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Case Number

W.P(C) 220911986

Attorney(S)

PRESENT: Mr. R.K Sanghi, Advocate for the Petitioners.
Mr. Suresh Kait, Advocate for the Respondents.

Judges

Mukul Mudgal
Dr. S. Muralidhar, JJ.

Acts

Central Excise and Salt Act, 1944,
Central Excises Act 1944 (Act).4.

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Smart Summary

Judgment Summary — Dr. S. Muralidhar, J.

Factual and Procedural Background

This writ petition, filed in 1986, challenged two show cause notices issued by the Assistant Collector, Central Excise, Rohtak dated 4.3.1986 and 5.9.1986. The notices sought recovery of differential excise duty in sums of Rs. 31.73 lakh (for clearances between 1.9.1985 and 28.2.1986) and Rs. 21.22 lakh (for clearances between 1.3.1986 and 3.8.1986). The petitioner is a company manufacturing glass and glassware (tariff item 23-A (5)), and its case was that excise could not be re-levied on printed soft drink bottles by including printing charges, because printing was done by a separate decorating unit and a trade notice (No. 18-CE/80 dated 7.2.1980) applied.

Procedurally, an earlier show cause notice dated 9.9.1985 (period 4.3.1985 to 31.8.1985) had already been challenged in Writ Petition No. 4921 of 1985. While that writ petition was pending, the Assistant Collector passed orders rejecting the petitioner's contentions and the petitioner filed statutory appeals before the Collector (Appeals). During pendency of these appeals further show cause notices (the two impugned notices) were issued and the petitioner sought restraining orders from the Collector (Appeals) and ultimately filed the present writ petition. The Collector (Appeals) later disposed of four appeals by a common order dated 29.10.1990, holding the appeals in respect of the two show cause notices to be non est and allowing two other appeals on technical grounds, and left open the department's power to issue a fresh show cause notice.

A fresh show cause notice was issued on 22.11.1990. The petitioner sought to amend the writ petition to challenge that fresh notice (amendment ultimately allowed on 13.9.1996). Various interlocutory applications about utilization of amounts credited to a personal ledger account and for refund/recall of orders were filed and decided over the years. The matter remained pending before the statutory authority (Assistant Collector) and the Court was asked to decide whether to exercise its Article 226 jurisdiction to quash the show cause notice(s).

Legal Issues Presented

Whether the High Court should exercise its discretionary jurisdiction under Article 226 of the Constitution to quash pending statutory show cause proceedings under the Central Excises Act, 1944, when an adequate and efficacious alternative remedy (statutory appeals) exists.
Whether the process of printing labels/printing on glass bottles amounts to "manufacture" such that excise duty could be levied again by adding printing charges to the cost of bottles already subject to excise — as contended by the petitioner relying on the Supreme Court decision in Union of India v. J.G. Glass Industries Ltd.

Arguments of the Parties

Petitioner's Arguments

The impugned show cause notices impermissibly sought to levy excise duty again on printed soft drink bottles by adding the cost of printing, even though duty had already been paid on the bottles; printing was done by a separate decorating unit.
The petitioner relied on the Supreme Court decision in Union of India v. J.G. Glass Industries Ltd. (1998 (97) E.L.T) which, in respect of the same product and tariff item, held that printing on glass bottles did not amount to manufacture and that excise could not be levied again on the cost of bottles along with printing charges.
Despite the availability of an alternate statutory remedy, the petitioner argued that because the matter had been pending in the High Court since 1986 and a Rule had been issued, the Court should decide the writ petition on merits (invoking precedents such as Modi Carpets Ltd. v. Union of India and other High Court orders and a short order of the Supreme Court in Dhampur Sugar Mills Ltd. v. Union of India).

The opinion does not set out separate, detailed arguments advanced by the respondents in the record of this judgment.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Union of India v. J.G. Glass Industries Ltd., 1998 (97) E.L.T	Held that printing on glass bottles did not constitute manufacture; once duty paid on manufacture of bottles, duty could not be levied again by including printing charges.	The petitioner relied on this decision to argue for quashing the show cause notices. The Court observed that even if J.G. Glass favours the petitioner, that decision can be relied upon by the petitioner before the Assistant Collector in the statutory proceedings; the High Court need not (and should not) bypass those proceedings under Article 226.
Modi Carpets Ltd. & Anr. v. Union of India, 1997 (91) E.L.T 285	Relied upon by petitioner to support the proposition that a writ petition pending for many years with Rule issued may be decided on merits despite alternate remedy (as argued by petitioner).	The Court distinguished this decision, noting that Modi Carpets involved challenges to validity of statutory provisions and therefore turned on its own facts; it did not establish a rule that writs pending long must be decided despite alternate remedies.
Union of India v. Rollatainers Ltd., 1991 (55) E.L.T 317 (Karnataka)	Relied upon by petitioner in support of maintaining writ despite alternate remedy.	The Court noted that Rollatainers was considered at the writ appeal stage (i.e., after consideration by a Single Judge) and therefore turned on its facts; not a general rule to displace statutory remedies.
Thressiamma v. Union of India, 2000 (120) E.L.T 602 (Kerala)	Relied upon by petitioner on maintainability grounds.	The Court observed that Thressiamma was a High Court decision considered at writ appeal stage and thus not a binding rule to permit bypassing alternate statutory remedies.
Carbonink Products v. Government of India, 1992 (61) E.L.T 19 (Mad.)	Relied upon by petitioner for contesting the rule that alternate remedy bars writ jurisdiction.	The Court treated Carbonink as dependent on its own facts and not laying down a general principle to override statutory remedies.
Dhampur Sugar Mills Ltd. v. Union of India, 2000 (122) E.L.T 333 (SC)	Short order relied upon by petitioner (facts-specific).	The Court recorded that Dhampur appears to be a short order turning on its particular facts and therefore not a precedent for general use to bypass statutory remedies.
Uttar Pradesh Jal Nigam v. Nareshwar Sahai Mathur, (1995) 1 SCC 21	Supports the proposition that High Court may refuse to entertain writ under Article 226 where adequate alternate remedy exists (absent fraud or absence of jurisdiction).	The Court cited this as one of the Supreme Court authorities establishing the principle that alternate remedies should be exhausted and that Article 226 is not to short circuit statutory procedures.
Danda Rajeshwari v. Bodavulu Hanumayamma, (1996) 6 SCC 199	Illustrates the principle that writ jurisdiction should not be invoked where an adequate alternative remedy under statute exists.	Placed reliance on this authority as part of the line of Supreme Court decisions supporting refusal to interfere under Article 226 when statutory remedy is available.
Titaghur Paper Mills Co. Ltd. v. State of Orissa, AIR 1983 SC 603	Authoritative statement that Article 226 is not intended to circumvent statutory procedures; courts may decline writ relief where alternative statutory remedies exist.	Used by the Court to reinforce the principle that matters involving revenue with statutory remedies available are ordinarily not to be dealt with by writ jurisdiction.
Asst. Collector of Central Excise v. Dunlop India Ltd., AIR 1985 SC 330	Holds that Article 226 cannot short circuit statutory procedures; writ relief is exceptional and requires good and sufficient reason; matters involving revenue where statutory remedies exist are generally not suitable for Article 226.	The Court quoted Dunlop at length and applied its reasoning to refuse to entertain the writ petition since statutory remedies were available and had been invoked by the petitioner.

Court's Reasoning and Analysis

The Court's analysis proceeded along the following steps, strictly following the materials and authorities cited in the opinion:

Identification of the procedural posture: the petitioner had invoked the alternative statutory remedy (appeals to the Collector (Appeals)) and there had already been significant litigation before the statutory authorities, including a disposal by the Collector (Appeals) and issuance of a fresh show cause notice which remained to be adjudicated by the Assistant Collector.
Legal principle: the Court observed that there is established Supreme Court precedent that a High Court may refuse to entertain a writ petition under Article 226 where an adequate and efficacious alternative statutory remedy exists, unless there is fraud or want of jurisdiction in the authority concerned. The Court specifically cited authorities (Uttar Pradesh Jal Nigam, Danda Rajeshwari, Titaghur Paper Mills, and the Dunlop decision) that articulate and support this principle.
Application of precedent to facts: having regard to the availability and invocation of the statutory remedy by the petitioner, and to the fact that the subsequent show cause notice was yet to be adjudicated by the Assistant Collector, the Court concluded that there was no good and sufficient reason to bypass the statutory process by exercising discretionary writ jurisdiction.
Treatment of petitioner's reliance on J.G. Glass: the Court accepted that the Supreme Court decision in J.G. Glass, if favourable to the petitioner on the substantive point about printing not being manufacture, could be relied upon by the petitioner before the Assistant Collector in the statutory proceedings. The Court expressed confidence that the Assistant Collector would take note of such a submission and pass appropriate consequential orders.
Distinguishing authorities relied upon by petitioner: the Court examined the other cases the petitioner relied upon (Modi Carpets, Rollatainers, Carbonink, Thressiamma, and Dhampur) and observed that those decisions turned on their own facts (for example, some were considered at the writ appeal stage or involved challenges to the validity of statutory provisions) and therefore did not establish any general rule permitting bypass of statutory remedies merely because a writ petition had been pending for a long time.
Exercise of discretion: applying the above principles, the Court exercised its discretion to decline to interfere with the ongoing statutory proceedings under Article 226, while providing directions to expedite the statutory adjudication and to consider refund applications concerning pre-deposit amounts.

Holding and Implications

Holding: The writ petition is DISMISSED.

Implications and immediate consequences:

The High Court declined to quash or otherwise interfere with the pending statutory proceedings before the Assistant Collector under the Central Excise and Salt Act, 1944, on the ground that an adequate and efficacious alternative statutory remedy exists and has been invoked.
The petitioner is permitted to rely upon the Supreme Court decision in Union of India v. J.G. Glass Industries Ltd. before the Assistant Collector; the Assistant Collector is expected to take such submissions into account and pass appropriate orders in the statutory proceeding.
Timetable directions issued by the Court:
- The Assistant Collector was directed to finalise and pronounce the final order on the show cause notice dated 22.11.1990 within three months from the date of the judgment or, in any event, not later than 30.11.2006.
- As regards refund of the pre-deposit amount, if the petitioner makes a written request within four weeks from the date of the judgment, the concerned authority will consider it and pass orders within eight weeks thereafter.
The Registry was directed to send a certified copy of this order to Respondents No. 5 and 6 within one week.
No new authoritative legal precedent or broad change in law was announced by this order; the Court applied established principles about the scope of Article 226 and the non-interference with statutory remedies in revenue matters.

This summary is confined strictly to the matters and statements contained in the provided opinion and does not add any information that is not present in the opinion.

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Hindustan National Glass & Industries. Anr v. Uoi & Ors

DR. S. Muralidhar, J.— This writ petition filed in 1986 initially challenged two show cause notices issued by the Assistant Collector, Central Excise, Rohtak. By the first show cause notice dated 4.3.1986, the petitioner, which is a company engaged in the manufacture of glass and glassware falling under tariff item 23-A (5) of the Central Excise Tariff, was asked to show cause as to why the prices charged by the petitioner for the soft drink bottles to their ultimate customers should be not taken as the assessable value and consequently why sum of Rs. 31.73 lakh should not be recovered as differential excise duty on the clearance of soft drink bottles for the period 1.9.1985 to 28.2.1986 The second show cause notice dated 5.9.1986 pertained to the period 1.3.1986 to 3.8.1986 and the differential excise duty sought to be recovered thereunder was in the sum of Rs. 21.22 lakh.

2. The petitioner's case in the writ petition was that the respondents were seeking to levy excise duty on printed soft drinks bottles on which excise duty had already been paid, this time by adding the cost of printing the label. According to the petitioner this was impermissible since the printing of the bottles was done by a separate decorating unit of the petitioner and, in any event, it denied the benefit available to it under a trade notice No. 18-CE/80 dated 7.2.1980

3. The facts stated in the writ petition reveal that in respect of the period 4.3.1985 to 31.8.1985, a show cause notice dated 9.9.1985 had been issued which had been challenged by the petitioner in Writ Petition No. 4921 of 1985 filed in the High Court of Punjab and Haryana. While the said writ petition was pending, the Assistant Collector on 16.7.1986 passed an order on the above show cause notice dated 9.9.1985 rejecting the petitioner's contentions. The petitioner preferred an appeal against the said order of the Assistant Collector on 15.10.1986 and that appeal was pending before the Collector (Appeals), Respondent No. 6 herein in terms of the Central Excises Act 1944 (‘Act’).

4. While the above appeal and writ petition were pending, the two further show cause notices dated 4.3.1986 and 5.9.1986, as noticed above and which are challenged in the present writ petition, were issued for the subsequent periods between 1.9.1985 to 3.8.1986 Replies thereto had been filed by the petitioner. Even before the Assistant Collector could adjudicate on these two show cause notices, the petitioner filed an application before the Collector of Appeals seeking to restrain the Assistant Collector from proceeding with these two show cause notices. Since the Collector of Appeals had not taken a decision on the appeal of the petitioner, the petitioner was constrained to file the present writ petition seeking the quashing of the said two show cause notices. Meanwhile on 16.10.1986 the Assistant Collector decided these two further show cause notices also against the petitioner. The petitioner filed an appeal against this order before the Collector (Appeals).

5. When the writ petition came up for hearing first on 22.10.1986, the counsel for the petitioner informed the Court that the statutory appeals filed by the petitioner on 15.10.1986 and 20.10.1986 were pending decision before the Collector (Appeals). This Court deferred the hearing of the writ petition.

6. Thereafter the case kept getting adjourned to await the decision in the appeals. On 25.1.1989 this Court issued Rule. As regards the application for stay, the same was dismissed as withdrawn. It was observed that “the pendency of the writ petition will not stand in the way of the appeal pending before the Collector of Appeals being disposed of. It is hoped that the appeal shall be disposed of expeditiously.”

7. At the hearing on 13.8.1990, the Court was informed that the statutory appeals had been heard on 8.8.1990 Thereafter, by a common order dated 29.10.1990 the Collector (Appeals) disposed of all the four appeals filed by the petitioner. The two appeals filed against the show cause notices dated 4.3.1986 and 5.9.1986 were dismissed on the ground that they were not in respect of any appealable orders. The other two appeals against the orders dated 16.7.1986 and 16.10.1986 passed by the Assistant Collector were allowed on technical grounds. Since the two further show cause notices dated 4.3.1986 and 5.9.1986 were based on the earlier show cause notice, they were also held to be non est. The Collector (Appeals), however, left it to the department to consider issuing a fresh show cause notice. Thus, in terms of the decision of the Collector (Appeals) dated 29.10.1990 the present writ petition, in so far as it challenged the show cause notices dated 4.3.1986 and 5.9.1986, became infructuous.

8. Consequent upon the above order, a fresh show cause notice was issued by the department to the petitioner on 22.11.1990 for the periods, 1.1.1985 to 28.2.1986 and 1.3.1986 to 31.3.1986 On 13.12.1990 this Court directed that “status quo regarding entries in the accounts in respect of the order of the Collector (Appeals) dated 29.10.90/6.11.90 shall be maintained.”

9. Thereafter, an application C.M No. 1179/91 was filed by the petitioner to amend the writ petition to challenge the fresh show cause notice. It appears that the pleadings in this application were completed only in December 1994. Thereafter the matter kept getting adjourned on several dates and ultimately the amendment application was allowed on 13.9.1996 On 17.2.2000 an application, being C.M No. 7368/96, filed by the petitioner seeking permission to utilise the amount credited by it to the personal ledger account for future clearances, was rejected by this Court. An application for recalling of this order being R.A No. 4025/2000 was kept pending in this Court for several dates. The recall application was dismissed for default on 28.2.2004 and restored on 16.8.2004 Ultimately by an order dated 15.7.2005, the review application R.A 4025/2000 was rejected. It was however observed that the petitioner's request for refund of pre-deposit amount paid at the stage of hearing of the appeals before the Collector (Appeals) would be considered at the time of disposal of the writ petition.

10. Mr. R.K Sanghi, learned counsel appearing for the petitioner submitted that the issue arising in the present writ petition was fully covered by the decision of the Hon'ble Supreme Court in Union of India v. J.G Glass Industries Ltd. 1998 (97) E.L.T In the said decision, in respect of the same product and tariff item number, it was held that the process of printing on the glass bottles did not amount to manufacture. Once excise duty had been levied and paid on the cost of manufacturing of the bottles, excise duty could not again be levied on the cost of those bottles together with the printing charges. He submits that in view of this judgment of the Hon'ble Supreme Court, this writ petition should be allowed and the impugned show cause notice quashed. As regards the maintainability of this writ petition under Article 226 challenging a show cause notice issued under a statute which provides an alternate remedy, Mr. Sanghi submitted that since the matter has been pending in this Court since 1986 and Rule has: been issued, the Court is bound to decide the writ petition on merits. In support of his submission that the writ petition ought not to be dismissed on the ground of existence of an alternate remedy, Mr. Sanghi relied upon the judgment of this Court in Modi Carpets Ltd & Anr. v. Union Of India., 1997 (91) E.L.T 285. He also placed reliance on certain other judgments of the High Courts in Union of India v. Rollatainers Ltd., 1991 (55) E.L.T 317 (Karnataka), Thressiamma v. Union of India, 2000 (120) E.L.T 602 (Kerala), Carbonink Products v. Government of India, 1992 (61) E.L.T 19 (Mad.) He also relied upon a short order of Hon'ble Supreme Court in Dhampur Sugar Mills Ltd. v. Union of India 2000 (122) E.L.T 333 (SC).

11. We are unable to agree with the counsel for the petitioner that this Court in exercise of its jurisdiction under Article 226 of the Constitution should interdict the pending proceedings before the statutory authority. The mere fact that the matter has been pending in this Court since 1986 and Rule has been issued cannot compel this Court to decide the writ petition on merits notwithstanding the availability of an effective alternate remedy under the Act. The decisions relied upon by the counsel for the petitioner turned on their individual facts and do not lay down any inviolable rule that a writ petition pending in a court for many years ought to be decided on merits even if there is an effective alternative statutory remedy. As regards the judgment of this Court in Modi Carpets Ltd. (supra), the validity of certain statutory provisions had also been questioned in the said writ petition. In Rollatainers Ltd. (supra), Carbonink Products (supra) and Thressiamma (supra) the High Court was considering the case at the stage of writ appeal i.e after the matter had already been considered by a Single Judge. The decision Dhampur Sugar Mills Ltd. (supra) of the Hon'ble Supreme Court is also a short order which appears to have turned on its own facts.

12. On the other hand there are innumerable decisions of the Hon'ble Supreme Court which say that the High Court can refuse to entertain a writ petition under Article 226 where there exists alternative remedy, which is adequate and efficacious, unless a party complains of fraud or absence of jurisdiction in the authority before whom the alternate remedy lies. In this connection the decisions in Uttar Pradesh Jal Nigam v. Nareshwar Sahai Mathur, (1995) 1 SCC 21, Danda Rajeshwari v. Bodavulu Hanumayamma, (1996) 6 SCC 199 and Titaghur Paper Mills Co. Ltd. v. State of Orissa, AIR 1983 SC 603 may be noticed. In Asst. Collector of Central Excise v. Dunlop India Ltd., AIR 1985 SC 330, while deprecating the resort to. the filing of the writ petition under Article 226 in respect of a matter for which remedy lay under the Central Excise and Salt Act, 1944, the Hon'ble Supreme Court observed as under (AIR p. 332 Para 3):

“………Art. 226 is not meant to short circuit or circumvent statutory procedures. It is only where statutory remedies are entirely ill suited to meet the demands 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 mixed up and the prevention of public injury and the 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. Surely matters involving the revenue where statutory remedies are available are not such matters. We can also take judicial notice of the fact that the vast majority of the petitions under Art. 226 of the Constitution are filed solely for the purpose of obtaining interim orders and thereafter prolong the proceedings by one device or the other. The practice certainly needs to be strongly discouraged.”

13. In the instant case not only is the alternative remedy available but it has also been invoked by the petitioner itself. As noticed hereinabove, there has already been one round of litigation before the statutory authorities and a second round commenced during the pendency of the present writ petition. The subsequent show cause notice is admittedly yet to be adjudicated upon by the Assistant Collector. Even if, as contended by the petitioner, the matter stands covered in its favour by the judgment of Hon'ble Supreme Court in J.G Glass Industries Ltd. (supra), we do not see any reason why the petitioner cannot rely upon this decision in the proceedings pending before the Assistant Collector, Respondent No. 5. We are certain that the Assistant Collector will take note of such a submission and pass appropriate consequential orders. In the facts and circumstances of the present case, we are of the view that the statutory proceedings under the Act pending at the stage of show cause notice ought not to be interfered with in exercise of our discretionary jurisdiction under Article 226 of the Constitution. We are satisfied that the petitioner has an effective alternative statutory remedy which ought not to be permitted to be bypassed by resort to writ proceedings under Article 226.

14. Mr. Sanghi finally prays that since the matter is pending before the statutory authority since 1990 it should be decided at the earliest. He also requests for directions in respect of the pre-deposit amount. As regards the first request, we direct that the final order on the show cause notice dated 22.11.1990, if not already made, should be finalised and pronounced by the Assistant Collector within three months from today and in any event not later than 30.11.2006 As regards the refund of the pre-deposit amount, if the petitioner makes a written request within a period of four weeks from today the same will be considered and orders passed thereon by the concerned authority within a period of eight weeks thereafter.

15. With the above directions, the writ petition is dismissed. The Registry is directed to send a certified copy of this order to the Respondents No. 5 and 6 within a period of one week from today.

Hindustan National Glass & Industries. Anr v. Uoi & Ors

Judgment Summary — Dr. S. Muralidhar, J.

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner's Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Hindustan National Glass & Industries. Anr v. Uoi & Ors

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