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TMI Blog2014 (9) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... e periods 1-7-2009 to 14-1-2010 which did not tally with the Daily Stock Account Register maintained in the factory. Perusing those data/records suggest that excess production was made for which excise duty is not paid. The authorities, thereafter, made extensive investigation and recorded the statement of the person authorised to maintain those accounts and subsequently, issued the show cause notice. The petitioner appeared before the authority, as directed in the said show cause notice, and asked for supply of certain documents. Subsequently challenge to the show cause notice is made in this writ petition. 4. At the time of moving this writ petition, the petitioner demonstrated before this Court that the entire basis of the show cause is on assumption and presumption and there is no corroborative evidence produced justifying the alleged clandestine removal of the goods. This Court, therefore, admitted the writ petition and allowed the parties to exchange affidavits, which have been filed by the respective parties. 5. Mr. Sengupta, the learned advocate for the petitioner, at the outset submits that ordinarily a writ Court does not interfere against issuance of a show c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moval unless it is corroborated by other evidences, viz. consumption of raw material, manufacturing of goods and its clandestine sale and in support thereof reliance is placed upon a judgment of the Tribunal in the case of M.T.K. Gurusamy v. Commissioner of Central Excise, Madurai, reported in 2001 (130) E.L.T. 344. 12. Mr. Sengupta strenuously submits that the show cause notice is bereft of all such material and, therefore, is liable to be quashed and set aside, in exercise of the power of judicial review under Article 226 of the Constitution of India. 13. Mr. Sengupta relies upon the provisions contained under Section 35A of the Central Excise Act, 1944 in support of his contention that presumption as to the genuineness of the contents in the documents can only be raised if the said person is jointly tried with the other person. To elaborate the same, he submits that it is alleged in the show cause notice that the said pen drive is recovered from Ansari who is not tried with the petitioner and, therefore, presumption cannot be raised under Section 35A of the said Act. 14. Lastly, it is submitted that the show cause notice is otherwise bad in view of the ratio la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the show cause notice, is required to be dealt with first. 18. In the case of Geep Flashlight Industries Limited (supra) the matter relates to a classification dispute. According to the department, the consignment of manganese dioxide attracts levy of duty under Tariff Item 28 which, according to the petitioner, should be assessed under Tariff Item 26. The appellate authority affirms the order of the assessing authority but the said order was reversed by the revisional authority accepting the stand of the assessee and directed refund of the duty. The department issued a notice under Section 131(3) of the Customs Act, 1962 which provides for a suo motu revision. Challenge is made to the said notice on the plea that suo motu revision can only be exercised provided the provisions, contained under Section 131(5) of the Act, are satisfied. A plea of limitation was also taken by the petitioner in the writ petition wherein challenge to the aforesaid notice is made. In the above perspective, it is held : "22. Once the provisions contained in Section 131(3) are attracted, the Central Government may of its own motion annul or modify any order passed under Section 128 or Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es or unconstitutional. Since the basis of the claim for the relief is found not to exist, the High Court rightly refused the prayer for the issue of a writ of prohibition restraining the Authorities from continuing the proceedings pursuant to the notices issued. As indicated by this Court in State of Uttar Pradesh v. Brahm Datt Sharma [(1987) 2 SCC 179] when a show cause notice is issued under statutory provision calling upon the person concerned to show cause, ordinarily that person must place his case before the Authority concerned by showing cause and the courts should be reluctant to interfere with the notice at that stage unless the notice is shown to have been issued palpably without any authority of law. On the facts of this case, it cannot be said that these notices are palpably without authority of law. In that situation, the appellants cannot successfully challenge the refusal by the High Court of the writs of prohibition prayed for by them." 20. In the case of Commissioner of Customs and Central Excise, Madurai v. Charminar (supra) dispute involved therein was a classification dispute and challenge was made to a show cause notice wherein it is held that the High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... going reasons, we are not inclined to interfere in the matter at this stage. However, considering the fact that the period stipulated in the impugned notices for furnishing reply has expired, we permit the petitioners to file reply within thirty days from today and if they do so filed their reply, the same shall be treated to be within time." 22. The ratio which could be culled out from the aforesaid judgment is that the power of judicial review, under Article 226 of the Constitution of India, can be exercised where challenge to a show cause notice is made provided it is patently demonstrated that the same is issued without jurisdiction or it does not disclose any offence to have been committed. Ordinarily High Court should not embark to decide the factual disputes but relegate the party to submit the reply before the authority concerned who is obliged to decide the same. The aforesaid rule is, however, not free from exception. The exception, carved out in the case of Indian Cardboard Industries Limited (supra), in my opinion, still holds the field. The aforesaid exception can be aptly quoted hereunder : "15. On the basis of the decisions cited it appears that the Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the show cause notice stage should be rare and not in a routine manner. Mere assertion by the writ petitioner that notice was without jurisdiction and/or abuse of process of law would not suffice. It should be prima facie established to be so. Where factual adjudication would be necessary, interference is ruled out." 25. Let me now see whether the show cause notice, issued by the authority, which is the subject matter in this writ petition, lacks material particulars justifying commission of offence or it is contrary to the settled proposition of law laid down in judicial pronouncements either by the Supreme Court or High Court or the Tribunals. 26. By relying on various judgments of the Tribunals, the petitioner tried to impress upon this Court that mere suspicion does not raise presumption as to commission of an offence in absence of any corroborative evidence. It is a consistent view of the Tribunals in the judgments cited by the petitioner, as indicated hereinabove, that the charge of clandestine removal cannot be proved only on the basis of the entries made in the note book maintained by the labourer in absence of any supporting evidence relating to consumption of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions and assumptions without any tangible evidence will be vitiated by an error of law." Similarly, in the case of Poly Printers v. C.C.E., Delhi-I, 2002 (139) E.L.T. 295, the Tribunal did not find the charge of clandestine manufacture and clearances of the final product by the assessee sustainable as "no evidence has also been collected by recording the statement of any buyers to establish the clandestine sale of the final product by the appellants without payment of duty .... No unaccounted printing ink was found lying in the factory premises of the firm...." The Tribunal also in the case of Laxmi Engg. Works v. CCE, Delhi, 2002 (139) E.L.T. 573 (T) wherein the charge of clandestine manufacture and removal was made on the basis of statements, which were retracted subsequently has observed that "Even otherwise there is nothing on record to suggest if statements of suppliers of the raw-material i.e. sellica/ingots which were not accounted for in the statutory record by the appellants and of the buyers to whom the final product i.e. copper wire rods were allegedly supplied by them without the payment of duty, during the period in question, were recorded. No evidence regarding consu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also nothing on record to indicate that the appellant had purchased the Quartz, Feldspar, Zinc, Borax Powder, Calcium and Dolomite and without accounting them used for the manufacture of Frit for clandestine removal. There is also nothing on record nor there is any statement of the suppliers of other raw materials, which would indicate that the appellant had received unaccounted raw material from the suppliers of these raw materials. There is a solitary evidence in the form of statement of supplier of one of the raw material i.e. Borax Powder, who indicated that the appellant had procured Borax Powder and not accounted the same in his record; and the said entries and information were deduced from the documents of the premises of Shri Anil Jadav and whose evidence has been discarded for having not been produced for cross examination; in the absence of any other tangible evidence to show that the appellant had been procuring the other major raw materials required for manufacture of Frit without recording in books of accounts, we are unable to accept the contentions of the ld. AR appearing for the Revenue and the findings of the adjudicating authority, that there was clandestine manu ..... 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