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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 ..... ent. [Order per : Akil Kureshi, J. (Oral)]. - The petitioner is a company registered under the Companies Act, 1956 presently called Ruchi Soya Industries Limited. Previously, one-M/s. Sunshine Oleochem Private Limited, which was also a registered company, now stands merged with M/s. Ruchi Soya Industries Limited with effect from 16th December 2010. This is relevant for the limited purpose since some of the transactions on record have been entered into by M/s. Sunshine Oleochem Private Limited, on the basis of which, the present petitioner-company seeks Excise Duty exemption in the Kutch region of the State of Gujarat. 2. The petitioner has challenged the show-cause notice dated 18th October 2010 along with Corrigendum dated 29th December 2010 issued by the Joint Commissioner of Central Excise, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f commercial production or such extended period as the Assistant Commissioner or Deputy Commissioner may allow. (v) In case on the basis of such certification or otherwise, the original value of investment in plant and machinery, (a) is found to be less than Rs. 20 Crore but was declared to be Rs. 20 crore or more, the manufacturer shall be liable to pay back the entire amount of duty exemption availed under the Notification at the rate of 24% per annum as if no exemptions were available, or (b) is found to be less than the declared value and was declared to be below Rs. 20 Crore, the manufacturer shall be liable to pay duty on the goods 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 grante ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircular of C.B.E. C. providing that if the investment was already made in installing the plant and machinery before 31st December 2005, simply because addition of new product, of which production had commenced after the cut-off date, such product cannot be kept out of purview of the exemption. With reference to this issue, we are not directly concerned. We may, however, record that the question of validity of the claim of the petitioner with respect to the exemption itself and the question whether the petitioner had made investment in plant and machinery in excess of Rs. 20 Crores and commenced commercial production before 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 dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uing a fresh show cause notice. In short, counsel submitted that the entire proceedings are wholly without jurisdiction and may, therefore, be quashed. 18. Counsel relied on the following decisions in support of his contentions : In case of Core Healthcare Limited v. Union of India reported in 2006 (198) E.L.T. 121 to contend that in absence of any jurisdiction to issue a show cause notice, the proceedings should be quashed. This was, however, a case where the adjudicating authority in exercise of statutory powers, had granted certain claim. Without challenging such an order, afresh show cause 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 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ashed in a writ proceeding. Reliance was yet placed on another decision of the Apex Court in case of Pancham Chand Ors. v. State of Himachal Pradesh Ors. reported in (2008) 7 SCC 117 to contend that any authority, other than the specified authority, cannot govern the discretion of the statutory authority. In the present case, since the Additional Director [Vigilance] has drawn a report, it was the contention of the petitioner that the empowered committee would not be guided by such a report. 19. On the other hand, learned counsel Mr. Ravani, appearing for the Department opposed the petition. He 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 ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption limit fixed is twice the value of investment made. 24. In clause (v) of Paragraph 3 of the Notification, it is stated that in case on the basis of such certification or otherwise, such investment is found to be less, than eventuality discussed hereinabove would follow. Meaning thereby, the source of the decision that the investment was less than what was declared could either be the certification of the Committee provided in clause (iii) of para 3, or any other source. 25. From the notification, therefore, it clearly emerges that the exemption is meant only for new 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is found to be inaccurate, the unit does not surrender the very right to enjoy exemption but that the computation of exemption would be made on the basis of ultimate investment made in plant and machinery, found on the basis of certificate or otherwise and not on the basis of higher declaration made by the manufacturer. 28. This distinction is vital since the notification attaches considerable importance on whether the manufacturer has made investment in plant and machinery in excess of Rs. 20 Crores or less than the said amount. 29. The case of the petitioner 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . reported in AIR 2004 SC 1467 = 2004 (164) E.L.T. 141 (S.C.), the Apex Court deprecated the practice of entertaining writ against the show cause notice and in granting interim relief. It was observed as under :- 5. This Court in a large number of cases has deprecated the practice of the High Court entertaining writ petitions questioning legality of the show cause notices stalling enquiries as proposed and retarding investigative process to find actual facts with the participation and in the presence of the parties. Unless, the High Court 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndertaking such an exercise before us nor do we have full material before us to undertake any such exercise. 37. The contention that the entire proceedings are sought to be re-opened on the same evidence and set of documents, in the present case, would not permit us to terminate the proceedings prematurely. The respondents have made serious allegations of irregularities and impropriety in the previous round of show cause notice and hearing proceedings. A detailed report of the Addl. Director General [Vigilance] is also 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... December 2005. Under such circumstances, we would not be justified in interfering at the stage of show cause notice. 41. As already noted, the fact whether the manufacturer has invested more than Rs. 20 Crores in its plant and machinery or less is of great significance insofar as the scheme of exemption notification is concerned. If it is found that the declaration that the investment in plant and machineries exceed Rs. 20 Crores is found to be incorrect, the manufacturer renders himself totally ineligible 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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