TMI Blog1997 (6) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... collection of data or information and transferring the same on the floppy cannot be said to be goods manufactured by the petitioner nor can the process of transcribing information on the floppies to meet the varied needs of the customers concerned, be said to involve any process of manufacture within the meaning of Section 3 of the Central Excises and Salt Act, 1944. Search operations were all the same conducted by the Excise Authorities, on the business premises of the petitioner on 16th and 23rd of February, 1988, resulting in seizure of a larger number of invoices Books and other documents; and culminating in the issue of a show cause notice dated 25th February, 1988, pointing out to the petitioner company that it was engaged in developing software, Software packages and Data processing which were cleared, either on recorded media like magnetic tapes floppy, Discs or captively consumed. The show cause notice further pointed out that the petitioner Company was entering into contracts with various Companies for Software development and data processing and for the said purpose unrecorded floppies are supplied to it by the customers or purchased by the petitioner from the open marke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty under Section 3 of the Central Excises and Salt Act, not only should it be shown that the petitioner had manufactured goods but that the said goods were excisable. He urged that even if the department were to bring the petitioner's case in the residuary item of the 1st Schedule to the Central Excises and Salt Act, or the Tariff Act, 1985, yet it was essential for the Authorities to establish further that what was sought to be subjected to duty were `goods' and that the same were manufactured by the petitioner. Relying upon the decision of the Supreme Court, in Union of India and Others v. Delhi Cloth and General Mills Co. Ltd. Others - 1977 (1) E.L.T. (J 199), Bhor Industries Ltd., Bombay v. Collector of Central Excise, Bombay - 1989 (40) E.L.T. 280 (S.C.) = AIR 1989 SC 1153, Moti Laminates Pvt. Ltd. v. Collector of Central Excise, Ahmedabad - 1995 (76) E.L.T. 241 (S.C.) he argued that the activities undertaken by the petitioner did not amount to carrying out a process of manufacture so as to attract any duty on the same. He also placed heavy reliance upon a decision of the Supreme Court in Prabhat Sound Studios v. Additional Collector of Central Excise - 1996 (88) E.L.T. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply proposed to take certain action which the petitioner had all the opportunity to oppose by filing its objections both on law as also facts. Relying upon a decision of this Court in W.P. No. 15488/1985, disposed of on 11th August, 1992, he argued that this Court need not interfere at this stage and leave the issue on merits and other aspects of the controversy raised by the petitioner to be determined in accordance with the machinery prescribed by the Act. 5.Three questions fall for consideration. These are : Is the show cause notice legally bad insofar as the same(1) propose to levy duty in respect of the period covered by exemption notification issued by the Government under Section 11C? Is the show cause notice barred by limitation or without(2) jurisdiction insofar as it relates to the extended period beyond six months prescribed by Section 11A? and; Should this Court interfere with the show cause notice in the(3) face of the self contained machinery provided by the Act for adjudication of the issues raised by the petitioner and if so whether the development of software packages, data processing, etc., referred to in the show cause notice amounts to manufacture of goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in order that the same may be attracted it must be alleged in the show cause notice that the duty had not been levied or paid by reason of fraud, collusion [or] wilful mis-statement or suppression of fact on the part of the assessee or by reason of contravention of any of the provisions of the Act or and the Rules made thereunder with intent to evade payment of duty by such person or his agent. In other words if the department proposes to invoke the proviso, the show cause notice must indicate the omissions or commissions on the basis whereof the benefit of the extended period of limitation is proposed to be taken. I draw support on this view from the decisions of the Supreme Court in Collector of Central Excise v. H.M.M. Ltd. - 1995 (76) E.L.T. 497 (S.C.); Tamil Nadu Housing Board v.Collector of Central Excise, Madras - 1994 (74) E.L.T. 9 (S.C.) and Pushpam Pharmaceuticals Company v. Collector of Central Excise, Bombay - 1995 (78) E.L.T. 401 (S.C.), reliance whereupon was placed by Mr. Chandrakumar, Counsel for the petitioner. 9.In Cosmic Dye Chemical v. Collector of Central Excise, Bombay - 1995 (75) E.L.T. 721 (S.C.), the question that arose was whether a mis-statement or supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1985 without obtaining a Central Excise licence and cleared the same clandestinely without accounting the same in the statutory records, without filing a classification list and price list, without raising Central Excise gate passes and without payment of Central Excise duty." A bare reading of the above would show that not only does the show cause notice allege wilful suppression but it also alleges clandestine clearance of goods without accounting the same in the statutory records and filing classification list etc. It is not therefore a case where the show cause notice can be said to be invoking the extended period of limitation without even disclosing the basis on which the same was being done. The show cause notice is sufficiently clear in that it has accused the petitioner of having wilfully suppressed the fact of manufacture of the goods and clandestine clearance of the same. The argument that the show cause notice does not attribute any intention to evade duty to the petitioner does not impress me. The words used in the show cause notice suggesting wilful suppression of facts and clandestine clearance of the goods are sufficient to convey that the petitioner had the inten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave interfered even when the Statutes under which the proceedings are initiated provide for a complete machinery to challenge the orders passed are : Cases where the Constitutional(i) vires of the very enactment under which the proceedings are initiated is under challenge; Cases where the proceedings have been initiated or concluded(ii) in total violation of the principles of natural justice; and (iii) Where the orders impugned are totally without jurisdiction or where private and public wrongs are so inextricably mixed up or where prevention of public injury and the vindication of public justice demands that recourse to Article 226 of the Constitution be taken. In cases where public Revenue are involved and the Statutes under which such revenue are being collected provide for a complete code and a comprehensive machinery for correction the orders that the Authorities may make, interference either at the initial or at the intermediate is not viewed by Courts with affection. 13.In Titaghur Paper Mills Co. Ltd. and Another v. State of Orissa and Others - AIR 1983 SC. Page 603 the proceedings under challenge were initiated under the Orissa Sales Tax Act. The Court held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Article 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 Article 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." 15.To the same effect are two Divisions Bench decisions of this Court in W.A. Nos. 2031 and 2032/1989, decided on 3-6-1991; and W.A. No. 15488/1985, decided on 11-8-1992 where this Court while considering the question of classification of goods under the Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the jurisdiction to pass an order is different from a duty to pass a correct order. If there is no inherent lack of jurisdiction then just because the order that the Authority has passed or may propose to pass is not or may not be a correct order is no reason why the authority should be prevented from exercising its jurisdiction. Similarly if the Authority lacks inherent jurisdiction to pass an order, then even if the conclusion arrived at by it on merits may be legally unexceptionable, the order shall have to be set aside. Law not only require that correct orders should be passed by it also requires that the same must be passed by the Authorities competent to do so. The remedy against an incorrect order passed by an Authority competent to do so is not a short cut to the High Court but recourse to the statutory remedies prescribed by the Act. In that view therefore I see no reason to short circuit the proceedings initiated by the Collector, the valiant attempt made by Mr. Chandrakumar, for persuading me to do so notwithstanding. Whether or not recording of sound on duty paid magnetic tapes and development of computer software and recorded media are comparable as argued by Mr. Chan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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