TMI Blog1981 (2) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... dant is the Assistant Collector of Central Excise, Vellore. The second defendant is the Superintendent of Central Excise, Kancheepuram and the third defendant is the Union of India, represented by the Secretary, Ministry of Finance, New Delhi. 4. The plaintiff had been manufacturing at its factory at Chettipuram village Chingleput district, asphalted roofing sheets (final product) for which the intermediate product is fibre mat. The factory has been in operation since 1969 and is working under l. 4 licence openly subject to excise supervision. 5. In the first stage of manufacture the plaintiff utilises the road picked waste paper, card board, craft paper, paper board, newsprint etc. which had been disposed of as waste. The plaintiff used to purchase these wastes from the contractors. These pickings so purchased are wetted and converted into pulp and thereafter made into sheets by rolling the same in the machine, then dried in sun and cut into requisite size. The sheet s normal size is 122 X 94 or 95 cm. and the weight thereof would be 1.6 kg. or 1.7 kg. At this stage the product is called fibre mat but the authorities have been trying to term the same as mill board or pape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the writ petition No. 6287 of 1975 relating to earlier order had become infructuous and the same may be dismissed. The first defendant issued a notice to show cause dated 13-2-1978, to the plaintiff which was served on the plaintiff at its factory at Chettipunyam village on 16-2-1978. In paragraph 4, it is stated that - The Government of India have classified light roofing under Tariff item 17(4) as could be seen from exemption notification No. 25/76; dated 9-2-1976 and paragraph 5 thereof is as follows - Messrs. Light Roofing Ltd., Chettipunyam village are therefore required to show cause as to why the dutiability nature of the light roofing sheets cleared from their factory prior to 9.2 1976 i.e. the date of issue of Notification No. 25/76, dated 9.2.76 should not be decided. 8. Item 17 of the Central Excises and Salt Act (Act I of 1944) as amended by the substitution of a new item therefore by the Finance Act, 1976, having effect from 1-3-1976. Since the present show cause notice relates only to goods, cleared from the factory prior to 9-2-1976, the item relevant to the period before 29-3-1976 applied to the case which reads as follows :- Item 17, Paper, all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly without notice or hearing or adjudication and being an exemption notification, the manufacturers had neither the right nor the necessity to litigate the matter in court. There were no counter affidavits filed in the writ petition. It was for the first time by the show cause notice dated 5-8-1977, issued to the plaintiff by first defendant that the claim was made by the defendants that roofing sheets cleared prior to 9-2-1976 were liable to excise duty under Item 17(4). 10. The plaintiff is entitled to a determination by the Civil Courts as to whether asphalted roofing sheets were paper falling under Item 17(4) prior to 9-2-1976 on evidence oral and documentary. The plaintiff is also entitled to a declaration that asphalted roofing sheets were not covered by Item 17(4) prior to 9-2-1976 and to a permanent injunction restraining the defendants from claiming, imposing, levying or collecting any excise duty on roofing sheets cleared prior to 9-2-1976. 11. The action of the first defendant in issuing the show cause notice dated 13-2-1978 is mala fide and without good faith or honesty. The entire matter was pending in this court in W.P. 6287 and 6858 of 1975, which were filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of Assistant Collector dated 22-9-1975 has to be quashed as a nullity and therefore the appellate order dated 10-10-1975, has also to be quashed in toto. Clause (3) of Article 226 has no application to nullities such as orders violating natural justice. (b) The direction in the Appellate order to re-examine the applicability of item 17(2) to roofing sheets is null and void and without jurisdiction and must be set aside. (c) If a legal proceeding has been initiated by a show cause notice like the show cause notice dated 21-9-1974, to adjudicate liability of mats-intermediate product to duty under item 17(2)-then there would be a pending proceeding. If the final order therein is set aside then the authority can continue the pending proceeding on the basis that it was yet to be disposed of. In the instant case, there was no show cause notice to adjudicate liability of roofing sheets under item 17. The order dated 22-9-1975 was a direction to clear roofing sheets on payment of duty under item 17 for the future, that is, clearances made after 22-9-1975, when it is found that the order dated 22-9-1975 is a nullity, there is no proceeding pending which could be continued bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edule to Act 1 of 1944, from the whole of the duty of excise leviable thereunder. The petitioner had no opportunity of being heard and also could not question the decision as it was an exemption order. If and when the question of liability is properly raised in a proceeding for recovering alleged short levies for any period before 9-2-1976, the assessee is entitled to question the liability on the basis that roofing sheets do not fall and never fell under item 17(4)/(2) and to have the question determined either in a suit or if permitted in proceedings under Article 226. (j) The show cause notice dated 5-8-1977 raises the matter of recovery of alleged short levy prior to 9-2-1976, for the first time. Under Rule 10 under which only such action can be taken, the demand can be only in respect of a period of one year immediately preceding 5-8-1977, i.e., for any duty due but not levied or short levied in respect of clearances on or after 6-8-1976. Starting from 9-2-1976 the exemption notification was in operation and there is no scope for any short levy determination on the basis of the show cause notice dated 5-8-1977. (k) The notice is vague as to period in para 5 by merely ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efined pulp is sent to the moulding machine where the pulp is converted into mats. These mats are in a wet condition having about 55 to 60 per cent moisture. These mats are then spread in the open yard to dry under the sun. At this stage, the mats are very flexible and porus which allow quick easy absorption of asphalt at a later process of impregnation. The sun dried mats are trimmed and corrugated and dipped in asphalt solution. After the sun drying and before the boards are trimmed, the completion of the commodity paper takes place. It is later that these boards are impregnated with asphalt solution and finally aluminium paint is coated over the surface and the product is called light roofing material. The name given by the plaintiff after rolling and cutting the paper pulp, as fibre mats is immaterial, irrelevant and not germane for the purposes of the Excise Act. They are paper board within the meaning of the Central Excise Tariff even after drying and more so when it is marketed as roofing material. It is liable to duty under item 17(3) or 17(4) of the Central Excise Tariff. On 24-3-1970, the Assistant Collector of Central Excise, Madras, after referring to a letter writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-1975, to the Appellate Collector of Central Excise, Madras. The order in appeal is dated 19-9-1975. Before the Appellate authority the plaintiff contended that the intermediary product called by them fibrous mat or board is not at all goods and has no market by itself. The Appellate Authority observed that the process of manufacture and marketing of finished goods has not been gone into in detail and remanded the appeal. The plaintiff thereupon filed writ petition No. 6858 of 1975, against the appellate order dated 19/23-9-1975 in App. No. 319/75 before the Appellate Collector, Central Excise, Madras, for issue of writ of certiorarified Mandamus quashing the order. The plaintiff also filed a writ petition No. 6287 of 1975 against the order which was made on 22-9-1975, by the first defendant that the light roofing sheets themselves are paper boards within the meaning of the Central Excise Tariff and calling upon the plaintiff to pay duty after the clearance of the finished product. The order dated 22-9-1975, against which W.P. 6287 of 1975 was filed was made in pursuance of the appellate order dated 19-9-1975. The appellate order dated 19-9-1975 set aside the order dated 18- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the Central Government to merely an impose dixit. All classifications under the Central Excise Act are decided by Central Government on investigation and the general representation of manufacturers and after considering the manufacturing process. It is decision taken by the Central Government and is within the scope of its powers. The allegation that the exemption notification is contrary to natural justice or that it is illegal or ultra vires are not correct. The allegation that the exemption notification should be with notice to manufacturers generally or to the plaintiff in particular is not correct. If the plaintiff wants to contend that the goods that it manufactures do not fall within the scope of the excise tariff the plaintiff must raise its contentions before the authority concerned. It is not correct to state that the show cause notice dated 5-8-1977 for the first time claimed that roofing sheets cleared prior to 9-2-1976 were liable to excise duty under item 17(4). The Civil court has no jurisdiction to entertain the suit since it relates to the matters of revenue and hence the suit is not maintainable. The decision on such classification of Excise Tariff and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning the defendants from levying or collecting the excise duty on roofing sheets? 3. Whether the plaintiff is entitled to the declaration that the show cause notice dated 13-2-1978 is illegal? 4. Whether the claim by the defendant is in time? 5. To what relief the plaintiff is entitled ? W.P. 774 of 1980 : In the affidavit in support of the writ petition No. 774 of 1980, sworn to by one Mr. Santhanakrishnan, Chief Accountant of the plaintiff company, the allegations in the plaint are repeated. The reasons for filing of the writ petition are given in paragraphs 12, 13 and 14 of the affidavit in addition to the repetition of the allegations made in the plaint. The respondents in the writ petition filed a written statement in the above suit after a dealy of nearly 500 days contending inter alia that the Civil court has no jurisdiction to entertain the above suit which pertains the matters of revenue and that it was for the authorities under the Act to decide the various issues raised by the plaintiff. 15. At that time, when the suit was filed, Article 226 of the Constitution of India was amended by the 42nd amendment of the Constitution. Now, from 1-8-1979, the old Arti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rections of Appellate Collector in his order dated 10-10-1975 is not correct. The 10-10-1975 order clearly stated that the very question whether or not asphaltic roofing sheets fell under item 17 should be decided by the Assistant Collector after hearing the petitioner. (e) The show cause notice in para 5 requires the petitioner to show cause as to why the duty should not be demanded on the light roofing sheets cleared from the factory prior to 9-2-1976 i.e. from the date of the issue of the notification No. 25/76, dated 9-2-1976. (f) Right upto 19/23-9-1975 and even thereafter under the very order, the department was claiming duty under item 17 on the mats and not on the roofing sheets. The 10-10-1975 order directed an enquiry whether or not roofing sheets are liable under item 17 and the plaintiff has already made the submission that this direction was illegal and void. But in any event this direction does not justify a show cause notice for re-assessment on the basis of short levy for a prior period. (g) The show cause notice has pre determined the very question in issue whether at all roofing sheets fall under item 17 by the assertion in paragraph 4, that the Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on mats and therefore no demand of duty on the roofing sheets. In the face of that statement and the remanded enquiry for duty on mats, the Excise department cannot say that there was non-levy or short levy of duty on roofing sheets as to which there was never any claim by the department till the void order dated 22-9-1975. (l) The proposed re-assessment violates Article 226 of the Constitution of India, because it is without authority of law. The Act and Rule s do not permit re-assessment after 3 months or 6 months, as the case may be, vice Rule 10 of the Central Excises and Salt Act. The petitioner (the plaintiff in the above suit) therefore prays for the issue of a writ of certiorarified mandamus or any other appropriate writ quashing the proceedings of the second respondent dated 30-1-1978/13-2-1978 in C. No. V/17/30/6/76 T.2 and restraining the respondents (the defendants in the above suit) from levying or collecting the Central Excise duty on the finished product of the roofing sheets of the petitioner prior to 9-2-1976. 17. In the counter affidavit filed by the second respondent on behalf of the respondents the following averments are made: The second respondent ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 is illegal, barred by limitation, mala fide and without jurisdiction are without basis. The allegation that the order of the Assistant Collector was quashed as a nullity and therefore the order dated 10-10-1975 is a nullity is denied. The reference to Article 226(3) has no relevance. The allegation that the appellate order to re-examine the applicability of the item 17 of the Central Excise Tariff is not null and void as the writ petition thereon has been dismissed. The allegation in paragraph 14(c) that the order dated 22-9-1975 calling upon the petitioner to clear the goods on payment of duty is not a nullity for the writ petition thereon has been dismissed The allegation in paragraph 14(e) that the show cause notice dated 13-2-1978 seeks to levy duty prior to 9-2-1976 and this is not justified is denied. There was no pre-determination of any question as is stated in paragraph 14(g). The allegation that the Assistant Collector and his authorities (whatever is meant by that) including the Government of India have disqualified themselves is incorrect. The performance of a statutory authority is not like a game or sport and no statutory authority by office can disqualify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of findings. Before proceeding to discuss the issues in the suit relating to the notification made by the second defendant bearing the date 30-1-1978 and signed on 3-2-1978, marked as Ex. P. I, directing the plaintiff to show cause why the excise duty should not be levied on the product of light roofing manufactured and cleared by the plaintiff prior to 9-2-1976, the details regarding the manufacture of light roofing material and the several attempts made by the second defendant to levy excise duty on the material will have to be set out for a better under, standing of the case. 21. A Commissioner was appointed as per the orders of this court in Appln. No. 208 of 1979 to inspect the factory premises of the plaintiff located in Chettipunniyam village, Chingleput district, and submit a report about the details of the manufacture of the light-roofing sheets. The resort of the Commissioner is marked as Ex. C. 1. The manufacturing process is set out in the Commissioner s report and in the several statements filed by the plaintiff before the second defendant in earlier proceedings. 22. Road pickings of waste paper forms the raw material, this includes various types of paper produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 397/70, dated 20-2-1970, marked as Ex. P. 4, the second defendant informed the plaintiff that the mill boards manufactured by M/s. Light Roofings Ltd. at Chettipunniam village are assessable to Central Excise duty at the board stage itself under Tariff Item No. 17(3) applicable to mill boards. The manufacturer of mill board without the Central Excise licence is in contravention of the Central Excise Rules and the plaintiff was requested to apply for the Central excise licence. The plaintiff was also directed by the second defendant to make available the records to the Central Excise Range Officer at Kancheepuram to enable him to collect duty involved on the mill boards manufactured so far and cleared by the factory without payment of Central Excise duty. 25. As against this registered notice P. 4, the plaintiff filed the writ petition W.P. No. 1873 of 1970 on the file of this court for issue of a writ of certiorari calling for the records on the file of the second defendant in his O C. No 397/70, dated 20-2-1970, and for quashing the same. In the said writ petition the plaintiff herein contended that mill board under the notification of the Central Excise Act means any unbl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce by the plaintiff to the first defendant with reference to the show cause notice Ex. P. 6 is marked as Ex. P. 7. The main contentions of the plaintiff in its objections are as follows :- 1. The term mill board under which the intermediary product is sought to be classified means hard board rolled with high pressure used for binding and the intermediary produce cannot be called a mill board; 2. The following differences in the meaning between mill board and straw board in several dictionaries were pointed out : Mill Board Straw Board Webster Third New International Dictionary Strong heavy paper board suitable for lining book covers and for panelling in furniture Board made of straw pulp and commonly used for packing and box making In Funk and Magnalis Standard dictionary Heavy paste board used for the covers of books, invitation press board Coarse board made of straw used for paper boxes and book covers Shorter Oxford English dictionary A kind of stout paste board rolled with high p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17(2), directed the plaintiff to state why the intermediary product should not be classified as paper board falling under sub Item (4) of Item No. 17 to the First Schedule to the Central Excises and Salt Act, 1944, and further action taken to levy excise duty. The plaintiff was also given opportunity to represent the case in person before the first defendant. Ex. P. 9 is the objection statement made by the plaintiff to the first defendant in respect of the above said notice of the first defendant marked as Ex. P. 8. In Ex. P. 9, the plaintiff submitted the following for the consideration of the first defendant. 1. All along the first defendant was trying to classify the unimpregnated mat as a mill board and now the first defendant is trying to classify the product as paper board falling under sub-item (4) of Item No. 17, and this classification is also not correct. 2. The intermediary product is not known in the market either as paper or paper board and the same can have no value and use unless it is stiffened by impregnation with asphalt. Only after that process, it can be used as roofing material. Such a product can never be sold or purchased in the market as paper or pap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68 independent of the assessment on paper board. 29. Against the order of the Assistant Collector of Central Excise, Vellore, marked as Ex. P. 10, the plaintiff filed an appeal to the Appellate Collector of Central Excise, Madras in appeal No. 1670/75. The order of the Appellate Collector, Central Excise, dated 9-9-1975, is marked as Ex. P. 13. The operative portion of the order of the Appellate Collector is as follows :- The appellants contend that the fibrous mat or board is not at all goods and has got no market by itself. It appears that this issue of the process of manufacture and marketing of finished goods had not been gone into in detail by the original authority. I hereby direct that the Assistant Collector will re-examine the issue afresh and decide the case after giving proper opportunity to the appellants to explain their view point. 30. Ex. P. 14 is the letter of the second defendant to the plaintiff stating that the intermediary product, viz. paper board manufactured in the factory of the plaintiff is allowed to be cleared without payment of duty on provisional basis pending decision on the appeal by the plaintiff. However, the plaintiff was informed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e merely intermediary products and were not known or recognised as Boards or marketed as such and therefore would not be classifiable under T.I. No. 17 of the Central Excise Tariff and the question of levy of duty on intermediary product does not arise. In the show cause notice Ex. P. 18, it is also stated that the present position of light roofing is that they stand exempted under Notification No. 2/76 dated 9-2-1976, read with the Notification No. 72/76, dated 16-3-1976. The Assistant Collector from the abovesaid notification had taken note of the fact that the Government of India have classified the light roofing under Tariff Item No. 17(4) as could be seen from exemption Notification No. 25/76, dated 9-2-1976 and consequent on the amendment to the Finance Bill and the change of tariff description of the paper it was classifiable under Tariff Item No. 17(2) and this also stand exempted vide Notification No. 72/76, dated 16-3-1976. Asphaltic roofing sheets manufactured by M/s. Light Roofing Ltd. are exempted and this exemption under Rule 8 of the Central Excise Rules, 1944 is effective from 9-2-1976 that is from the date of issue of Notification No. 25/76, dated 9-2-1976. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... memo filed by the advocate for the defendant herein and the same is marked as Ex. P. 3. The memo Ex. P. 3 is to the following effect :- The Appellate Collector has remanded the case back to the Assistant Collector for fresh consideration. In the light of the decision taken that the intermediary product fibre mat is not liable to duty under Tariff Item 17, the above writ petition has become infructuous and has to be dismissed. Hence, on the strength of the abovesaid two memos, viz. Ex. P. 2 and P. 3, both the writ petitions were dismissed. Now we will have to consider whether the plaintiff is entitled to a declaration that the show cause notice dated 30-1-1978 marked as Ex. P. 1 is illegal and void for a consequential permanent injunction restraining the defendants from levying excise duty on the finished product of light roofing produced by the plaintiff. 33. Issue No. 1 : Whether the plaintiff is entitled to the declaration that asphalted roofing sheets were not covered by Tariff Item No. 17(4) ? Sec. 3 of the Central Excises and Salt Act, 1944, provides for the levy of duty and collection of the same. Section 3 reads as follows :- 3. (1) There shall be levied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd twenty paise per kilogram 3. Printing and writing paper, packing and wrapping paper, straw board and pulp board, including grey board, corrugated board, duplex and triplex boards, other sorts. Ninety paise per kilogram 4. All other kinds of paper and paper board not otherwise specified. One rupee and twenty paise per kilogram. Item No. 17 was amended by Act 66 of 1976 as follows :- Paper and Paper Board, all sorts (including paste board, mill board straw board, card board, and corrugated board) in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power- (1) Uncoated and coated printing and writing paper (other than poster paper) Twenty five per cent ad valorem (2) Paper board and all other kinds of paper (including paper or paper boards which have been subjected to various treatments such as coating, impregnating, corrugation, creping and design printing), not elsewhere specified. Forty per cent ad valor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led before the Appellate Collector of Central Excise and the said Appellate Collector of Central Excise was pleased to set aside the order of the Assistant Collector of Central Excise and directed the Assistant Collector of Central Excise to re-examine the issue afresh and decide the case after giving proper opportunity to the plaintiff to explain their view points. As against this order of the Appellate Collector the plaintiff filed a writ petition No. 6858 of 1975 in which the plaintiff prayed for quashing the order of the Appellate Collector, Central Excise. The above said proceedings were taken in respect of the intermediary product. 34. As far as the final product is concerned, viz. the light roofing sheets, the second defendant issued an order as per Ex. P. 14, dated 22-9-1975 that the finished product is to be cleared from the factory only on payment of Central Excise duty leviable under Tariff Item No. 17(4) of the Central Excise Tariff. As against this order, the plaintiff filed a writ petition No. 6287 of 1975 for a writ of certiorarified mandamus declaring the above order as void and for quashing the same. 35. Thus from the abovesaid proceedings it is seen that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Salt Act, 1944, the Central Government hereby exempt asphaltic roofing sheets falling under sub-item (2) of Item 17 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) from the liability of the duty leviable thereon. As per this notification it looks as if the Government had already decided that asphaltic roofing sheets falling under Tariff Item No. 17(2) as it then stood. Whatever may be the position prior to the notification but after the abovesaid notification it is clear that the Government is of the view that Asphaltic roofing sheets fall under Tariff Item No. 17(2). An argument was advanced on behalf of the plaintiff that the decision of the authorities that the asphaltic roofing sheets falling under Tariff Item No. 17(2) was not taken after due notice to the persons concerned. It is not known whether any decision was arrived at by any duly constituted authority to the effect that the asphaltic roofing material come under Tariff Item No. 17(2) after observing the due formalities. But from the show cause notice, Ex. P. 18, it is seen that the excisability of asphaltic roofing material which was the subject matter of discussion in the Fourth and Fif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... altic roofing sheets from Item No. 17 clearly shows that the Government had also decided that this item falls under tariff Item No. 17. Hence my finding on this issue is that the finished product viz. asphaltic roofing sheets is an item taxable under Central Excise Tariff No. 17(4). 41. Issue No. 3: Whether the plaintiff is entitled to the declaration that the show cause notice dated 13-2-1978 is illegal ? The point for determination in the writ petition :-Whether the petitioner viz. the plaintiff in the suit is entitled to a writ of certiorarified mandamus or any other appropriate writ quashing the proceedings of the second respondent dated 30-1-1978/13-2-1978 in C. No. V/17/30/6/76 T. 2 ? It is seen that the earlier show cause notice viz., Ex. P. 6 dated 7-9-1972 and Ex. P. 8, dated 21-9-1974 were issued only in respect of intermediary product in the process of manufacturing asphaltic roofing sheets viz. fibrous mat. The Central Excise authorities were vacillating in classifying the intermediary product and at one time as per Ex. P. 6 they sought to classify the intermediate product as a mill board. The second show cause notice, viz. Ex. P. 8 sought to classify the interme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of the advice of the Chief Chemist of the department the Central Excise authorities seems to have arrived at the conclusion that the fibre mat or the base mat which is an intermediary product will not attract the levy of excise duty in view of the fact no mechanical process involved in the manufacture of the same. This is made clear in the third show cause notice Ex. P. 18 dated 5-8-1977. Hence, the department did not pursue the show cause notice Ex. P. 6 dated 7-9-1972, and Ex. P. 8 dated 21-9-1974, in respect of the intermediary product It is not brought to the notice of this court whether any opinion was offered by the Chief Chemist or whether any decision was taken in the Central Excise Tariff Conferences held in 1975 and 1976 and whether the end product, viz. the asphaltic roofing material is liable to excise duty under Tariff Item No. 17(4). But as per Ex. P. 18, the third show cause notice with reference to the levy of excise duty, an inference is sought to be drawn that the finished product is excisable under Tariff Item No. 17(4) on the strength of the Notification No. 25/76, dated 9-2-1976, by which the Government exempted the levy of duty in respect of the light roof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how cause le. the Assistant Collector of Central Excise why he should not pay the amount specified in the notice. 2. The Assistant Collector of Central Excise, after considering the representation, if any, made by the person on whom notice is served under sub-Rule (1), shall determine the amount of duty or charges due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined within ten days from the date on which he is required to pay such amount or within such extended period as the Assistant Collector of Central Excise may, in any particular case, allow. The period of three months prescribed under Rule 10(1) is now enhanced to six months. Hence as per the Rule l0, the department can claim excise duty on light roofing material only in respect of the roofing sheets produced during six months prior to the show cause notice, Ex. P. 18. 43. In order to meet this argument the defendants contend that the show cause notice was issued under Rule 10-A of the Central Excise Rules in respect of which the period of limitation is five years. Rule 10-A of the Central Excise Rules reads as follows - 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of escaped turnover by best judgment is in excess of the Rule making power and the sub-Rule as a whole is therefore invalid. Relying upon the aforesaid decision, it is contended that the Act insofar as it does not provide for recovery of escaped assessment or provide residuary powers for recovery of sums due to Government but only provides for them in the rules, the demand in pursuance of the Rule s is unsustainable. The contention of the learned Counsel is well founded. In R. Sundararajulu Naidu v. Entertainment Tax Officer, Madurai VII, 1967-1-MLJ 458, Venkatadri J. had occasion to consider a similar question in dealing with the validity of the Rule as made under the Madras Entertainment Tax Act (X of 1939), where in the main Act there was no provision for assessing the escaped income but a provision has been made only in the Rule s. The learned Judge held that where the main enactment is silent on the question of levy of escaped assessment, the Rule s made under the Act cannot extend the charging power. Following the decision in Haji P.A. Kareem v. Dy. Commercial Tax Officer, Mettupalayam, 1966-18 STC 370, referred to above we hold that Rule 12 in so far as it seeks to exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , will not in any way support the case of the defendants. 45. Reliance was placed on behalf of the defendants on the case reported in Assistant Collector of Central Excise, Calcuttta v. National Tobucco Co. of India Ltd., 1972 S.C 2563-1978 E.L.T. (J 416), where the Supreme Court had occasion to deal with Rule 10-A of the Central Excise Rules. In the course of the judgment it is observed as follows :- It is true that Rule 10-A seems to dear with collection and not with the ascertainment of any deficiency in duty or its cause by a quasi-judicial procedure. If, however, it is read in conjunction with Section 4 of the Act, we think that a quasi-judicial proceedings, in the circumstances of such a case, could take place under an implied power. It is well established Rule of construction that a power to do something essential for the proper and effectual performance of the work which the statute has in contemplation may be implied. See Craies on Statute Law, 5th Edition, page 105. This case cannot be an authority for the proposition that Rule 10-A is valid. The question whether Rule 10-A which relates only with collection can be made use offer the as ascertainment of deficien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agitated in a civil court. But where a plea seeks to prove that the impugned order is a nullity in the true legal sense, that is a plea which does not come within the mischief of the bar created by Sections 3(4) and 16 of the Act. 48. In the case reported in the Pabbojan Tea Co. Ltd. etc. v. Dy. Commissioner, Lakshmipur and others, AIR 1968 S.C. 271, where the Supreme Court had an occasion to deal with similar provisions in the Minimum Wages Act and the observation of the Supreme Court can be usefully extracted here - It is pertinent to note that Section 24 of the Act creates an express bar in respect of a particular kind of suits, namely, suits for recovery of wages in certain eventualities. The obvious intention was that a poor employee was not to be driven to file suit for the payment of the deficit of his wages but that he could avail himself of the machinery provided by the Act to get quick relief. It does not in terms bar the employer from instituting a suit when his claim is that he has been called upon to pay wages and compensation to persons who are not governed by the notification under the Minimum Wages Act. On an analysis of the provisions of the Act we find (l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision is already declared unconstitutional or the constitutionality of any provision is to be challenged, a suit is open. A writ of certiorari may include a direction for refund if the claim is clearly within the time prescribed by the Limitation Act but it is not a compulsory remedy to replace a suit. In the case reported in the State of West Bengal v. The Indian Iron nd Steel Co. Ltd., AIR 1970 S.C. 1298 also the above principle was recognised. 50. Taking into consideration the principles laid down in the above decisions and also bearing in mind the fact that the complaint by the plaintiff relates to the very validity of the proposed assessment and also taking into consideration that there is no express bar of the jurisdiction of the civil court in the Central Excises and Salt Act, 1944, we will have to come to the conclusion that the objection of the defendants with regard to the jurisdiction of the court to entertain the suit will have to be negatived. 51. The next question raised by the defendants is that as per Ex. P. 1, only a show cause notice had been issued and the plaintiff is at liberty to file his objections end that the second defendant after considering th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was no non-disclosure of a primary material fact which the assessee was bound to disclose under Section 34 (1) (a) of the Act, the High Court can interfere by issuing an appropriate writ. The headnote in the above decision may be usefully extracted here - The High Courts have ample powers under Art. 226 of the Constitution, and are in duty bound thereunder to issue such appropriate orders of directions as are necessary in order to prevent persons from being subjected to lengthy proceedings and unnecessary harassments by an executive authority acting without jurisdiction. Alternative remedies such as are provided by the Income-tax Act cannot always be a sufficient reason for refusing quick relief in a fit and proper case. 54. In the case reported in Rajaram Varma v. State of U.P. and others, AIR 1968 All. 369, Full Bench of the Allahabad High Court observed as follows :- It is true that if a statute creates a new right or a new obligation and also specifies the particular mode in which the same is to be enforced, the jurisdiction of ordinary courts is by implication excluded and the enforcement of the right or the obligation has to be done only by recourse to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wholly outside the jurisdiction of the taxing authorities and in respect of such illegal action the jurisdiction of the civil court continued to subsist in our judgment the suits were competent. 58. In the case reported in Sakthi Sugars Ltd. and others v. Dy. Commercial Tax Officer, Bhavani and others, 23 STC 232, a Division Bench of this court observed as follows :- But if a factual determination on a question tantamounts to the investigation of a jurisdictional fact, then the High Court will not refrain from investigating the same and adjudicating upon it if the result of such an investigation decides a jurisdictional fact which would enable the taxing authorities to assume jurisdiction and bring to tax certain articles, then it cannot be said that no Rule at all under Art, 226 can be issued. Relying on the principles laid down in the above decisions and in view of the findings that the show cause notice is potently barred by limitation this court has got the power to issue a writ of certiorarified mandamus to quash the illegal notice. 59. On behalf of the defendants reliance is sought to be placed on the decision of the Privy Council reported in the Secretary of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty on final product; 3. The earlier show cause notices are not in any way connected with the show cause notice Ex. P. 1 in view of the fact that memos filed in both the writ petitions viz. Ex. P. 2 and P. 3 which clearly state that the earlier show cause notices have become infructuous. On account of these reasons it cannot be said that Ex. P. 1 is the continuation of the earlier show cause notices. 61. Taking all the above said circumstances there is no difficulty in coming to the conclusion that the show cause notice Ex. P. 1 is illegal, void and obviously barred by time and this court has the jurisdiction to grant appropriate reliefs. Hence my finding on this issue is that the plaintiff is entitled to the declaration that the show cause notice dated 13-2-1978 is illegal. I answer the point in the writ petition in affirmative and hold that the plaintiff is entitled to the relief prayed for in the writ petition. 62. Issue No. 4 : Whether the claim by the defendant is in time ? Rules 10, 10-A and 11 of the Central Excises and Salt Act, 1944, were deleted and a new Rule 10 was made by the Notification No. 267/77-C.E., dated 6-8-1997, providing for six months for an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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