JUDGMENT
Amitava Lala, J.
1. The petitioners challenged a show cause-cum-demand notice under Section 11A(1) of the Central Excises and Salt Act, 1944 issued by the Collector-I, Central Excise, Calcutta-II, Collectorate, Calcutta. Under normal circumstances, Writ Courts are very slow in interfering with any show cause notice. However, this is not a show cause notice simpliciter but a show cause-cum-demand notice which is obviously derived from a reason to believe that there is a genuine cause of issuance of such notice. Whether the Writ Court will interfere or will not interfere that will depend upon various circumstances. It is well-settled by now that the Writ Courts are maintaining restraint in interfering with the disputes which are to be adjudicated by the authority wherefrom alternative remedy is available. A show cause notice may be construed as an initial stage of a process of an Executive authority. Therefore, it is needless to say that in such circumstances. Court should not interfere with the same. In a recent judgment of the Supreme Court – [Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and Ors.] the Supreme Court reiterated the constant view that there is no bar for the writ jurisdiction of the High Court in interfering with any of the disputes but if any bar exists the same is self-imposed. However, in a case of violation of principles of natural justice, fundamental right, vires or when any decision making process or decision is without jurisdiction the Writ Court should interfere with the same. This is such a case where the jurisdiction of the authority is under challenge.
2. At the initial stage, in entertaining the writ petition a Bench of this Court was pleased to take up a prima facie view about the entertainability of the writ. An interim order was passed. By the passage of time long eight years have elapsed. Parties have exchanged their affidavits. Ultimately, it has placed under the heading “old matters” and subsequently under “old adjourned matters” before this Court.
3. Mr. Abhijit Chatterjee, learned Counsel appearing for the petitioner contended that the notice dated 3rd April, 1995 is time-barred. Therefore, issuance of the same is without jurisdiction. At the relevant point of time, a period of six months for issuance of such notice when it was found that the excise duty has not been levied or paid or has been short-levied or short-paid or erroneously refunded was available to the authority. However, such period can only be extended when such levy or payment or short-levy or short-payment or erroneous refund is arising by reason of fraud, collusion or any wilful misstatement or suppression of facts or contravention of the provisions of the Act or Rules made thereunder with intent to evade payment of duty by such person or his agent.
4. Factually, the case of the Central Excise Authority is that the assessee has paid Central Excise duty on certain goods at the rate prevailing from time to time under Chapter 38 of the Central Excise Tariff. Such goods are Thinner, Tonor Crystals, Accilyte, Phosdine etc. Paints and varnishes falling under Chapter 32. According to the authority, since the aforesaid goods which are falling under Chapter 38 used together and complementary to one another the rate of Central Excise duty will be under Chapter 32.
5. Can it be said that it is a case of a suppression of material facts and/or wilful misstatement?
6. The classification lists as per the format of the excisable goods of the authority has been given and the same had duly verified by the authorities. Copies of such documents are annexed with the writ petition. Therefore, it cannot be said that the petitioners have suppressed the material facts. Hence, what is the reason to serve such notice? The only reason is to get extension of time period for five years under the proviso of Section 11A when admittedly six months period has already expired. Can it be done? According to me, in a case of fiscal statute rigid principles are to be followed. There is no scope of flexibility. There are two parts of the coin. One is evading the duty and another is unjust enrichment. Moreover, in a fiscal statute, mathematical precision is deep-rooted. When the goods are disclosed before the authority for identification and it was accordingly made how can it be said even thereafter that there was suppression of material facts or wilful mis-statement. Whether the original goods used for the purpose of making paints and varnishes will also fall under Chapter 32 or under Chapter 38 is a matter of determination. In any event, let me see what the judicial pronouncements are speaking in respect of the same.
7. Mr. Chatterjee learned Counsel appearing for the petitioners has cited judgments on four aspects of the matter. Firstly, he has taken the plea that when the demand ex facie barred, the authorities lacks jurisdiction in issuing such notice. Secondly, he took the plea that in the present circumstances the authority cannot take the benefit of proviso. Thirdly, he contended qualification list has already made. Lastly, he has taken the plea that mere mechanical reproduction of the Section under the Act cannot make a substantial ground of show cause unless a case made out to that extent.
8. (Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District I, Calcutta and Anr.) a five Judges’ Bench of the Supreme Court held that it is well settled that High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction to avoid lengthy proceedings and unnecessary harassment. (East India Commercial Co. Ltd., Calcutta and Anr. v. Collector of Customs, Calcutta) it was held that if on a reading of the notice, it is manifest that on the assumption that the facts alleged or allegations made therein were true, none of the conditions laid down in the specified sections was contravened, the respondent would have no jurisdiction to initiate proceedings pursuant to that notice. He further cited 1993 (68) E.L.T. 28 (M.P.) (Godrej Foods Ltd. v. Union of India) being a judgment of the Madhya Pradesh High Court which also deals with the self-same Section 11A of the Central Excise Act. The Division Bench of the Madhya Pradesh High Court said it is clear that for applying Section 11A of the Act in the case i.e. for applying the proviso to extend the limitation to five years it is necessary for the Excise Authorities to establish that the duty of excise had not been levied or paid or short-levied or short-paid by reason of either fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act or Rules made thereunder, with intent to evade payment of duty. It is also clear that a mere mechanical repetition of the language of the provision in the show cause notice would not confer jurisdiction on the Collector of Central Excise to issue a show cause notice under Section 11A of the Act beyond the period of six months taking advantage of the proviso to the Section.
9. Ratio of (Collector of Central Excise v. Chemphar Drugs & Liniments) is similar to the situation hereunder. The only difference is the availability of the exemption under different notifications etc. The Supreme Court held that exemption under Notification Nos. 71/78-C.E., and 80/80-C.E. is available if the total value of clearances of all the excisable goods did not exceed a specified limit. The assessee while claiming exemption in respect of Patent and Proprietary medicines falling under Tariff Item 14E did not indicate in the declaration the value of clearances of exempted goods falling under Tariff Item 68. But according to Revenue it was necessary to do so. Accordingly the extended period of limitation of five years as provided in Section 11A was invoked by the Department. Assessee produced Classification List duly approved by Excise Authorities and Survey Registrar showing visit of excise officer to the factory hence the Department had full knowledge of fact about the manufacture of all goods. The value of clearance of exempted goods was not indicated under the belief that it was not enquired to be indicated. The case for wilful mis-statement, suppression of facts or contravention of any provisions of the Act, is not sustainable and period of limitation available to the Department under Section 11A of the Central Excises and Salt Act is only six months and not five years. From 1989 (43) E.L.T. 195 (S.C.) (Padmini Products v. Collector of Central Excise) I find again that the Supreme Court held that for invoking extended period of five years limitation duty should not had been paid, short-levied or short-paid or erroneously refunded because of either any fraud, collusion or wilful mis-statement or suppression of material facts or contravention of any provision of the Act or Rules made thereunder are essentially ingredients. These ingredients postulate a positive act, therefore, failure to pay duty or take out a licence is not necessary due to fraud or collusion or wilful misstatement or suppression of facts or contravention of any provisions of the Act. Likewise suppression of facts is not failure to disclose the legal consequences of a certain provision.
10. In a further case (Pushpam Pharmaceuticals Company v. Collector of C. Ex., Bombay) it was held that Section 11A empowers the department to reopen proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of course the context in which it has been used indicates otherwise. A perusal of the proviso indicates that it has been used in company of such strong words as fraud, collusion or wilful default. In fact, it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render its suppression. So far as Classification List which has already been given in (Tata Iron & Steel Co, Ltd. v. Union of India and Ors.) it is held in paragraph 7 therein as follows :
“In fact, it is common ground that right from 1962 the appellant was filing classification lists containing the description of the items and showing them as liable to the payment of excise duty only under Item No. 26AA(ia) and these lists were accepted and approved by the excise authorities. In these circumstances, we fail to see how it could be said that the appellant was guilty of any suppression or misstatement of facts or collusion or violation of the provisions of Central Excise Act as contemplated under the proviso to Section 11A of the said Act. In view of this, the period of limitation would clearly be only six months prior to the service of the show cause notice. The demand for excise duty against the appellant on the said composite units under Item No. 68 of the Excise Tariff, to the extent that it exceeds the period of six months prior to the service of the show came notice must, therefore, be struck down”.
11. As against such submissions, Mr. Samir Sengupta learned Senior Counsel appearing on behalf of the Union of India, contended before this Court that the impugned notice cannot be said to be vague. A brief fact of the case is given there. However, from the very beginning of the brief facts I find that the same is reproduction of show cause notice of the self-same issue that payment of duty under Headings being 38.14 and 38.23 as accepted by the Excise Authority will not be appropriate and Chapter Headings 32.08 and 32.09 will be appropriate. Therefore, it is unknown to this Court how the same can be treated as “wilful misstatement” and “suppression of facts”. When the fact submission is incorrect legal submission cannot be substantiated on the basis of such wrongful submission. He has drawn my attention to the interim order passed by a Bench of this Court on 28th April, 1995. There I do not find that any such point on the part of the respondents was accepted by such Court. On the other hand, Court was pleased to take a prima facie view in favour of the petitioners. However, now the Court heard the writ petition finally. Learned Counsel wanted to put emphasis on the first two lines of the interim order by saying that the writ petition is directed against a show cause notice dated 3rd April, 1995. Reply is to be filed within thirty days. Therefore, Court should direct to do so. I am sorry to say that this is not so. Court has recorded the submissions to come to an appropriate conclusion by recording the same. Court wanted to say that thirty days time was given under the notice to give reply. Further, he relied upon two judgments. One is reported in 1999 (111) E.L.T. 8 (S.C.) (Todi Inds. Ltd. v. Union of India) and Anr. is (Union of India and Ors. v. Metal Box Co. of India Ltd. and Ors.). Possibly by citing first judgment he wanted to say where forum for alternative remedy is available the same cannot be interfered by the Writ Court. Even in the next judgment he has taken the similar plea that non-exhaustion of alternative remedy is a good ground for refusal of order under Article 226 of Constitution of India because it is premature application. When a notice of demand of excise duty involving the valuation of excisable goods is made entertaining of writ petition straightaway against such notice is not advisable.
12. As against this, the learned Counsel appearing for the petitioner on the strength of (L Hirday Narain v. Income-tax Officer, Bareilly) contended that when the High Court entertaining the writ petition gave an opportunity of hearing on merits, the writ petition cannot therefore, be rejected on the ground that statutory remedy was not availed of.
13. From the very beginning I have observed when the opportunity of the writ petition can be availed of and when it cannot. The writ petition is made challenging the very foundation of the show cause-cum-demand notice. Therefore, when the very foundation is not available on what ground the alternative forum will proceed is unknown to this Court. Assuming for the moment, if I accept the argument of Mr. Sengupta on the ground of alternative remedy I have to hold that prima facie there is a case of the authority to go into it for the purpose of investigation. But when law prohibits the authority on the basis of the time-barred notice by extending the scope without any foundation and Supreme Court and High Courts repeatedly held that such type of notice is bad, it cannot be said that Mr. Sengupta’s argument has proceeded towards the true perspective. Therefore, such argument of alternative remedy cannot be accepted at all irrespective of the facts whether the same can or cannot be taken up after entertaining the same at the final stage. That apart, Supreme Court and High Courts on numerous occasions held as above that when six months period will be available for the authority and when the period can be extended for five years. Even two or three such cases placed before this Court are factually similar and the words “suppression of the facts” or “wilful misstatement” are the subject matters. I cannot deviate from such ratio following the same taking an independent view as I have observed at the very beginning of the judgment.
14. Therefore, taking into totality of the matter I am of the view that writ petition should be succeeded and accordingly succeeds. Interim order passed hereunder stands confirmed. Accordingly, the writ petition is disposed of. However, no order is passed as to costs.
15. Prayer for stay is made, considered and refused.
16. Xeroxed certified copies of this judgment will be supplied to the parties within seven days from the date of putting requisites for drawing up and completion of the order and certified copy of this judgment.