M/s Excellent Gravure Industries Ltd. V. Deputy Commissioner, Central Excise, Guwahati

WP(C)/5638/2007

AI Insights

The case involves M/s Excellent Gravure Industries Ltd., which challenged an order by the Deputy Commissioner of Central Excise, Guwahati, demanding payment of Rs.4,16,302 as CENVAT, along with interest and penalties under the Central Excise Act. The petitioner argued that there was no suppression of facts regarding the receipt of insurance claims for damaged inputs, and thus, the extended period of limitation invoked was inappropriate. The respondents contended that the writ petition was not maintainable as the order was appealable under the statute, and the petitioner had not exhausted the available statutory remedies. The court dismissed the writ petition, emphasizing the need to exhaust alternative remedies and finding no breach of natural justice.

• Counselvise Citation: [2007] 140 COUNSELVISE.COM (IT) 801633 (HC-GUWAHATI)
• Appeal Type: Others
• Pronouncement Date: 05-07-2007
• Assessment Year: misc
• Other Referred Cases: Thansingh Nathmal and others -vs- The Superintendent of Taxes, Dhubri and others, Assistant Collector of Central Excise, Chandan Nagar, West Bengal -vs- Dunlop India Ltd. and others, HB Gandhi, Excise and Taxation Officer-cum-Assessing Authority, Karnal and others -vs- M/s Gopinath & Sons and others, Whirlpool Corporation -vs- Registrar of Trade Marks, Mumbai and Ors., Sarabhai M. Chemicals -vs- Commissioner of Central Excise, Vadodara, Binoy Sarma -vs- Life Insurance Corporation of India and Ors., Raja Kakati -vs- Union of India and Ors., Manager, Borsapori Tea Estate & Another -vs- Addl. Deputy Commissioner, Golaghat and another, M/s Upar Assam Tea Industries -vs- Union of India & Ors.
• Laws Referred To: Central Excise Act, 1944, Central Excise Rules, 2002, CENVAT Credit Rules
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: AK BORA
• Assessee Lawyers: M HAZARIKA; S K KEJRIWAL
• Keywords: Central Excise Duty; CENVAT credit; Extended Period of Limitation; Interest; Penalty
• Section: 11AB; 11AC; 11A(1)

Judgement Text

"WP(C) 5638/2007 BEFORE HON’BLE MRS. JUSTICE ANIMA HAZARIKA JUDGMENT AND ORDER Challenge in this writ petition is made against the order No.06/CEX/TECH -1/ACG/2007 dated 5.7.2007 passed by the Deputy Commissioner, Central Excise, Gu wahati, relevant portion of which is quoted hereunder;- ORDER Having regard to my discussion and findings recorded in the preceding paragraphs , 1) I confirm the demand of Rs.4,16,302/- (CENVAT) by invoking exten ded time limit in terms of the first proviso to section 11A(1) of the Act. 2) Interest at appropriate rate in terms of Section 11 AB of the Ac t on the above amount of duty demanded should be paid forthwith. 3) Penalty of Rs.4,16,302/- is imposed under Section 11AC of Centra l Excise Act read with Rules 25 of the Central Excise Rules, 2002. If the Noticee pays the duty of Rs.4,16,302/- and the interest thereon u nder Section 11AB within thirty days (30) from the date of communication of the order, the penalty liable to be paid by such Noticee under Section 11AC shall be twenty-five percent of the duty so determined provided the penalty also been pa id within thirty days (30) from the communication of the order. ( A.K. Mandal ) Deputy Commissioner C.No.V(15)08/Adj/Tech-I/ACG/2006 Dated:6.7.07 By registered Post M/s Excellent Gravure Industries Ltd. Industrial Area, Ghy-16 ( A.K. Mandal ) Deputy Commissioner 2. Perusal of the aforesaid order dated 5.7.2007 would reveal that the same was preceded by a demand-cum-show cause notice issued to the petitioner by the same authority on 27.10.2006. The said notice was replied to by the petitioner a nd the petitioner was admittedly afforded personal hearing by the authorities. T hereafter, the impugned order dated 5.7.2007 was passed. 3. I have heard Ms. M Hazarika, learned Senior counsel assisted by Mr. SK K ejriwal, learned counsel appearing for the petitioner. Also heard Mr. AK Bora, l earned Central Govt. Counsel appearing for the respondents. 4. During the course of argument strong objection has been raised on behalf of the respondents assailing the maintainability of the writ petition on the gr ound of non-exhausting the remedy available under the statute. Mr. Bora, learned Central Govt. Counsel has submitted that a bare perusal of the order would show that the order under challenge is an appealable order and there is absolutely n o whisper by the petitioner as to why the appellate remedy provided under the st atute has not been availed of by the petitioner. 5. In support of his submission, Mr. Bora has relied upon the following dec isions; i) AIR 1964 SC 1419 (Thansingh Nathmal and others -vs- The Superint endent of Taxes, Dhubri and others) ii) AIR 1985 SC 330, Assistant Collector of Central Excise, Chandan Nagar, West Bengal -vs- D unlop India Ltd. and others. iii) 1992 Supp (2) SCC 312 (HB Gandhi, Excise and Taxation Officer-cu m-Assessing Authority, Karnal and others -vs- M/s Gopinath & Sons and others) 6. As a decision regarding the preliminary point of maintainability of this writ petition demands precedence over the controversy of the facts delving on t he merits, at this stage, it is not necessary for this Court to recite in detail the facts set forth in the pleadings. Nevertheless for the sake of clarity a sy nopsis of the facts as gathered from the pleadings of the parties is narrated he reinbelow: The petitioner is a Public Limited Company incorporated under the Compan ies Act 1956, having its registered Office and factory at Kalapahar Industrial A rea (CITI CAMPUS), Gopinath Nagar, Guwahati. The petitioner carries on the busin ess of manufacture and sale of Flexible Laminated Film. The Flexible Laminated Film manufactured by the petitioner falls under s ub heading No. 3902 6911 of the Central Excise Tariff Act, 1985 and the petition er is liable to pay Central Excise duty on the said finished products at prevail ing rate. The petitioner is also entitled to avail CENVAT credit under the CENVA T Credit Rules. The petitioner has all along been claiming CENVAT credit and uti lizing the same in the manner provided by law and all claim and utilization of C ENVAT credit has been done by the petitioner under the full knowledge and guidan ce of the authority. On 30.10.06, a Demand-cum-Show Cause Notice being C.No. V(15) 08/ADJ/Tec h-1/ACG/2006/14153 was issued by the Deputy Commissioner, Central Excise, Bhanga garh, Guwahati invoking the extended period of limitation under the first provis o to Section 11 A (1) of the Central Excise Act, 1944 (’Act’ for short). By the said show cause notice, it was alleged that the petitioner evaded payment of Cen tral Excise duty amounting to Rs.4,16,302/- (Cenvat) and Education Cess amountin g to Rs.8,326/- during the months of April, 2003 and July, 2004 by suppressing m aterial facts to the department that the petitioner has received insurance claim on damaged Cenvatable inputs, thereby contravened the provisions of Rule 3 (4) of the CENVAT Credit Rule, 2004 and Rules 4, 5, 6, 8 and 11 of the Central Excis e Rules, 2002, inasmuch as, the petitioner/Noticee has proportionately availed a nd utilized Cenvat credit on the damaged inputs against 4616.90 kgs of Metalised polyester, 89 kgs AI fril, 965.20 kgs of Pet Film, 7912.2 kgs of Polythene Film , 1652.8 kgs of P film and 8572.10 kgs of Flexible Polyfilm, during the period S eptember, 2003 to June, 2004, which was damaged by flood on 14.7.2004. The propo rtionate duty involvement in these inputs came to be Rs.3,91,461/- (Cenvat). The Insurance Company has informed the department about the claim made by the Notic ee regarding the damage of quantity of inputs in process. The estimated value of the raw materials in process which can be termed as removed as such came up t o be Rs.1,55,256/- whose duty liability would be Rs.24,841/- (Cenvat). The depar tment has not been informed about the losses occurred during calamity (flood) by the Noticee. Rather the assessee submitted the claim to the National Insurance Company for compensation of the damaged inputs. The National Insurance Company v ide letter dated 6.4.2006 also confirmed the payment of the claim to the assesse e. The petitioner replied to the above notice and specifically stated that nothing was suppressed from the revenue department and the fact that even the ca lamity was due to the sudden flood was known to all and it was also reported in the newspapers. Therefore, a claim was lodged to the Insurance Company. Accordin gly, the Surveyor assured the loss and the Insurance Company paid an amount of R s.24,54,000/- against their claim. It was thus contended that no question of sup pression arises, inasmuch as, stock register of the company was verified by the revenue authorities and they had full knowledge of the damaged inputs and thus, in the background of the above facts and circumstances, invoking the extended pe riod under Section 11A of the Act does not arise. Thereafter, a personal hearing was afforded to the petitioner, wherein t he petitioner reiterated the stand taken in the show cause reply. But the petiti oner alleges that without considering the same the impugned order dated 5.7.2007 was passed which is under challenge in this writ petition. 7. Based on the aforesaid facts, now the Court shall proceed to take up the issue of maintainability as raised by Mr. Bora, learned counsel appearing for t he respondents, Ms. Hazarika, learned Senior counsel appearing for the petitione r has submitted that the High Court, having regard to the facts of the case has a discretion to entertain or not to entertain a writ petition. The alternative r emedy has been consistently held by the Supreme Court not to operate as a bar in at least the following contingencies, viz. (i) where the writ petition has been filed for enforcement of any of the fundamental rights or (ii) where there has been violation of principles of natural justice or (iii) where the order or the proceedings are wholly without jurisdiction or the vires of the Act is challenge d. Ms. Hazarika has further submitted that in the instant case, there being no w illful suppression of fact with intention to evade duty warranting invocation of the extended period of limitation on the part of the petitioner, the show-cause notice and the impugned order dated 5.7.2007 passed consequently is bad in law and is liable to be set aside and quashed, more so, when the authorities have co nfirmed the demand and imposed penalty without first establishing willful suppre ssion to evade payment of Central Excise duty on the part of the petitioner. 8. In support of her submission on the point of maintainability, Ms. Hazari ka has placed reliance on the following decisions; i) (1998) 8 SCC 1, Whirlpool Corporation -vs- Registrar of Trade Marks, Mumbai and Ors. ii) (2005) 2 SCC 168, Sarabhai M. Chemicals -vs- Commissioner of Central Excise, Vadodara iii) 2007 (3) GLT 832, Binoy Sarma -vs- Life Insurance Corporation of India and Ors. iv) 2007 (2) GLT 312 Raja Kakati -vs- Union of India and Ors. v) 1995 (1) GLT 120, Manager, Borsapori Tea Estate & Another -vs- A ddl. Deputy Commissioner, Golaghat and another. vi) The judgment and order dated 9.8.2007 passed in WP(C) No.458/200 2, M/s Upar Assam Tea Industries -vs- Union of India & Ors. 9. It is true that the power to issue prerogative writs conferred on the co urt under Article 226 of the Constitution of India is plenary in nature and is n ot limited by any other provision of the Constitution. However, notwithstanding this wide power granted on writ courts, certain self regulatory restrictions on exercise of power to issue such prerogative writs including the writ in the nat ure of Certiorari have been imposed by precedents. It is a rule of law that unde r ordinary circumstances a litigant is to mandatorily avail the alternative reme dy available to him under normal course of law before approaching the High Court on the writ side. For efficacious alternative remedy for redressal of grievance if available to an aggrieved person, the remedies under Article 226 of the Cons titution of India will not be normally available. It is true that the rule of ex clusion of writ jurisdiction on the ground of availability of alternative remedy does not operate as an absolute bar for entertaining a writ petition. The writ remedy being largely dependent on the rule of discretion and equity; heavy burde n lies on the writ petitioner to convincingly establish before the court that th e alternative remedy is either not attracted or the same even if available is no t efficacious. There are other grounds such as flagrant violation of principles of natural justice, absolute anarchial abuse of power by an executive and so on which may not detain a writ court from exercising its jurisdiction. But none of the above parameters for bypassing the statutory alternative remedy available to the writ petitioner can be seen in the instant case. Apart from making a rather conventional statement in para 29 of the writ petition, no other ground has bee n pressed into service by the petitioner. 10. Now let us have a look at the decisions rendered by the Apex Court as we ll as this Court cited by the rival parties. Regarding decisions cited on behalf of the petitioners; The decision rendered in the Whirlpool Corporation (supra) categorises t he following contingencies; where existence of alternative remedy would not be o perative as far as exercise of writ jurisdiction, (i) when the writ petition has been filed for enforcement of any of the fundamental rights; or (ii) where ther e has been violation of the principles of natural justice or (iii) where the ord er or proceedings are wholly without jurisdiction or the vires of the Act is cha llenged. The Apex Court further held that in spite of alternative statutory reme dies, there is no bar to issue a writ of Certiorari or Prohibition by the High C ourt if the authority against whom the writ is filed is shown to have had no jur isdiction or had purported to usurp jurisdiction without any legal foundation. B ut that is not the present case in hand. The case of Sarabhai Chemical (supra) cited by the learned counsel for t he petitioner is also not an issue in this case. In the case of Binoy Sarma (supra) considering the peculiar facts of the case, the learned Single Judge was inclined to entertain the writ petition in s pite of the availability of alternative remedy. In the case of Binoy Sarma (supr a), petitioner’s agency had been terminated after long 6 years of the show cause notice and the reply thereto, that too without taking into consideration the re ply to the show cause notice while passing the impugned order. Therefore, Court held that such arbitrary exercise of power falls in the realm in the violation o f the principles of natural justice and thus entertained the writ petition. In the case of Raja Kakati (supra), this Court indicated the circumstanc es, where plea of alternative remedy is not a bar for exercise of writ jurisdict ion. In Raja Kakati (supra), the Court found that there has been gross violation of principles of natural justice. Hence, in such circumstances, the Court held that plea of exhaustion of alternative remedy is not a bar for disposal on merit s by exercising writ jurisdiction. There is no dispute to the above proposition of law. In the present case in hand, a bare perusal of the impugned order dated 5.7.2007 would reveal that the same was passed after considering the reply to the show cause notice and af fording opportunity of hearing to the petitioner. Therefore, violation of principles of natural justice does not arise. The case of Binoy Sarma (supra) an d Raja Kakati (supra) thus, will not be applicable. In the case of Borsapori Tea Estate (supra), the Court held that a Civil Rule after admission cannot be dismissed on the ground of availability of an al ternative statutory remedy. The Court held as such considering the fact that whe n no question of facts are involved for deciding the question raised in the civi l rule and when there is absolute lack of jurisdiction in passing the impugned o rder, the existence of alternative remedy will not debar the court in exercising jurisdiction under Article 226 of the Constitution of India. In view of the fac ts and circumstances of the present case in hand, the Borsapori Tea Estate (supr a) case would not be applicable. The judgment rendered in Upar Assam Tea Industries (supra) though on the back ground of imposition of tax and penalty following an adjudication under Se ction 11 A (1) of the Act, the facts involved in the said case are totally diffe rent than the case at hand. Further, the question regarding the bar of alternati ve remedy was not an issue in the said case. The judgment rendered by the learne d Single Judge in the said case was affirmed by the appellate court in the writ appeal being WA No.11/2009. While the appellate court has reasoned its judgment based on the total lack of decision by the revenue authorities as regards the im port and meaning of the expression installed capacity and substantial expansi on occurring in the notification No.33/99, there was no occasion for the court to decide the question of alternative remedy which is precisely the question her e. Regarding the decisions cited on behalf of the respondents; In the case of Thansingh Nathmal (supra), the Apex Court stated at para 7 as thus; & & The jurisdiction of the High Court under Art. 226 of the Constitutio n is couched in wide terms and the exercise thereof is not subject to any restri ctions except the territorial restrictions which are expressly provided in the A rticles. But the exercise of the jurisdiction is discretionary: it is not exerci sed merely because it is lawful to do so. The very amplitude of the jurisdiction demands that it will ordinarily be exercised subject to certain self-imposed li mitations. Resort to that jurisdiction is not intended as an alternative remedy for relief which may be obtained in a suit or other mode prescribed by statute. Ordinarily the Court will not entertain a petition for a writ under Art. 226, wh ere the petitioner has an alternative remedy, which without being unduly onerous , provides an equally efficacious remedy. Again the High Court does not generall y enter upon a determination of questions which demand an elaborate examination of evidence to establish the right to enforce which the writ is claimed. The Hig h Court does not therefore act as a court of appeal against the decision of a co urt or tribunal, to correct errors of fact, and does not by assuming jurisdictio n under Art. 226 trench upon an alternative remedy provided by stature for obtai ning relief. Where it is open to the aggrieved petitioner to move another tribun al, or even itself in another jurisdiction for obtaining redress in the manner p rovided by a statute, the High Court normally will not permit by entertaining a petition under Art. 226 of the Constitution the machinery created under the stat ute to be bypassed, and will leave the party applying to it to seek resort to th e machinery so set up. In Dunlop India Ltd. (supra), regarding entertaining a petition under Ar ticle 226 of the Constitution, in spite of availability of alternative remedy th e Apex Court held that, Article 226 is not meant to short-circuit or circumvent statutory proce dures. It is only where statutory remedies are entirely ill-suited to meet the d emands of extraordinary situations, as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mix ed up and prevention of public injury and vindication of public justice require it that recourse may be had to Art. 226 of the Constitution. But then the Court must have good and sufficient reason to by-pass the alternative remedy provided by statute. On the other hand, matters involving the revenue where statutory rem edies are available are not such matters . In HB Gandhi (supra), the Apex Court at para 6 held as thus, The constitutional validity of the provisions in sub-section (5) of Sec tion 39 of the Act were not assailed in the writ petition. Similar provisions, a ccompanied by similar proviso, have been held valid. At the stage at which the r espondents approached the High Court, what the respondents could have, if the fa cts so justified, assailed was the question of the refusal of the appellate auth ority to exercise the discretion under the proviso. When an hierarchy of appeals is envisaged by a taxing statute, it is generally to be insisted that an assess ee must go through the statutory proceedings. In C.A. Abraham v. ITO, it was obs erved: In our view the petition filed by the appellant should not have been en tertained. The Income Tax Act provides a complete machinery for assessment of ta x and imposition of penalty and for obtaining relief in respect of any improper orders passed by the income tax authorities, and the appellant could not be perm itted to abandon resort to that machinery and to invoke the jurisdiction of the High Court under Article 226 of the Constitution when he had adequate remedy ope n to him by an appeal to the Tribunal &. 11. Admittedly the order under challenge was passed after affording opportun ities to the writ petitioner and therefore, violation of natural justice does no t arise in the facts and circumstances of the case. On the other hand, the vires of the statute or total lack of jurisdiction are not the grounds in this writ p etition. In the absence of these two contingencies, mere pleadings of an impugne d action being violative of Articles 14, 19 and 21 of the Constitution of India would not per se demand exercise of discretionary power by a writ court bypassin g the alternative statutory remedies available under the statute. 12. The case at hand does not disclose any material fact so as to conform th e contingencies categorized in Whirlpool case (supra). The facts cited above dem onstrate observance of principles of natural justice while passing the impugned order and jurisdiction vested by law upon the authority who passed the order. Th e vires of said law also not being under challenge; it is entirely different mat ter whether the authority vested with the power and jurisdiction has exercised t he same legally, reasonably or has acceded its jurisdiction or was guilty of non -application of mind and other pre-requisites of due exercise of such powers. 13. The sum total of the discussion led this Court to the inevitable conclus ion that the impugned order dated 5.7.2007 being appealable order the direct cha llenge to the same in the writ court without exhausting alternative statutory re medy as provided under the statute is not permissible under the law and conseque ntly, the writ petition fails and accordingly, dismissed. Interim order passed e arlier stands vacated. 14. However, considering the facts and circumstances of the case, there shal l be no order as to costs. "