JUDGMENT
Pendse, J.
1. By this petition filed under Articles 226 and 227 of the Constitution, the petitioners re challenging issuance of six show cause-cum-demand notices dated February 20, 1985, February 28, 1985, March 12, March 13, March 19 and March 31, 1985. By these six show cause notices, the petitioners were called upon to explain why excise duty short levied of the total value of Rs. 1,17,81,766.84 should not be recovered in accordance with Section 11A(i) of the Central Excises and Salt Act, 1944 (hereinafter referred to as the ‘Act’). The facts which gave rise to the issuance of the show cause notices by the Superintendent of Central Excise, Telco Pimpri Range, Pune, are not in dispute, but are required to be set out briefly to appreciate the grievance of the petitioners.
2. Petitioner No. 1 is a company registered under the Indian Companies Act, 1913 and carries on business of manufacture of motor vehicles at its factory at Pimpri, Pune Dist. The petitioners manufacture chassis of motor vehicles. The motor vehicles are excisable goods subject to duty of excise under Tariff Item No. 34 of the First Schedule to the Act. Explanation I to Tariff Item No. 34 provides that expressions “motor vehicle”, “tractor” including “agricultural tractor” and “trailer” shall include a chassis. The petitioners opted for self-removal procedure under Chapter VII-A of the Act after the Central Government declared by notification that the said procedure would apply to excisable goods as are notified by the Central Government. Rule 173B provides that every assessee shall file with the proper officer for approval a classification list inter also setting out the value and description of all goods and trade discount, if any, allowed in respect thereof to the buyer along with such other particulars as the Central Board of Excise & Customs or the Collector may specify. The proper officer is required to approve the price list under sub-rule (3) of Rule 173C and, thereafter, the value disclosed in the price list is considered the correct value for the purpose of assessment as provided under Section 4 of the Act.
3. The petitioner company filed the classification list effective from March 1, 1984 in respect of motor vehicles manufactured and the classification list was duly approved by the Superintendent of Central Excise on April 10, 1984. In the said classification list, the description of excisable goods is as follows :-
“TATA Diesel Model 1210 SE/42 Chassis with 6 Tyres size 9.00 x 20 – 12 PR Rayon Standard Highway Tyres, 7 Wheel Rims Size 7.00 x 20 GBC-30 Gear Box Ring Carrier Piston Engine exhaust brake and fail safe brake.”
The company also filed price list effective from April 5, 1984 in respect of motor vehicles falling under Tariff Item No. 34 and the price list was duly approved. In the prices list, the description on excisable goods is as follows :-
“CI Tata Diesel Chassis 1210 SE/42 fitted with 7 wheels size 7.00 x 20 and 6 nos. 9.00 x 29 – 12PR, Standard Highway Rayon Tyres GBC-30 Gear Box Ring Carrier Piston, Engine Exhaust Brake, Fail Safe Brake G1 Sr. No. 29.”
The price list had an enclosure showing the list of additional charges/deletion allowance, as the case may be. The enclosure sets out tyres of different descriptions and the supply of tyres is subject to additional charges for deletion allowance is that if a customer wants to buy motor vehicles chassis only with four tyres i.e. two tyres less than the standard fitment of six tyres, then the price of the chassis would be less to the extent of two tyres. The price list along with the enclosure was duly approved by the officer and the petitioners cleared the chassis from time to time after payment of requisite excise duty. There is no dispute that the duty was paid by calculating the assessable value by taking into consideration the value of four tyres when the chassis was cleared only with four tyres instead of six tyres.
4. The Superintendent of Central Excise served show cause notice dated February 20, 1985 on the company claiming that the assessee has short-paid duty of Rs. 29,95,769.55 for the period from August 1, 1984 to November 30, 1984 because of not taking into consideration the value of motor vehicle chassis according to the given specification in the classification list i.e. with six tyres but instead the value was assessed by taking into consideration the value of motor vehicle chassis with four tyres only and, consequently, the assessee is liable to pay duty on differential value in accordance with the annexure to the show cause notice. The Superintendent also served five more notices in respect of period commencing from January 1, 1980 and ending with March 31, 1981 on identical grounds. The petitioner company was called upon to show cause to the Collector of Central Excise, Pune, and in support of the claim of the department, reference was made to the copy of letter dated February 1, 1985 from the Automotive Research Association of India. The said letter claims that the Association has studied the specification of Tata vehicle and confirm that six tyres would not be adequate to meet the specification. The company sent reply dated April 11, 1985 claiming that the show cause notices are issued without jurisdiction and there is no question of any short payment of duty as claimed by the Department. The Collector declined to drop the proceedings after receipt of the reply and that gave rise to the filing of the petition to challenge the legality of the show cause notices.
5. Mr. Andharujina, learned counsel appearing on behalf of the petitioners submitted that the issuance of the show cause notices by the Excise authorities is clearly without jurisdiction and is an abuse of the power vested in the department. The learned counsel urged that out of the six show cause notices, five are clearly time-barred as the department has not even referred to the proviso to sub-section (1) of Section 11A which extends the period during which show cause notice could be served. The learned counsel urged that save and except show cause notice dated February 20, 1985, other notices are clearly barred by limitation as prescribed under sub-section 11A of the Act. Mr. Andharujina further submitted that even the show cause notice dated February 20, 1985 is totally unsubstainable because it is open for the department to claim that the assessable value of the motor vehicle chassis should be loaded with the value of two tyres when admittedly, motor vehicle chassis with four tyres were cleared from the factory gate. It was contended that for determination of value under Section 4 of the Act, the value of the excisable goods i.e. motor vehicle chassis fitted with four tyres are only to be taken into consideration and not the value on a notional or unreal basis of motor vehicle chassis fitted with six tyres. The learned counsel submitted that the show cause notice merely claims that the assessable value should be loaded with the value of two more tyres by reference to the description given in the classification list and that is totally illegal.
Mr. Desai, learned counsel appearing on behalf of the respondents, on the other hand, urged that the petition filed by the company should not be entertained by stifling the investigation by the Collector of Central Excise. Mr. Desai urged that the writ Court should not exercise jurisdiction and deprive the departmental authorities from examining whether the assessable value of motor vehicle chassis should be loaded with the value of two more tyres. The learned counsel urged that exercise of jurisdiction under Article 226 of the Constitution at this juncture is uncalled for. On merits, Mr. Desai did not dispute that motor vehicle chassis were cleared from factory gate by fitment of four tyres only and the company had paid duty by assessing the value of the chassis along with the value of four tyres. It is not the claim of the department that the company is manufacturing tyres. Mr. Desai referred to the return filed by Pratap Wankhedkar, Assistant Collector of Central Excise, Pune, and sworn on August 28, 1985, to urge that the claim of the department that the assessable value of motor vehicle chassis must be determined with reference to what has been given under the column of specification in the classification list. Mr. Desai very frankly did not support the issuance of show cause notices other than one issued on February 20, 1985 for the period commencing between August 1, 1983 and November 30, 1984.
6. Before adverting to the validity of the show cause notice dated February 20, 1985, which is admittedly within the stipulated period prescribed under sub-section (1) of Section 11A, it is necessary to dispose of the challenge to the remaining five show cause notices. Section 11A of the Act prescribes for recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. Sub-section (1) prescribes that when any duty of excise has not been levied or paid or has been short-levied, then the officer may require the assessee by show cause notice served within six months from the relevant date to show cause why such short-levied duty should not be recovered. The proviso to sub-section (1) enables the officer to serve notice within a period of five years from the relevant date when the duty is not levied or short-levied by reason of fraud, collusion or any wilful mis-statement or suppression of facts. It is not the claim of the department and none of the show cause notices even whisper about short-levied duty by reason of fraud, collusion or any wilful mis-statement or suppression of facts by the company. It is, therefore, obvious that five show cause notices which are in respect of period covered from January 1, 1980 and ending with March 31, 1981 are hopelessly barred by rule of limitation. These five notices are issued between February 28, 1985 and March 31, 1985 i.e. long after the period of six months from the relevant date had expired. Mr. Desai, therefore, very rightly did not support these five show cause notices and consequently, the same are required to be struck down.
7. That leaves for consideration the show cause notice dated February 20, 1985 and when the levy of short duty is alleged for the period commencing from August 1, 1984 to November 30, 1984. Mr. Desai submits that the department should be permitted to continue with the proceedings commenced with the service of show cause notice and the High Court should not examine the validity of the show cause notice at this juncture. It was urged by the learned counsel that the department should be left to determine the question of facts which are required to be examined to ascertain whether the duty was short-levied. It is not possible to accept the submission of the learned counsel that the High Court cannot entertain petitions under Article 226 of the Constitution to examine the validity of show cause notice is issued without any jurisdiction or the show cause notice cannot be sustained by reference to any of the provisions of law, then the High Court is entitled to strike down the showcase notice and it is not necessary to compel the assessee to undergo cycle of litigation before the Excise authorities. It would be appropriate, in this connection, to make reference to decision of the Supreme Court in Calcutta Discount Co. v. I.T. Officer . While examining the provisions of Section 34 of the Income-tax Act, 1922, the Supreme Court observed that to confer jurisdiction under Section 34 of issue notice in respect of assessment beyond the period of four years from the end of the relevant year, the Income-tax Officer must have reason to believe that income, profits or gains chargeable to income-tax have been under-assessed and he must have also reason to believe that such under assessment has occurred by reason of omission or failure on the part of an assessee to disclose fully and truly all material facts. The Supreme Court then observed that if the fact does not disclose the existence of the relevant requirements, then it must be concluded that the Income-tax Officer had no jurisdiction to issue such notices. The Supreme Court examined this aspect in the case of East India Commercial Co. v. Collector of Customs . Subba Rao, J. as he then was, speaking for the majority while examining the jurisdiction to issue notice under Imports and Exports (Control) Act, observed :-
“If on a reading of the said 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 respondents would have no jurisdiction to initiate proceedings pursuant to that notice. To state it differently, if on a true construction of the provisions of the said two sections the respondent has no jurisdiction to initiate proceedings or make an inquiry under the said sections in respect of certain acts alleged to have been done by the appellants, the respondent can certainly be prohibited from proceeding with the same.”
It is, therefore, well-settled that a writ of prohibition can be issued by the High Court if the fact disclosed in the show cause notice clearly indicates that the officer issuing the notice lacks jurisdiction to commence the proceedings. Mr. Desai referred to the decision of the Division Bench of this Court in Garware Plastics and Polyster Ltd. v. Union of India [1986 (24) ELT 449] but in our judgment the said decision has no relevance whatsoever to the question as to whether the High Court can exercise jurisdiction when the show cause notice is issued without any jurisdiction. In our jugment the objection of Mr. Desai that the petition should not be entertained is, therefore, required to be turned down.
8. The impugned show cause notice dated February 20, 1985 claims that the assessee has short-paid the duty because of not taking into consideration the value of the motor vehicle chassis according to given specification in the classification list. The gravemen of the charge is that the classification list sets out the specification in which reference is made to fitment of six tyres, but instead of taking into consideration the value of six tyres along with the value of the chassis, the assessable duty is determined by taking into consideration the value of only four tyres. The show cause notice claims that even though the assessee has cleared the chassis with four tyres, merely because the specification in the classification list refers to six tyres, the assessable value is required to be loaded with the value of two more tyres. On the undisputed facts of the company had cleared chassis only with four tyres, the question for determination is whether the department can claim that the assessable value of the chassis should be loaded with the value of two more tyres. In our judgment, the claim of the department in this connection, is totally unsustainable. Mr. Andharujina pointed out that several customers while purchasing the chassis request that the chassis should be supplied with four tyres and not six. The learned counsel invited our attention to copy of the letter sent by one of the customers and which is annexed as exhibit ‘K’ to the petition. It is not in dispute that indeed the company had cleared from the factory-gate are motor vehicle chassis with four tyres, still the assessable value should be determined by taking into consideration the value of six tyres instead of four tyres ? In our judgment, the department cannot do so. The petitioner-company was entitled to self-removal procedure in accordance with Chapter VII-A of the Act and the provisions of Rule 173A are attracted. The petitioners had filed the classification list as well as the price list and the annexure to the price list leaves no manner of doubt that the company had indicated that the additional charges/detection allowance would be permitted in accordance with the demand of the customer. There are several items in the annexure which establish that the customer is not bound to accept each of the items and consequently, while determining the assessable value of the motor vehicle chassis, value will differ in accordance with the demand for different items set out in the price list by the company. In our judgment, when the chassis are cleared with four types, then it is not permissible; for the Excise authority to claim that the assessable value of motor vehicle chassis should be fixed by taking into consideration the value of six tyres only, because the specification given in the classification list indicated that the chassis can be supplied with six tyres. It is not for the Excise authorities to determine whether the customer should purchase the chassis with four tyres or sixty tyres and the liability of the company to pay excise duty depends upon what actually was cleared at the factory-gate and not on hypothetical basis as what should have been cleared with reference to the classification list. Mr. Desai made faint attempt to urge that once the company opted for self-removal procedure and filed a classification list and price list, then motor vehicle chassis should be supplied in every case with six tyres and even if such chassis is supplied with four tyres, still the assessable value should be loaded with the value of two more tyres. It is impossible to acceded to the submission. A plain; reading of Rule 173B(1)(a) indicates that the classification list filed by the company is in respect of goods manufactured and intended to be removed from the factory. The expression “intended to be removed from factory” clearly establishes that there is no compulsion or obligation on the manufacturer to clear the goods in accordance with the specification referred to in the classification list. It is always permissible and open for the manufacturer to clear the goods by supply of articles less than referred to in specification in the classification list and in such cases, the assessable value would be only that which is the value of the goods cleared at the factory-gate. In our judgment, the issuance of show cause notice dated February 20, 1985 in these circumstances, is entirely without jurisdiction and the assumption of the department that the duty was short-levied is unsustainable. In these circumstances, it is necessary to strike down even the show cause notice dated February 20, 1985.
9. Accordingly, petition succeeds and rule is made absolute in terms; of prayer (a) and all the impugned to show cause notices are struck down. In the circumstances of the case, there will be no order as to costs.