Haryana Sheet Glass Ltd & 1 Petitioner(S) v. Union Of India & 2 (S)

ORAL JUDGMENT

(Per : HONOURABLE MS. JUSTICE H.N DEVANI)

1. This petition under Articles 226 and 227 of the Constitution of India challenges show cause notice dated 4th May 2009 issued by respondent No. 2 - Commissioner of Central Excise & Customs, Surat-II, raising a demand of customs duty under section 28(1) of the Customs Act, 1962 (the Act) and interest under section 28AB of the Act; proposing penalty under section 112 and confiscation of imported capital goods under section 111 of the Act, etc.

2. According to the petitioner, the demand raised in the show cause notice pertains to the period from October 1996 to January 1998, whereas the show cause notice has been issued on 4 May 2009 and as such, in view of the provisions of section 28(1) of the Act the show cause notice is ex facie time-barred.

3. Mr. Uday Joshi, learned advocate for the petitioners has submitted that on a perusal of the show cause notice, it is apparent that the same pertains to the period from October 1996 to January 1998, whereas the same has been issued on 4 May 2009. Attention is invited to the provisions of sub-section (1) of section 28 of the Act, to submit that the demand in the show cause notice has been raised under the said provision which expressly provides for service of notice to a person chargeable with duty or interest within a period of six months from the relevant date whereas, in cases of collusion or any willful misstatement or suppression of fact by the importer or the exporter, the said period is substituted by five years. It is further submitted that the Explanation to section 28(1) of the Act specifically provides that, where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of one year or six months or five years, as the case may be. It is further submitted that a perusal of the provisions of section 11A(1) of the Central Excise Act, 1994 as well as section 28(1) of the Act, makes it absolutely clear that the time limit for issuance of show cause notice has been clearly stipulated therein and that, there no authority and/or forum is vested with the power to condone any delay caused in issuance of show cause notice under the said provision.

4. It is contended that as limitation has been incorporated in the statute itself, the impugned show cause notice which has been issued beyond the period of limitation prescribed in the statute is barred by limitation. It is urged that the impugned show cause notice, which has been issued pursuant to the order of the Supreme Court, is not sustainable as the said order being contrary to the provisions of section 28 of the Act and section 11A of the Central Excise Act is per incuriam.

In support of his submissions, the learned advocate has placed reliance upon the decisions of the Supreme Court in Fuerst Day Lawson Ltd. v. Jindal Exports Ltd.., (2001) 6 SCC 356 and Union of India v. Manik Lal Banerjee, AIR 2006 SC 2844, and Mamleshwar Prasad v. Kanhaiya Lal (dead) through L.Rs, (1975) 2 SCC 232.

5. The facts are not in dispute. The petitioner company at the relevant time, was engaged in the activity of manufacturing sheet glass. Vide letter dated 5 September 1997, respondent No. 3 - Development Commissioner, Kandla Free Trade Zone issued a letter dated 5.9.1997 informing the petitioner company that in view of the fact that the petitioner company had not fulfilled export obligation against the goods permitted to be cleared under the advance DTA sale facility, the petitioner company should pay the differential duty and that if any reduced duty benefit was availed of in 5% rejects already cleared, differential duty may also be paid to the Central Excise Officer. This letter was followed by another letter dated 14.10.1997 calling upon the petitioner company to pay differential duty on advance DTA sales immediately.

6. The petitioner challenged the aforesaid demands by way of a writ petition before this Court being Special Civil Application No. 5478 of 1998. Vide judgement and order dated 11 July 2008, the petition came to be allowed whereby this Court held that in absence of any show cause notice and consequential adjudication, the impugned communications cannot be permitted to hold the field and accordingly, quashed and set aside the said communications.

7. The Union of India challenged the aforesaid decision before the Supreme Court by way of a leave petition being Special Leave Petition No. 4808 of 2009, which came to be disposed of vide the order dated 28 April 2009, whereby the Supreme Court directed Commissioner of Customs, Range C.B.W, Division-I, to give show cause notice to the assessee stipulating the grounds on which he seeks to demand the duty. The show cause notice was to be given within two weeks from that date and reply thereto was to be filed within four weeks by the assessee. It was made clear that the Commissioner will decide the matter on merits and that the assessee would not raise the plea of limitation. The parties were directed to maintain status quo as prevailing on the said date till the Commissioner decides the matters in accordance with law and the Commissioner was directed to dispose of the matter within three months.

8. Pursuant to the aforesaid directions issued by the Supreme Court, the respondent No. 2 has issued the impugned show cause notice. However, it appears that despite the period of three months for disposing of the matter as directed by the Supreme Court, having expired long back, the Commissioner has still not disposed of the case.

9. According to the petitioner, the show cause notice is barred by limitation in view of the provisions of section 28(1) of the Act and that the order of the Supreme Court which overlooks the provisions of section 28 of the Act and section 11A of the Central Excise Act, is per incuriam.

10. From the facts noted hereinabove, it is apparent that the respondent No. 2 - Commissioner has issued the show cause notice pursuant to the directions issued by the Supreme Court vide order dated 28 April 2009. In the said order, it is expressly stipulated that the assessee will not raise the plea of limitation. A perusal of the said order also indicates that the assessee was represented through his learned counsel before the Supreme Court. It appears that at the relevant time when the Court recorded that the assessee will not raise the plea of limitation no objection has been raised on behalf of the petitioner. The Commissioner is duty bound to abide by the aforesaid directions issued by the Supreme Court. Hence, no fault can be found in the action of the respondent No. 2 in issuing the show cause notice in compliance with the directions of the Supreme Court.

11. As regards the contention that the order passed by the Supreme Court is per incuriam inasmuch as the same is passed without considering the provisions of section 28(1) of the Act and section 11A of the Central Excise Act, as held by the Apex Court in A.R Antulay v. R.S Nayak, (1988) 2 SCC 602, an irregular order of a court of unlimited jurisdiction can be set aside by it on application being made to that Court either under rules of court dealing expressly with setting aside the orders for irregularity or ex debito justitiae if the circumstances warrant. (Emphasis supplied). Thus, if at all the petitioner is aggrieved by the directions issued by the Supreme Court, the remedy lies before the Supreme Court and not before this Court.

12. In the light of the aforesaid discussion, the petition being devoid of any merit is summarily dismissed with no order as to costs.