1989 (5) TMI 64 - HC - Central Excise

Issues Involved:
1. Definition of "manufacturer" under Section 2(f) of the Central Excises and Salt Act, 1944.
2. Jurisdiction of the Central Excise authorities to issue a show cause notice.
3. Applicability of the limitation period under Section 11A of the Central Excises and Salt Act, 1944.
4. Validity of proceedings under the Central Excises and Salt Act, 1944.

Issue-wise Detailed Analysis:

1. Definition of "manufacturer" under Section 2(f) of the Central Excises and Salt Act, 1944:
The petitioner, Anglo-India Jute Mills Co. Ltd., argued that it should not be considered a "manufacturer" under Section 2(f) of the Central Excises and Salt Act, 1944, as it only supplied raw materials (granules) to other manufacturers who produced polythene films independently. The petitioner emphasized that these manufacturers operated with their own machinery, employees, and supervision, and the petitioner had no control over their manufacturing activities. The respondents, Central Excise Authorities, contended that the petitioner engaged in manufacturing by supplying raw materials and paying job charges, thus falling within the definition of "manufacturer" under Section 2(f). The court referenced the Supreme Court decision in Ujagar Prints v. Union of India, which clarified that job workers are liable for excise duty as they cause the "manufacture" of goods, irrespective of ownership.

2. Jurisdiction of the Central Excise authorities to issue a show cause notice:
The petitioner challenged the jurisdiction of the Central Excise authorities to issue the show cause notice dated 16-3-1982, arguing that the notice was issued after the expiry of the limitation period and was therefore illegal and without jurisdiction. The court had to determine whether the facts disclosed in the notice to show cause warranted the initiation of proceedings and whether the respondents had the jurisdiction to issue such a notice. The court found that the issue of whether the petitioner was a manufacturer needed to be adjudicated based on evidence, and the writ court was not the appropriate forum for such fact-finding.

3. Applicability of the limitation period under Section 11A of the Central Excises and Salt Act, 1944:
The petitioner argued that the notice to show cause was issued beyond the six-month limitation period specified in Section 11A of the Central Excises and Salt Act, 1944. The respondents countered that the petitioner had not disclosed the manufacturing activities, justifying the extended limitation period of five years under the proviso to Section 11A(1). The court noted that for the extended limitation period to apply, there must be evidence of deliberate withholding of information by the assessee. The court found that this issue required further adjudication by the appropriate authorities.

4. Validity of proceedings under the Central Excises and Salt Act, 1944:
The petitioner sought to quash the show cause notice and related proceedings, arguing that they were initiated with a mala fide motive and were without jurisdiction. The court examined whether the actions of the respondents were barred by limitation and whether the proceedings were justified. The court concluded that the petitioner should be given an opportunity to present evidence before the appropriate authorities, and the writ court should not interfere at this stage. The court left the issue open for adjudication by the relevant authorities and allowed the respondents to proceed in accordance with law.

Conclusion:
The court disposed of the writ petition and the Rule, vacating all interim orders. It emphasized that the petitioner should be allowed to present its case before the appropriate authorities, and nothing observed by the court would prejudice either party. The court granted a stay of operation of its order for two weeks after the Summer Holidays and made no order as to costs.

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