Delhi High Court

Agv Alfab Limited vs Commissioner Of Central Excise, ... on 15 March, 2011

Author: Sanjiv Khanna

*        IN THE HIGH COURT OF DELHI AT NEW DELHI

+                   Writ Petition (Civil) No. 12604/2009

AGV Alfab Limited                              ....Petitioner
                Through       Mr. Rajesh Jain, Advocate.

                    VERSUS

Commissioner of Central Excise, Delhi II   ....Respondents
                Through     Mr. Mukesh Anand with
                           Mr. Shailesh Tiwari, Advocates.

      Writ Petition (Civil) No. 2003/2010

AGV Alfab Limited                              ....Petitioner
                Through       Mr. Rajesh Jain, Advocate.

                    VERSUS

Commissioner of Central Excise, Delhi II   ....Respondents
                Through Mr. Satish Kumar,
                           Sr. Standing Counsel.

CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE SANJIV KHANNA

                              ORDER

% 15.03.2011

The petitioner, AGV Alfab Limited, by these two writ petitions,

has challenged and questioned three show cause notices dated 8/13th

October, 2008, 17/31st August, 2009 and 8th February, 2010 issued by

the Assistant Commissioner of Central Excise, under Section 11A of the

Central Excise Act, 1944 (Act, for short) and the relevant Rules.

2. The petitioner, as per the show cause notices, is engaged in

manufacture of aluminum doors, windows, partitions, frameless doors,

curtain walls etc. According to show cause notices, the items

manufactured by the petitioner are dutiable and fall under the heading

7610 of the First Schedule to the Central Excise Tariff Act, 1985.

3. The contention of the petitioner on the other hand is that it is

engaged in doing work of structural glazing (curtain walls) and cladding

which cannot be regarded as identifiable commercial products in a

factory or in any other manufacturing premises. It is alleged that the

said activity involves only erection and installation of curtain walls and

cladding and not manufacturing and, therefore, no excisable goods

come into existence.

4. The petitioner is right in their contention that a similar

issue/question had arisen and was decided by the Central Excise and

Service Tax Appellate Tribunal, Northern Bench, in the case of the

petitioner vide their decision dated 22nd November, 2004 which is

reported in 2005 (186) ELT 451 (Tribunal - Delhi). On a query being

made it is revealed that this decision relates to the years 1999-2004.

The three impugned show cause notices pertain to the year 2007

onwards. In the counter affidavit filed by the respondent, the

respondent has relied upon a Larger Bench decision of the Tribunal in

the case of Mahindra and Mahindra vs. CCE, 2005 (190) ELT 30

(Tribunal - Delhi)., and it is stated that the earlier decision of the

Tribunal, in the case of the petitioner, does not bar and prohibit them

from examination of the issue on merits. The petitioner, in the

rejoinder, has submitted that the Larger Bench decision in the case of

Mahindra and Mahindra (supra) is not applicable to them. It is further

stated that the said decision does not notice and consider the judgment

of the Supreme Court in CCE, Thane and Madras Vs. Ajit India Pvt. Ltd.,

2000 (119) ELT 274.

5. Strictly speaking, principles of res judicata do not apply to tax

proceedings. Each assessment period is treated as a separate unit.

What is decided in one year might not apply in the following year.

However, it is equally true that unless there is a justification and change

in circumstances, the Revenue authorities should not depart from the

previous decision. There should be some material or reason to make a

departure. Certainty and consistency are hall-marks of good tax

administration.

6. In the present case, only show cause notices have been issued

and there has not been any determination or decision by the

authorities. The stand taken by the respondent in the counter affidavit

is that the matter requires examination and consideration in view of the

Larger Bench decision of the Tribunal in the case of Mahindra and

Mahindra (supra). The contentions raised by both sides require

consideration and debate. The exact nature of activities undertaken and

the method and technique involved in the "assembly/manufacture" has

to be examined. This necessarily also involves the factual aspect. We do

not think that in the circumstances it will be proper for us to step in and

quash the show cause notices at the initial stage. Justification and

reason for examination of the case/issue has been indicated in the

counter affidavit.

7. Generally, parties are not encouraged to seek writ remedy, if

alternative remedy is available. In Whirpool Corpn. Vs. Registrar of

Trade Marks, (1998) 8 SCC 1 the Supreme Court pointed out the three

contingencies in which writ remedies may be sought namely "where

the writ petition has been filed for the enforcement of any of the

fundamental rights or where there has been a violation of the principle

of natural justice or where the order or proceedings are wholly without

jurisdiction or the vires of an Act is challenged." In the present case in

view of the observations made above, we are not satisfied that the

present case, justifies interference inspite of the alternative remedy.

The Supreme Court has observed in a catena of decisions over the years

that a writ court should not interfere at the stage of issuance of show

cause notice by the authorities. In Union of India v. Hindalco

Industries,(2003) 5 SCC 194 it was observed by the Supreme Court that

in taxation matters it is not proper for the High Court to interfere in

exercise of jurisdiction under Article 226 of the Constitution at the stage

of show cause notice especially if there is an alternative remedy

available i.e. by way of filing a reply or appeal. It was held:

"12. There can be no doubt that in matters of taxation, it is inappropriate for the High Court to interfere in exercise of jurisdiction under Article 226 of the Constitution either at the stage of the show- cause notice or at the stage of assessment where alternative remedy by way of filing a reply or appeal, as the case may be, is available but these are the limitations imposed by the courts themselves in exercise of their jurisdiction and they are not matters of jurisdictional factors. Had the High Court declined to interfere at the stage of show-cause notice, perhaps this Court would not have been inclined to entertain the special leave petition; when the High Court did exercise its jurisdiction, entertained the writ petition and decided the issue on merits, we do not think it appropriate to upset the impugned order of the High Court under Article 136 of the Constitution on a technical ground."

8. Although the rule is not without exception and a writ court may

interfere even at the stage of issuance of show cause notice if it is

issued without jurisdiction or in an abuse of process of law, however,

the Supreme Court has asserted that such interference should be rare

and not a matter of routine. It has been held in Union of India v. VICCO

Laboratories, (2007) 13 SCC 270 :-

"31. Normally, the writ court should not interfere at the stage of issuance of show-cause notice by the authorities. In such a case, the parties get ample opportunity to put forth their contentions before the authorities concerned and to satisfy the authorities concerned about the absence of case for proceeding against the person against whom the show-cause notices have been issued. Abstinence from interference at the stage of issuance of show-cause notice in order to relegate the parties to the proceedings before the authorities concerned is the normal rule. However, the said rule is not without exceptions. Where a show-cause notice is issued either without jurisdiction or in an abuse of process of law, certainly in that case, the writ court would not hesitate to interfere even at the stage of issuance of show-cause notice. The interference at the show- cause notice stage should be rare and not in a routine manner. Mere assertion by the writ

petitioner that notice was without jurisdiction and/or abuse of process of law would not suffice. It should be prima facie established to be so. Where factual adjudication would be necessary, interference is ruled out."

9. As of now, there is no determination of the questions raised even

by the authorities. No final view has been taken by the respondent.

The situation is still fluid. It cannot be disputed that the respondent i.e.

the Commissioner of Central Excise has jurisdiction to decide and go

into the said questions by issue of notice under Section 11A of the Act.

The said authority can adjudicate and decide the objections and

contentions raised by the petitioner. In these circumstances, we are not

inclined to entertain the present writ petition against the show cause

notices and the petitioner is given liberty to file reply within three

weeks to the show cause notices along with the citations relied upon by

them. The Commissioner of Excise will examine the said contentions

including the judgments relied upon by the petitioner. The contention