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2018 DIGILAW 880 (CAL)

V. K. Udyog Limited v. Union Of India

2018-12-04

DEBANGSU BASAK

body2018
JUDGMENT : Debangsu Basak, J. 1 The Court: A show-cause cum demand notice dated September 11, 2013 and the consequential Order in Original dated August 30, 2018 are under challenge in the present writ petition. 2. According to the petitioner, the impugned show cause cum demand notice as also the Order in Original suffers from lack of jurisdiction. The petitioner contends that, the show cause cum demand notice was issued in respect of transactions had for the year 2009-11. The show-cause cum demand notice is dated September 11, 2013. It is beyond the period of limitation of one year prescribed under Section 11A of the Central Excise Act, 1944. For the authorities to invoke the provisions of Section 11A(4) of the Act of 1944, the essential ingredients in respect thereto must be present. In the present case none of them are present. The claim being barred by limitation, the assumption of jurisdiction by the authorities in issuing the show-cause cum demand notice and the consequent order in original is without jurisdiction. He refers to page 277 of the writ petition and submits that, grounds (iii), (iv) and (ix) at such pages were not considered and decided in the order in original. 3. Learned Advocate for the petitioner submits that, although the petitioner claimed to be a manufacturer and obtained registration for the same, the adjudicating authority found the petitioner to be a trader. Therefore, according to him the petitioner does not come within the purview of the Central Excise Act, 1944. No liability can be fastened upon the petitioner under the provisions of the Act 1944. The entire exercise of issuing the show cause cum demand notice and Order in Original is without jurisdiction. 4. Referring to the impugned Order in Original, the learned Advocate for the petitioner submits that, the petitioner raised few objections in respect to the impugned show cause cum demand notice. The petitioner relied upon few judgments in support of such contentions. Neither the contentions nor the judgment have been dealt with by the impugned Order in Original. Therefore, the impugned Order in Original stands vitiated by reason of breach of principles of natural justice. In support of such contention, he relies upon (Cal) Artee Overseas Private Limited v. Union of India, (2016) 332 ELT 470. 5. Neither the contentions nor the judgment have been dealt with by the impugned Order in Original. Therefore, the impugned Order in Original stands vitiated by reason of breach of principles of natural justice. In support of such contention, he relies upon (Cal) Artee Overseas Private Limited v. Union of India, (2016) 332 ELT 470. 5. Learned Advocate appearing for the petitioner submits that, in particular, the petitioner relied upon judgments to contend that, in the event cross examination of witnesses is not allowed, the evidence of such witness cannot be taken into consideration. Transporters' statements are not sufficient to fasten any liability upon the petitioner. The petitioner relied upon a number of judgments on the points raised before the adjudicating authority. None of the judgments were considered in the Order in Original. 6. Learned Advocate appearing for the respondent submits that, the petitioner obtained registration as a manufacturer under the under the Duty Free Credit Entitlement (DFCE) scheme. It availed benefits under such scheme. A raid was conducted at the business premises of the petitioner on March 22, 2011. Immediately thereafter, the petitioner surrendered such registration on May 6, 2011. The show cause cum demand notice was issued within the extended period of five years as prescribed under Section 11A(4) of the Act of 1944 on the ground that the petitioner was guilty of suppression of facts. He refers to the evidence given by the Managing Director of the petitioner where, the Managing Director submitted that, the petitioner did not carry out any manufacturing activity and that, the Managing Director had no knowledge of the persons to whom the imported goods were sold. In such circumstances, the adjudicating authority returned the finding that the petitioner acted fraudulently in obtaining the registration as a manufacturer and had actually dealt with the goods as a trader. Consequently, there is no infirmity in the impugned order either when it decides the question of limitation or when it returned the finding that, the petitioner is liable to pay sum adjudicated. He submits that, the points raised by the petitioner were considered in detail. The impugned order contains adequate reasons. The petitioner was heard during the adjudicating process. The impugned order cannot be said to be without jurisdiction. Therefore, there being no infirmity in the order, no interference is called for. 7. He submits that, the points raised by the petitioner were considered in detail. The impugned order contains adequate reasons. The petitioner was heard during the adjudicating process. The impugned order cannot be said to be without jurisdiction. Therefore, there being no infirmity in the order, no interference is called for. 7. This is the second writ petition at the behest of the writ petitioner relating to the impugned show cause cum demand notice dated September 11, 2013. The petitioner approached the Writ Court earlier at the hearing stage of the impugned show cause cum demand notice complaining that the authorities were not allowing the petitioner to cross-examine the prosecution witnesses. Such writ petition of the petitioner was disposed of by an order dated September 11, 2013 requiring the authorities to allow the petitioner to cross-examine the prosecution witnesses. 8. Pursuant to the Order dated September 11, 2013, the authorities requested the petitioner to provide the list of prosecution witnesses which the petitioner wanted to cross-examine. The petitioner submitted the list of witnesses which it required to cross-examine. The petitioner was afforded the opportunity to cross-examine such witnesses. It is not the case of the petitioner that, all witnesses that the petitioner wanted to cross-examine were not provided to the petitioner for cross-examination. 9. In such circumstances, it cannot be said that the petitioner was denied any right to cross-examine any of the prosecution witnesses. It is the choice of the delinquent in any proceeding to cross-examine any prosecution witness or not to cross-examine any of such witnesses. In the facts of the present case, the petitioner was asked to provide the list of the prosecution witnesses which it wanted to cross-examine. The petitioner was allowed to cross-examine such witnesses. 10. As noted above, the impugned show-cause notice is dated September 11, 2013. It relates to a period from 2009-2011. Section 11A(4) of the Central Excise Act, 1944 deals with the extended period of limitation. It is as follows:- "11A(4). The petitioner was allowed to cross-examine such witnesses. 10. As noted above, the impugned show-cause notice is dated September 11, 2013. It relates to a period from 2009-2011. Section 11A(4) of the Central Excise Act, 1944 deals with the extended period of limitation. It is as follows:- "11A(4). Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by the reason of (a) fraud; or (b) collusion; or (c) any willful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Act or of the rule made thereunder with intent to evade payment of duty, by any person chargeable with the duty, the Central Excise Officer shall, within 5 years from the relevant date, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable under section 11A and a penalty equivalent to the duty specified in the notice." 11. Section 11A(4) of the Act of 1944 allows the authorities five years' time from the relevant time to serve notice upon such person to show cause as to why the person responsible should not pay the amount specified in the notice along with interest thereon along with penalty equivalent to the duty specified in the notice. 12. The show-cause notice alleges that, the petitioner is guilty of suppression of facts. Section 11A(4)(d) of the Act of 1944 deals with such scenario. Such clause relates to suppression of facts. In the facts of present case, the petitioner claimed itself to be a manufacturer and obtained a registration. On raid, the authorities found that, the petitioner not to be a manufacturer and to have indulged in trading of the imported goods after obtaining the benefits under the DFCE Scheme. The authorities found the petitioner to have suppressed facts relating to its business while obtaining the registration and the benefits under the DFCE Scheme. The change of suppression of facts made in the show-cause cum demand notice stands substantiated. There is no infirmity or perversity with regard thereto. The transaction relates to the period 2009- 2011 and the impugned show-cause cum demand notice was issued on September 11, 2013, well within the period of five years from the relevant date as laid down under Section 11(4) of the Act of 1944. There is no infirmity or perversity with regard thereto. The transaction relates to the period 2009- 2011 and the impugned show-cause cum demand notice was issued on September 11, 2013, well within the period of five years from the relevant date as laid down under Section 11(4) of the Act of 1944. Therefore, the department cannot be faulted when it invoked provisions of Section 11A(4)(d) of the Act of 1944 in issuing the impugned show-cause notice and adjudicating thereon. There is no substance in the contention with regard to the limitation as put forward by the petitioner. Therefore, the authorities cannot be said to be acting without jurisdiction on the ground that, the claim made under the impugned show-cause notice stands barred by limitation as prescribed under the Act of 1944. 13. The impugned order in original proceeds to discuss the evidence and materials produced before it. It weighs the relevant materials and evidence and arrives at the findings as contained in the impugned order. It gives reasons for arrival at such finding. 14. Judgments were cited by the petitioner before the adjudicating authority in support of its three primary contentions namely, right of cross-examination, proceedings being barred by limitation and that transporter's statements cannot be relied upon. The Order in Original deals with the points with regard to limitation, cross-examination and transporter's statements. The impugned Order in Original finds the proceedings to be within the period of limitation and gives reasons for the same. Essentially, it is of the view, the proceedings are within the period of limitation under the provisions of Section 11A(4) of the Act of 1944. There is no evidence placed on record to suggest otherwise. As noted above, all witnesses that the petitioner wanted to cross-examine were allowed to be cross-examined. Therefore, on such ground also the petitioner has no case. So far as the transporter's evidence is concerned, there are discussions in the impugned order with regard thereto. The impugned order does not proceed merely on the basis of transporter's evidence. It takes into consideration evidence given by the diverse witnesses. It takes into account the evidence of the Managing Director and the statements recorded under Section 108 of the Customs Act, 1962. According to the petitioner the Managing Director retracted his statements in cross-examination. The impugned order does not proceed merely on the basis of transporter's evidence. It takes into consideration evidence given by the diverse witnesses. It takes into account the evidence of the Managing Director and the statements recorded under Section 108 of the Customs Act, 1962. According to the petitioner the Managing Director retracted his statements in cross-examination. It is a case where the petitioner being guilty of certain misdeeds under the fiscal laws, its Managing Director admits such mistake in a statement under Section 108 of the Customs Act, 1962 and proceeds to say that, such statements are incorrect in cross-examination made by the petitioner. The adjudicating authority rightly refused to rely on such cross-examination of the Managing Director. In any event, there is overwhelming evidence on record to suggest that, the petitioner availed of the benefits making a false representation to the authorities and is now seeking to dodge the fiscal law. 15. Artee Overseas Private Limited (supra) follows a Division Bench of the Bombay High Court. The Bombay High Court judgment noted in Artee Overseas Private Limited (supra) is of the view that, a quasi judicial authority cannot exclude from its consideration the material which is relevant. If it does so, the order suffers from nonobservance of the principles of natural justice. In the present case, the adjudicating authority did not exclude from its consideration, any material which is relevant. None of the judgments, which the petitioner claims is relevant to the issue, has any relevance in the facts of the present case. None of the judgments cited on the point of limitation barred by limitation. Limitation is mixed question of fact and law. The Order in Original decides the issue of limitation. In doing so, it did not err in applying a wrong law or fact. The petitioner being allowed to cross-examine the list of witnesses that it gave to the authorities, the applicability of judgments on the question of cross-examination does not arise. Artee Overseas Private Limited (supra) cannot be read to suggest that, every judgment cited by a party to a proceeding when irrelevant must also be dealt with failing which, the order passed by the adjudicating authority would stand vitiated by the breach of principles of natural justice. Artee Overseas Private Limited (supra) cannot be read to suggest that, every judgment cited by a party to a proceeding when irrelevant must also be dealt with failing which, the order passed by the adjudicating authority would stand vitiated by the breach of principles of natural justice. I would read the proposition laid down in Artee Overseas Private Limited (supra) to mean that, every relevant fact or issue raised before the adjudicating authority must be dealt with. If the issue of fact or law is adequately dealt with, correct principles of law applied to arrive at the findings returned, then, notwithstanding, such adjudicating authority not specifically referring to any of the judgments cited before it, the same will not vitiate the impugned order on the touch-stone of breach of principles of natural justice. Any other view would be a pedantic reading of the ratio of Artee Overseas Private Limited (supra). Nothing is on record to suggest that, the adjudicating authority applied the wrong principles of law in rendering its decision or that the judgments cited before it required it to take a different view, in the facts of the present case. 16. The impugned order is appealable. The petitioner chose not to prefer an appeal therefrom. The petitioner chose to assail the impugned order on the scope and ambit of interference under Article 226, with an Order in Original against which a statutory appeal lies. While exercising jurisdiction under Article 226 of the Constitution of India, a Writ Court is not called upon to transform itself to an appellate authority, reappraise the evidence placed before the adjudicating authority and substitute its own findings with that returned by the adjudicating authority. However, Writ Court is required to interfere with the impugned order, if it is substantiated that, the impugned order suffers from the vice of breach of principles of natural justice or is non-speaking or it violates any provisions of the Constitution or breaches any fundamental right of the petitioner. None of the grounds noted above stands substantiated in the facts of the present case. 17. In such circumstances, W.P. No. 529 of 2018 is dismissed. No order as to costs.