrate that the petitioner did not satisfy the above noted conditions. The entire issue was examined by the Additional Director and a detailed report was drawn. 20. Counsel further submitted that in any case, the present proceedings are at the stage of show cause notice. The petitioner would have sufficient opportunity to reply to the contents of the notice and to defend itself. 21. Counsel further submitted that the issues are highly debateable and disputed question of facts are involved. Writ petition, at this stage therefore, should not be entertained. 22. Having thus heard learned counsel for the parties, first of all we may notice that the exemption notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w industries which are set up after the publication of the Notification. Equally important condition for availing exemption under the said Notification is that such industry should have been set-up not later than 31st December 2005 and only the investment made till such cut off date is eligible for exemption. The exemption is envisaged in two slabs : for those industries which have made investment in plant and machinery in excess of Rs. 20 Crores, exemption is granted on all goods cleared from such units from so much of the duty of excise or the additional duty of excise; as the case may be, leviable thereon under the said Acts as is equivalent to the amount of duty paid by the manufacturer of goods other than the amount of duty paid by utilization of CENVAT credit. In other words, with respect to industries having investment of more than Rs. 20 Crores, the exemption from payment of excise duty and additional duty on the goods cleared from such units was without any limit. In case of the units having investment in plant and machinery of less than Rs. 20 Crores on the date of commencement of commercial production, the exemption is limited to the first clearances up to an aggregate v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is that it had made investment in plant and machinery far in excess of Rs. 20 Crores, well before the cut off date and also commenced commercial production before the last date envisaged under the exemption notification i.e., 31st December, 2005. The case of the respondents, however, is that the petitioner had made mis-declarations, that it could not have commenced commercial production since essential machinery was not installed before the last date. 30. In the present petition, it is not necessary, not even possible for us to go into these highly disputed questions of fact. What we need to ascertain is - whether the respondents are within their right in issuing the show cause notice and seeking explanation from the petitioner with respect to correct value of investment made in plant and machinery and whether actually the commercial production had commenced before 31st December, 2005. In this regard, as already noted, counsel for the petitioner vehemently contended that having previously issued such a notice and after having obtained the replies from the petitioner, the respondents had dropped the proceedings. Such decision could not have been re-opened by issuing a fresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt is satisfied that the show cause notice was totally Honest in the eye of law for absolute want of jurisdiction of the authority to even investigate into facts, writ petitions should not be entertained for the mere asking and as a matter of routine and the writ petitioner should invariably be directed to respond to the show cause notice and take all stands highlighted in the writ petition. Whether the show cause notice was founded on any legal premises is a jurisdictional issue which can even be urged by the recipient of the notice and such issues also can be adjudicated initially, before the aggrieved could approach the Court. Further, when the Court passes an interim order it should be careful to see that the statutory functionaries specially and specifically constituted for the purpose are not denuded of powers and authority to initially decide the matter and ensure that ultimate relief which may or may not be finally granted in the writ petition is accorded to the writ petitioner even at the threshold by the interim protection, granted." 34. In case of Mahanagar Telephone Nigam Limited v. Chairman, Central Board, Direct Taxes & Anr. reported in AIR 2004 SCW 2934 = 2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o placed on record. The stand of the respondents is that from the very documents on record, admitted facts and circumstances and materials which were available before the previous committee, it was impossible to come to the conclusion that the petitioner had in fact made investment in plant and machinery in excess of Rs. 20 Crores, and further that the commercial production had commenced before 31st December 2005. Additionally, counsel for the respondents had placed before us communications which would indicate that the question of taking disciplinary action departmentally against the members of the committee is under active consideration of the appropriate authority. 38. We should not be understood to have accepted such a stand of the respondents. Suffice it to say that when such serious allegations of impropriety are brought to our notice, we would be wholly unjustified in terminating the proceedings at the show cause notice stage. It is true that much of the evidence sought to be relied on in the second round of hearing was very much before the previous committee when the proceedings were dropped, however, that by itself would not be sufficient to permit us to prevent the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to claim any exemption at all. Additionally, we also noticed that para-3 of the Notification provides for such facts being ascertained on the basis of certificate issued by the Committee, or even otherwise. The power of the respondents therefore to make thorough inquiry into the declarations made by the manufacturer cannot be curtailed. When the question of granting exemptions and resultant considerable amount of duty waiver is at issue, we would not like to terminate the proceedings at the show cause notice and even without permitting of full inquiry. By way of abundant caution, we clarify that nothing stated in this order would come in the way of the petitioner in raising all contentions before the Committee in response to the show cause notice. We have expressed no opinion whatsoever on the issues raised by the respondents with respect to eligibility of the petitioner to claim exemption. All issues will be decided on the basis of evidence that may be brought on record. With above observations, petition is dismissed. 42. Counsel for the petitioner, at this stage requests that interim relief previously granted be continued for four weeks. Respondents may proceed further ..... X X X X Extracts X X X X X X X X Extracts X X X X
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