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SCA/5478/1998 3/ 5 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 5478 of 1998
For
Approval and Signature:
HONOURABLE
MR.JUSTICE D.A.MEHTA
HONOURABLE
MS.JUSTICE H.N.DEVANI
==========================================
1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To
be referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
==========================================
HARYANA
SHEET GLASS LIMITED & 1 - Petitioner(s)
Versus
UNION
OF INDIA & 29 - Respondent(s)
=========================================
Appearance :
MR
RAKESH GUPTA, MR.UDAY JOSHI AND MS.POOJA GUPTA, ADVOCATES FOR M/S
TRIVEDI & GUPTA for Petitioners
MRS
VASAVDATTA BHATT for Respondent(s) : 1 - 2,4 - 5.
MR HARIN P RAVAL
for Respondent(s) : 3,
NOTICE SERVED for Respondent(s) : 6,8 -
30.
NOTICE UNSERVED for Respondent(s) :
7,
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CORAM
:
HONOURABLE
MR.JUSTICE D.A.MEHTA
and
HONOURABLE
MS.JUSTICE H.N.DEVANI
Date
: 11/07/2008
ORAL
JUDGMENT
(Per
: HONOURABLE MR.JUSTICE D.A.MEHTA)
This
petition was admitted by an order dated 18.8.1999 and interim relief
was granted by the same order after recording various contentions of
both the sides and the peculiar facts of the case. Against a demand
of Rs,6,76,07,490/-, the petitioner was called upon to deposit a sum
of Rs.1,30,00,000/- on or before 29.9.1999 and another sum of
Rs.1,00,00,000/- on or before 20.10.1999. The operative part of the
directions reads as under :
?SIt
was submitted that the amount to be paid by the petitioners is
about Rs. 6,76,07,490.00 and at present under the interim
relief the amount which will be made payable in two installments
would come to only Rs.2.3 crores i.e. 1.3 crores and Rs. 1
crore. Even if the amount of bond will be taken into account which
is Rs.1.5 crores then also,the total amount would come to Rs.3.8
crores. The petitioners, therefore, must be directed to furnish a
bank guarantee and/or security for the remaining amount of
Rs. 4.46 crores as in case of failure, the petitioner would be
liable to pay the said amount. We may, however, state that
prima-facie we are satisfied that without issuance of show cause
notice, affording opportunity of hearing and without
adjudication, the petitioner could not have been asked to pay the
amount of Rs. 6.76 cores . Again, prima-facie we are satisfied
that when the petitioner unit is permitted to be converted from
EOU to EPCG, the amount of Rs.3.14 crores would be substantially
reduced, by more than Rs. 2.70 crores.. Again in our opinion, the
order passed by us would not adversely affect the interest of
revenue. ?S
The
petition is required to be decided on a limited count. It is an
admitted position that the demand was raised for payment of
differential duty amount vide communications dated 5.9.1997 and
14.10.1997, but ultimately, the said demand came to be quantified
vide communication dated 14.12.1998 at a figure of Rs.6,76,07,490/-.
The
principal case of the petitioner is that even during pendency of the
request of the petitioner before the Development Commissioner to
extend the gestation period of 12 months from the date of
re-starting of the production and before the request of the
petitioner for conversion from EOU to EPCG could be granted, the
three communications dated 5.9.1997, 14.10.1997 and 14.12.1998 came
to be issued demanding the aforesaid differential amount of duty
without issuing any show cause notice or without any adjudication
order as to the liability of the petitioner. It was, therefore,
submitted that the said three communications are required to be
quashed and set aside. In support of the submissions made, reliance
has been placed on the Apex Court decisions in the case of Metal
Forgings v. Union of India, 2002 [146] ELT 241 and Akay
Cosmetics Pvt. Ltd., 2005 [182] ELT 294. The learned
counsel appearing on behalf of the respondent authority was not in a
position to dispute the fact that no show cause notice was issued
and that, there was no adjudication fixing the liability to duty, on
the basis of which the aforesaid amount came to be demanded under
the impugned communications.
In
the case of Commissioner of Central Excise v. Akay Cosmetics
Pvt. Ltd.
(supra), the Apex Court has reiterated the earlier statement of law
in the following words :
?S[46] Lastly,
we find that the demand for differential duty for the period 1/1/1988
to 31/8/1988 without issue of show cause notice under Section 11A,
was sustainable.
[47] In
the case of Union of India & Others v. Madhumilan Syntex Pvt.
Ltd., reported in 1988 [35] ELT 349, this Court held that the demand
raised without notice was invalid. That, Section 11A clearly
proceeded to say that prior show cause notice must be issued to the
person against whom any demand on grounds of short-levy or non-levy
was proposed and, therefore, post-facto show cause notice cannot be
regarded as adequate in law.??
Applying
the well settled legal position to the facts of the case, it is
apparent that, in absence of any show cause notice and consequential
adjudication, the impugned communications dated 5.9.1997 and
14.10.1997 (Annexure ?SK?? collectively) and the letter dated
14.12.1998, cannot be permitted to hold the field. Accordingly, all
the three communications are quashed and set aside. As a
consequence, the amount paid under order dated 18.8.1999 shall be
returned to the petitioner within a period of four weeks from the
date of receipt of a certified copy of this order, without the
petitioner having to make a claim therefor. In relation to the
other prayers made, suffice it to state that, in the facts and
circumstances of the case, the Court has not thought it fit to enter
into merits of the controversy considering the fact that no show
cause notice has been issued and the said issues can be decided as
and when the same are raised in appropriate proceedings, if any.
The
petition is allowed, accordingly, in the aforesaid terms. Rule made
absolute. There shall be no order as to costs.
[D.A.MEHTA,
J.]
[HARSHA
DEVANI, J.]
parmar*
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