Whether issuance of second SCN regarding recovery of dues and penalty before adjudicating the first SCN regarding confiscation of goods legal?

PJ/Case Laws/2012-13/1370

Case:-JAY KUMAR LOHANI Versus COMMISSIONER OF CENTRAL EXCISE, INDORE

Citation:-2012 (28) S.T.R. 350 (M.P.)

Issue:- Whether issuance of second SCN regarding recovery of dues and penalty before adjudicating the first SCN regarding confiscation of goods legal?

Brief facts:-By this petition under Article 226/227 of the Constitution of India, the petitioners have challenged the show cause notice dated 6-1-2012 issued by the first respondent Commissioner invoking provisions of Section 11A of the Central Excise Act, 1944 (for short, the Act). By the impugned notice, the petitioners have been asked to show cause as to why excise duty and penalty as mentioned in the said notice should not be jointly and severally demanded and recovered from them by invoking extended period of 5 years.
According to the petitioners, prior to issuance of the impugned show cause notice the respondents had issued a notice dated 19-8-2011 on the basis of the same allegations which have been levelled in the impugned notice, calling upon the petitioners to show cause as to why the goods seized (branded manufactured tobacco, branded roasted cut supari and unbranded roasted cut supari) be not confiscated and penalty for the same be not imposed. It is stated by the petitioners that a reply to the said earlier show cause notice dated 19-8-2011 was submitted by them on 21-11-2011 and before taking any decision in respect of the said earlier show cause notice, by pre-judging the issue involved in the matter the Commissioner Central Excise has issued the impugned show cause notice dated 6-1-2012 about recovery of duty and penalty.

Appellant’s contention:- The learned counsel for theappellant contended that the Commissioner has pre-judged the issue and therefore, submission of reply to the impugned show cause notice would be futile. In the circumstances he submitted that the interference at the stage of show cause notice is called for and the reliefs claimed in the petition deserves to be granted. In support, he placed reliance on the judgment passed by High Court of Madras in the case of Madurai Metal Industries v. Union of India [1991 (52) E.L.T. 495 (Mad.)] and on the judgment passed by the Supreme Court in the case of ORYX Fisheries Private Limited v. Union of India [2011 (266) E.L.T. 422 (S.C.)]. He submitted that either the show cause notice be quashed or an order be passed prohibiting the Commissioner from proceeding further with the impugned show cause notice till the final adjudication of the question involved in earlier show cause notice which is regarding validity of the seizure, the proposed confiscation and the excisability of the goods in question. The petitioners also placed reliance on the judgment of Padmini Products v. Collector of Central Excise [1989 (43) E.L.T. 195 (S.C.)] in which the question as to whether the provision of extended period of 5 years is applicable to the petitioners’ case or not can be very well raised.

Respondent’s contention:- The respondent placed reliance on the decision given by theSupreme Court in the case of Standard Chartered Bank & Ors. v. Directorate of Enforcement & Ors. (AIR 2006 SC 13011 = 2006 (197)E.L.T. 18 (S.C.)

Reasoning of judgment:-The contention raised by learned counsel for the petitioners that before deciding the objections raised in reply to the earlier show cause notice dated 19-8-2011, the impugned show cause notice dated 6-1-2012 could not have been issued by the first respondent is wholly misconceived. Learned counsel for the petitioners could not point out any legal provision requiring the authorities to first adjudicate the notice issued regarding confiscation and then only they could have issued the impugned show cause notice regarding recovery of dues and penalty. In the circumstances, having regard to the fact that it is not a case of prejudging of the issue and that it is not a case of the show cause notice being without jurisdiction, we find no case for making interference in the show cause notice. It is very clear from the impugned show cause notice dated 6-1-2012 that only a prima facie view has been expressed in regard to the allegations about wilful suppression of the facts of manufacture and clearance of branded manufactured tobacco and roasted cut Supari. In the circumstances the show cause notice which has been challenged in this petition cannot be labelled to have been issued after pre-judging the question involved in the matter. Therefore, the judgments on which reliance has been placed by the learned counsel for the petitioners are of no help to the petitioners as the language employed in those show cause notices is quite different from the impugned show cause notice.
It was further held that the petitioners can put forward their representations against the impugned show cause notice before the Commissioner and it is for the Commissioner to decide the relevant aspects while deciding whether to impose or not to impose the duty and penalty on the petitioners. It is also clear from the scheme of the Act that after the decision being taken by the Commissioner, it is appealable before the authorities established under the Act. Having regards to this, we see no justification for issue of a writ of prohibition restraining the authority from proceeding further with the impugned show cause notice. As observed it is for the petitioners to put forward their defenses as may be available to them before the Commissioner and pursue him in accordance with law.
In the circumstances, having regard to the fact that it is not a case of prejudging of the issue and that it is not a case of the show cause notice being without jurisdiction, we find no case for making interference in the show cause notice. Accordingly, the writ petition is hereby dismissed.

Decision:-Petition dismissed

Comment:-The analogy drawn from this case is that when it is not ascertainable from the language of the show cause notice that the issuing authority has pre-judged the issue, the issuing authority cannot be prohibited from proceeding further in the case. The appellant had misconceived the facts and applied for writ petition wherein there was no provision in law in respect of appellant’s contentions.

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PJ/Case Laws/2012-13/1370

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