9911796707
TMI Blog1982 (8) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... p India Ltd., and National Rubber Manufacturers Ltd. (hereinafter to be referred to as principal purchasers) are the principal purchasers. They used to enter into contracts with the respondent-writ petitioner for the supply of nylon cotton belting duck. The percentage of nylon content in the belting duck will range between 10 and 60, and the nylon was supplied by Dunlop India Ltd. by importing them under actual user's licence whereas National Rubber Manufacturers Ltd. supplied indigenous nylon. Both the nylon and cotton are blended together according to the specifications of the purchaser to make the belting duck. The belting duck fall under Item 19 (1) (i) of the First Schedule to the Central Excises and Salt Act, 1944 (hereinafter to be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id notification was withdrawn on the ground that the transactions entered into with the " principal purchasers" are only works contract and not a contract of sale, and the cost of nylon has not been included in the declared price. The third appellant issued a show cause notice on 28th September, 1974, calling upon the respondent to show cause as to why penalty should not be imposed under Rule 173-Q and why the differential duty amounting to Rs. 2,07,428.50 on the quantity and value of the cotton nylon duck manufactured and removed by the respondent during the period 1st October, 1973 to 30th June, 1974, should not be demanded from them. A second show cause notice was issued on 27th February, 1975, covering the period 1st March, 1969 to 31st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for the sale and the price of nylon need not be included by the respondent as it was supplied by the dealers, and there is no violation of conditions 3, 4 and 5 of Notification No. 144/70. The learned Judge further held that merely because the attorney for the respondent took a stand that the contracts in question were only for charges for work done, it does not mean that the statement is conclusive and it is for the appellants to find the correct facts and establish the same. On these findings the learned Judge issued a writ of prohibition, prohibiting the appellants from taking further steps in pursuance of the show cause notice. Against this judgment of the learned Judge, the present appeals have been filed. 4. The main conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the respondent has entered into with its "principal purchasers" have not been produced, or considered by the appellants, as even at the stage of show cause notice, writ petitions came to be filed and writ of prohibition was issued prohibiting them from taking further action in pursuance of the show cause notice. Whether the price mentioned in those agreements can be taken as "wholesale cash price" and what are the other terms and conditions in the agreement and whether the wholesale dealings of the respondent are at arm's length, are matters which can be considered only after the respondent submits its explanation to the show cause notice and produces the necessary documents and records in support of its contention. The further question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... priate remedy when there is no inherent lack of jurisdiction for the appellants to take further action in pursuance of the show cause notice issued by them. Such a writ cannot be issued where the appellants, in exercise of the powers vested in them, are in the fact-finding stage. Their exercise of jurisdiction depends upon the existence of certain facts, and a writ of prohibition cannot be issued before they had the opportunity of considering the jurisdictional facts. The learned Judge held that the stand taken by the respondent's attorney that the contracts in question are works contract is not conclusive and it is for the appellants to ascertain the correct facts and establish the same. It is precisely for the same reason the show cause n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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