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Tata Iron & Steel Co. Ltd v. Union Of India
Factual and Procedural Background
This group of petitions challenges a show cause notice dated 19th/22nd January, 1990, issued under the Central Excises and Salt Act, 1944. The petitions arise from proceedings initiated pursuant to this notice, which was based on intelligence collection and statements recorded from the petitioners' officers during investigation. The petitioners seek relief under Article 226 of the Constitution.
Legal Issues Presented
- Whether the Court should interfere with the show cause notice at the stage of its issuance under Article 226 jurisdiction.
- Whether the petitioners can be permitted to furnish bank guarantees instead of depositing the adjudicated amount of duty in the event of an adverse adjudication order and subsequent appeal.
Arguments of the Parties
Petitioners' Arguments
- The petitioners challenged the validity of the show cause notice issued under the Central Excises and Salt Act, 1944.
- Mr. Taleyarkhan, representing the petitioners, argued extensively against the notice and requested that if an adjudication order went against them, they should be allowed to furnish bank guarantees instead of depositing the amount of duty during the appeal process.
Respondent's Arguments
The opinion does not contain a detailed account of the respondent's legal arguments.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Court observed that it rarely interferes at the show cause notice stage under its writ jurisdiction and that the notice was issued within jurisdiction and legal authority. The Court noted that the notice was based on intelligence and statements recorded during investigation, raising questions of fact and mixed law and fact, which are not suitable for adjudication at this preliminary stage. The Court emphasized that it would not examine the merits or demerits of the case at this stage to avoid prejudicing subsequent proceedings. Regarding the petitioners' request to furnish bank guarantees instead of depositing the duty amount if an appeal is filed, the Court found this request reasonable and accepted it.
Holding and Implications
DISMISSED: The petitions challenging the show cause notice are dismissed.
However, the petitioners are permitted, in the event of an adverse adjudication order and filing of an appeal, to furnish bank guarantees from a nationalised bank equivalent to the amount of duty (excluding penalty) along with interest at 15% per annum instead of depositing the amount. The bank guarantees must remain valid until the final disposal of the proceedings and for sixty days thereafter. This decision allows the petitioners procedural flexibility during appeal but does not set any new legal precedent.
1. This group of petitions challenges the show cause notice dated 19th/22nd January, 1990 issued under the Central Excises and Salt Act, 1944.
2. Hearing Counsel on either side and going through the impugned notice we are satisfied that this is not a case warranting interference in our jurisdiction under Article 226 of the Constitution. Indeed, this Court rarely interferes at the show cause notice stage. However, in view of the arguments advanced in extenso by Mr. Taleyarkhan, we have gone through the detailed show cause notice, including the annexures thereto. The notice is based on collection of intelligence as also upon the petitioners' officers' statements recorded in the course of investigation. Questions of fact as also mixed questions of fact and law would arise for determination before the authority hearing the proceedings pursuant to this notice. It is not possible nor open for this Court in its writ jurisdiction to go into the merits and demerits of the facts and circumstances set out therein. And, which way on merits the proceedings ultimately conclude is of but little relevance at this show cause notice stage. Suffice it to note that the notice is not vitiated by either lack of jurisdiction or legal authority in issuing the same.
3. In the circumstances, we see no good reason why the petitioners, if aggrieved, should not avail the provided opportunity of showing cause against the notice and raising in reply thereto all such contentions as advised. We refrain from touching the merits of the dispute or make any observations thereon, lest the same affect, one way or the other, the proceedings hereafter pursuant to the said notice.
4. Mr. Taleyarkhan submitted that in the event the adjudication order goes against the petitioners and occasion arises for filing appeal therefrom, the question of depositing the amount of duty will arise. He requests that instead of depositing the amount, the petitioners should, in the facts and circumstances, be permitted to furnish bank guarantee or guarantees in that behalf. We are inclined to accept this request.
5. In the result, the following order is passed :-
(a) The petitions fail and the same are dismissed.
(b) In the event, however, the adjudication order goes against the petitioners and if occasion arises for filing appeal therefrom, the appellants instead of depositing the adjudicated amount, will be at liberty to furnish in favour of the Collector of Central Excise, bank guarantee or guarantees of a nationalised bank of amount equivalent to the amount of duty (excluding penalty, if any) together with interest thereon at the rate of 15 per cent. per annum from the due date till actual payment. The bank guarantee or guarantees, as the case may be, shall be kept alive and operating till the hearing and final disposal of the proceedings under the Central Excises and Salt Act and for a period of sixty days thereafter.
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