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Madhya Pradesh High Court · body

2016 DIGILAW 618 (MP)

S. B. Products v. Union of India

2016-07-27

ANURAG SHRIVASTAVA, RAJENDRA MENON

body2016
ORDER : Heard counsel for the parties on admission. 2. Challenging the Show Cause Notice dated 10-2-2015 (Annexure P-2) issued to the petitioners initiating proceedings under Rule 56 of the Central Excise Rules, 1944, petitioners have filed this petition. 3. The petitioners are engaged in the manufacture of certain tobacco products and it is seen that on 11-6-2010 certain samples of petitioner's product were drawn and sent for chemical examination to Central Revenue Control Laboratory, New Delhi. The reports were received by the competent Revenue Authorities, but the reports were not supplied to the petitioner. However, a show cause notice was issued to both the petitioners vide Annexure P-2, dated 10-2-2015 demanding duty on the products. The duty has been demanded under Rule 56 of the Central Excise Rules, 1944, but the grievance of the petitioners is with regard to non-compliance of the mandatory requirements of Rule 56(2), which mandates that after the sample seized is tested, the same has to be communicated to the petitioners along with the test result and then only a show cause notice can be issued. It is pointed out that as this statutory requirement has been violated the entire notice is liable to the quashed. 4. Our attention is invited to an order passed by a Bench of this Court in W.P. No. 3650/2015 (M/s. Sahu Traders v. Union of India and others) on 6-11-2015, wherein after considering Rule 56 and finding breach of sub-rule (2) of the aforesaid Rule, the identical writ petition has been allowed and similar show cause notice has been quashed. In the order passed by a Bench of this Court in the case of M/s. Sahu Traders (supra), the matter has been so dealt with in Paragraph No. 5, which reads thus :- "5. A perusal of sub-rule (2) of the aforesaid rule clarify indicate that the officer who seizes the sample as contemplated under sub-rule (1) has to get the test conducted for the sample and thereafter, communicate the result of the test to the manufacturer. The requirement of Rule 2 is clear, the sample can be tested by the officer concerned and thereafter the test report as a matter of mandatory requirement is required to be communicated to the manufacturer thereafter Sub-Rule (iv) gives a right to the manufacturer to seek re-testing within 90 days. The requirement of Rule 2 is clear, the sample can be tested by the officer concerned and thereafter the test report as a matter of mandatory requirement is required to be communicated to the manufacturer thereafter Sub-Rule (iv) gives a right to the manufacturer to seek re-testing within 90 days. Admittedly in this case after the sample was taken and test report obtained the statutory requirement of communicating the report to the manufacturer and his right to have it re-tested has been denied. It is seen and clear that neither the report has been communicated to the manufacturer nor he was given an opportunity to seek re-testing and challenging the reports. Directly based on the report received the show cause notice for classification and proposed action has been issued. As the show cause notice has been issued without following the condition precedent as is contemplated under Rule 56 we find that issuance of the show cause in the manner done is unsustainable, not only issuance of show cause notice but once we find a statutory requirement of law in the matter of testing of the manufactured item to be violated. All subsequent action taken thereof after the report of testing is received. In view of the above we allow this petition quash the impugned show cause notice Annexure P3, dated 13-1-2012 and all consequential action taken thereof. Respondents are at liberty to proceed in the accordance with law for taking action as may be permissible from the stage of receipt of the report of testing." 5. In this case also identical factual position exists. Inasmuch as, the show cause notice has been issued along with the report of testing and the report of testing was issued prior thereto as required under sub-rule (2) of Rule 56. 6. Accordingly, for the grounds and reasons already considered and decided by this Court in the case of M/s. Sahu Traders (supra), we allow both these writ petitions. The impugned show cause notice dated 10-2-2015 (Annexure P-2) stands quashed.