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The Central Excise Tariff Act, 1985
Y. Duraisamy vs The Commissioner on 13 February, 2002
The Companies Act, 1956
Article 226 in The Constitution Of India 1949
Ece Industries Limited vs Commissioner Of Central Excise, ... on 27 March, 2003

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Madras High Court
M/S.Sakthi Masala Private Ltd vs The Commissioner Of Central ... on 2 April, 2008

DATED:02.04.2008

CORAM:

THE HON'BLE MR.JUSTICE P.JYOTHIMANI

W.P.No.35544 of 2007

and M.P.Nos.1 & 2 of 2007

.....

M/s.Sakthi Masala Private Ltd.,

rep. By its Manager M.Nachiyappan

6 Mamarathupalaym, Erode 638 004.

... Petitioner

vs.

1. The Commissioner of Central Excise

No.1, Foulks Compound

Anaimedu, Salem 636 001.

2. The Directorate General of

Central Excise, Intelligence,

Chennai Zonal Unit,

C-3, "C" Wing, "Rajaji Bhavan"

Besant Nagar, Chennai 600 0090.

... Respondents.

Writ petition filed under Article 226 of the Constitution of India praying for issuance of a Writ of Prohibition as stated therein.

For petitioner : Mr. N.V. Venkataraman

For respondents : Mr. Velayutham Pichaya

....

ORDER

This writ petition is directed against the show cause notice issued by the second respondent dated 04.10.2007, under which the second respondent has directed the petitioner to show cause to the Commissioner of Central Excise, as to why the goods, viz.,

(i) "SAKTHI"/"STC" branded Bajji Bonda Powder should not be classified under Sub Heading 2108.99 of erstwhile First Schedule to the Central Excise Tariff Act,1985 and 2106.9099 of the present First Schedule to the Central Excise Tariff Act, 1985;

(ii) the goods viz., "SAKTHI"/"STC" branded Tamarind Rice Powder, Lemon Rice Powder, Garlic Rice Powder, Dhall Powder and Chilly Chutney Powder should not be classified under Sub Heading 2103.90 of erstwhile First Schedule to the Central Excise Tariff Act,1985 and 2103.9040 of the present First Schedule to the Central Excise Tariff Act, 1985; (iii) as to why the extended period under the proviso to Section 11A(1) of Central Excise Act,1944 should not be invoked and Central Excise Duty amounting to Rs.3,99,66,776/- and Educational Cess of Rs.5,76,352/- totalling Rs.4,05,43,128/- for the period from September,2002 to October,2006 should not be demanded on the goods manufactured and cleared without payment of duty; and (iv) as to why penalty should not be imposed under Section 11AC of Central Excise Act, 1944 and Rule 25 of Central Excise Rules, 2002.

2. The petitioner is stated to be a Private Limited Company incorporated under the Companies Act,1956 engaged in the manufacture and sale of various spices and other masala powders falling under Chapter 9 of the Central Excise Tariff Act,1985. As per the impugned show cause notice, the above said manufactured goods are not used as masalas, since they no longer retain the essential characteristics of spice meriting classification under Chapter 9. As per the show cause notice, it is presumed that the above said goods were cleared without disclosing the above said fact and without payment of appropriate Central Excise duty. 2(a). It is the case of the petitioner that during 1995, three out of the six items under dispute, viz.,

(i) Dal Mix (presently called as Dhal rice powder);

(ii)Idly, Dosa Powder (presently called as Chilli chutney powder);

(iii)Tamarind Mix (presently called as tamarind rice powder)

were the subject matter of investigation by issuance of show cause notice dated 27.11.1995 and 24.04.1996, against which the petitioner moved W.P.No.7029 of 1996. The said writ petition was disposed of by quashing the show cause notice relating to articles included in 0903.00 making it clear that if there is any other item manufactured by the petitioner not coming within the said entry, it would be open to the opposite party to proceed in accordance with law. The said order is reported in 2002 (140) E.L.T. 77 (Madras) [P.C.Duraisamy vs. Assistant Commissioner of Customs & Central Excise, Erode-1]. Two other connected writ petitions, viz., W.P.Nos.7162 and 7163 of 1995 were also disposed of along with the above said writ petition. 2(b). According to the petitioner, the three items, which were subject matter of the previous writ petitions, viz., (i) Dal Mix; (ii) Idly, Dosa Powder; and (iii) Tamarind Mix have merely undergone a change in English name without altering the contents and the current English names of the above products are, (i) Dal rice powder; (ii) Chilli Chutney powder; and (iii) Tamarind rice powder. According to the petitioner, by virtue of the earlier order stated above, the present impugned show cause notice in respect of the above three items suffers lack of jurisdiction. 2(c). It is the further case of the petitioner that based on the observations made in the above writ petitions, the respondents have also dropped further proceedings in respect of other two show cause notices relating to the manufacture of soap nut powder and the trading of cleaning powder apart from the above three items and the order of this Court has become final. 2(d). The remaining three items, viz., (i) Garlic Mix (presently called as garlic rice powder); (ii) Lemon rice powder; and (iii) Bajji Bonda powder, did not form part of the earlier litigation. In June and July,1998, the Government imposed levy on spices and the petitioner applied for registration and the registration certificate was given in favour of the petitioner in CE 250151 5186 Sl.No.7/98 and the petitioner has filed the classification list in terms of the then existing Rule 173B of the Central Excise Rules, 1944 and all the above said six products were classified by the petitioner under Chapter 9 and the same was accepted by the Department. 2(e). The petitioner by its letter dated 02.06.1998, has proposed to use the packing materials belonging to M/s.Sakthi Devi Spices Private Limited, having brand name "SANTHI" for packing bajji bonda mix and has agreed to discharge the duty of excise and the same was acknowledged by the respondents and returns have been filed for the month of June and July,1998. The Government, by Notification No.17/98, has exempted levy of excise duty with effect from 18.07.1998. Accordingly, the petitioner has filed refund claim, which was sanctioned by the Assistant Commissioner, Erode Division in the order dated 06.01.2000, after obtaining approval from the Assistant Commissioner (Technical) in the Office of the Commissioner of Central Excise, Coimbatore dated 28.12.1999. Therefore, according to the petitioner, the remaining three items, viz., (i) Garlic Mix (presently called as garlic rice powder); (ii) Lemon rice powder; and (iii) Bajji Bonda powder were classified by the petitioner under Chapter 9, which was accepted by the respondents without any contest and in spite of that, invoking the same under the present impugned show cause notice is without jurisdiction. The petitioner is stated to have obtained many awards for their manufacturing process.

2(f). It is the case of the petitioner that the impugned show cause notice seeks to reclassify the six products, out of which three, viz., (i) Dal Mix (presently called as Dal rice powder); (ii)Idly, Dosa Powder (presently called as Chilli chutney powder); and (iii)Tamarind Mix (presently called as tamarind rice powder), were the subject matter of the earlier show cause notice dated 27.11.1995 and 24.04.1996, which was already quashed by this Court and the said order has become final. In respect of other three products, viz., (i) Garlic Mix (presently called as garlic rice powder); (ii) Lemon rice powder; and (iii) Bajji Bonda powder, the petitioner has filed a statutory declaration under Rule 173B on 02.06.1998 stating that the said products are falling under Chapter 9 and brought to Central Excise duty for a very short period of two months and declaration of the said products in Sl.No.07, 10 and 22 under Chapter 9 in the brand name of "Sakthi" has been approved by the Excise Department through the Range Superintendent of Central Excise and the closing stock position of various finished goods have duly been approved by the Central Excise Officer on 02.06.1998 and returns were filed as per Rule 173G of the erstwhile Central Excise Rules,1944 for the two months, viz., July and August,1998 and the same was acknowledged by the Superintendent of Central Excise. 2(g). The spices falling under Chapter 9 were brought to duty by Notification No.5/98 dated 2.6.98 and thereafter, it was withdrawn by Notification No.17/98 dated 18.7.98. Therefore, the petitioner, who has remitted the amount for two months has filed refund application. According to the petitioner, all the six items have already been classified as spices and statutory declaration has been approved, and therefore, the impugned show cause notice seeking to demand duty for the period from September,2002 to October,2006, served on the petitioner on 08.10.2007, invoking the extended period of limitation of five years under the proviso to Section 11A of the Act,1944, is without jurisdiction and the same is without any authority of law. 2(h). The impugned show cause notice is challenged on various grounds including that when the earlier show cause notice has been set aside, subsequent proceedings on the same issue cannot be initiated on the basis of alleged suppression of facts and by invoking the extended period of limitation; that the earlier decision of this Court, viz., [P.C.Duraisamy vs. Assistant Commissioner of Customs & Central Excise, Erode-1 (2002 (140) ELT 77 (Mad.)] is binding on the respondents in respect of three items; that in respect of remaining three items which were not the subject matter of earlier writ petition the petitioner has already filed statutory declaration under Rule 173B under erstwhile Central Excise Rules,1944, which was approved and acknowledged; that the brand "Sakthi" was also disclosed in the said declaration and therefore, there was no suppression of any material fact to enable the respondents to initiate proceedings under extended period of five years as per Proviso to Section 11A; that the spices were originally brought under duty and subsequently exempted by notification No.17/98-CE dated 18.7.98, since the petitioner has remitted the duty for whole of July,1998, a refund claim was made, which was sanctioned on 06.01.2000; that even otherwise, under Section 11A, the respondents are permitted to initiate proceedings only for a period of five years, whereas the impugned notice proceeds for the demand from April,2002 to October,2006 and the show cause notice was served on 08.10.2007 and calculating the period till date of service, it is more than five years and therefore, the impugned show cause notice is void ab initio. It is admitted by the petitioner that it has not chosen to submit on the merits as to whether the impugned products would fall under Chapter 9 or 21, which is not within the realm of this Court.

3. It is the case of the respondents in the counter affidavit that the petitioner is a Private Limited Company registered under the provisions of the Companies Act,1956 incorporated in the year 1998, having their factory and office in the place mentioned in the writ petition, viz., No.6 Mamarathupalayam, Erode 638 004 and is engaged in the manufacture of various edible preparations, spice powders, masala powders, etc. and the products are marketed in the brand name "SAKTHI" and copyright owned Logo "STC". The Managing Director of the petitioner Company is one P.C.Duraisamy and his family members are the share-holders. 3(a). It is also the case of the respondents that the said P.C.Duraisamy is also a Director of M/s.Sakthi Hi-Tech Foods India Pvt. Ltd. and M/s.Santhi Devi Spices Pvt. Ltd. and other similar family concerns and he is also the proprietor of M/s.Sakthi Trading Company. All the concerns are situated in the same premises.

3(b). In the year 2005, the respondents came to know through intelligence that the petitioner is indulging in the evasion of excise duty in respect of Sakthi Brand food preparations without registration with the Central Excise Department and without payment of excise duty under law and wrongly classifying and availing duty exemption meant for Small Scale Industries by using the brand name "Sakthi" and logo "STC", which belong to P.C.Duraisamy, as proprietor of M/s.Sakthi Trading Company. 3(c). The second respondent, based on report, has visited the premises of the petitioner on 13.10.2005 and took statements from various persons, including one D.Senthil, Director of the petitioner Company; Nachiappan, Manager and P.C.Duraisamy, Managing Director. Since the petitioner has failed to furnish the requisite complete information relating to the ingredients of their products, the second respondent had to issue the impugned notice based on the available records. 3(d). It was, because of the suppression of various material facts, Section 11A(1) of the Central Excise Act,1985 was invoked for extended period, by claiming the amount as stated in the impugned show cause notice. The petitioner, instead of replying to the impugned show cause notice, has chosen to file the writ petition, which according to the respondents is not maintainable. 3(e). According to the respondents, the only Company which had registration certificate was one M/s.Sakthi Trading Company, which is a proprietary concern with P.C.Duraisamy, as its proprietor and using the said registration he has been clearing all disputed items in various names and manufacturing the goods in the same premises, viz., No.6, Mamarathupalayam, Erode. The certificate was issued in the name of M/s.Sakthi Trading Company, to the proprietor P.C.Duraisamy and no certificate has been obtained by the present petitioner, which is a Company registered under the Companies Act. 3(f). The writ petition, viz., W.P.No.7029 of 1996, mentioned by the petitioner, in which order was passed and reported in P.C.Duraisamy vs. Assistant Commissioner of Customs & Central Excise, Erode-1 (2002 (140) ELT 77 (Mad.) relates to M/s.Sakthi Trading Company, which is a proprietary concern and not the present petitioner Company. The earlier show cause notice dated 24.04.1996 was issued to M/s.Sakthi Trading Company in respect of Turmeric Powder, Chilli Powder, Coriander Powder, Masala Powder, Sundavathal, washing and cleaning preparations, such as soap nut powder and cleaning powder by the said proprietary concern. It was, based on the stand taken by the respondents in the counter affidavit in the said writ petition in respect of M/s.Sakthi Trading Company in respect of three items, the show cause notice was quashed, however, giving liberty to the respondents to proceed in accordance with law, if there is any other item manufactured by the petitioner not coming under the said Entry. Other writ petitions were also filed by P.C.Duraisamy, as proprietor of M/s.Sakthi Trading Company in respect of the goods manufactured by the proprietorship. Therefore, according to the respondents, on the factual position, the judgement given in the said case is not relating to the present petitioner at all and the question of applicability of the said judgement in respect of three items, which are covered in the present impugned show cause notice does not arise. 3(g). According to the respondents, the products manufactured by the present petitioner are different and they are sold in different names without registering themselves with the respondents. The Department's registration stood only in the name of P.C.Duraisamy of M/s.Sakthi Trading Company and the said certificate of registration was issued on 02.06.1998 for the purpose of manufacturing excisable goods regarding branded spices falling under sub heading No.0903.00 and if the petitioner manufactures any other thing, it does not fall under Chapter 9 and if the petitioner fails to inform the same and file return, it amounts to suppression of facts and therefore, the respondents are entitled to invoke Section 11A(1) of the Central Excise Act,1944. 3(h). The petitioner in this writ petition has not registered themselves with the respondents and no returns have been filed and therefore, it is not correct for the petitioner to state as if the respondents were already aware of the operation of the petitioner. It is also the further case of the respondents that by making claim from September,2002 to October,2006, they invoked the extended period of five years limitation and not beyond that period. According to the respondents, it is the petitioner, who has misrepresented and misled by filing of the writ petition against the show cause notice which is a clear abuse of process of law. 3(i). According to the respondents, M/s.Sakthi Trading Company, which is the petitioner in the earlier writ petition has produced three products, which were disputed therein, wherein the contents of spices in the goods were ranging from 55% to 90% and therefore, classified under Chapter 9 of the Act. However, in respect of the products manufactured by the petitioner, the spice contents was ranging from 15% to 20%. Even as per the statement given by the Director and Managing Director of the petitioner Company, it warrants classification under Chapter 21. Simply because the petitioner is using the brand name and logo of M/s.Sakthi Trading Company, the concession extended to the said proprietary concern cannot be extended to the petitioner, which is a different entity altogether. 3(j). It is the case of the respondents that even in the earlier writ petition, this Court has given liberty to the respondents to proceed in accordance with law if any other items were manufactured. Apart from the fact that the petitioner Company has not registered with the Central Excise Department for manufacture, the claim of the petitioner is incorrect on the ground that the mixture of spices once mixed, the individual spices lose its essential characteristics and therefore, they cannot be classified under Chapter 9 as spices, as per the judgement of the Supreme Court in A.P.Products Ltd. vs. State of Andhra Pradesh (2007 (214) ELT 485 (SC). 3(k). The point raised by the petitioner in the writ petition that the Dal mix, Idly dosa mix and Tamarind mix have merely undergone a change in name in English without any alteration in its contents, is denied. It is also the case of the respondents that the petitioner has a right of appeal against the order of the second respondent and even thereafter, alternative remedy is available under the Act. When the statutory remedies are available in fiscal statute, it is only proper for the parties to seek such remedy. It is also denied that the impugned notice lacks jurisdiction. It is only after investigation that spice contents were found to be different, the impugned notice came to be issued. The finality attained in respect of three products was in relation to the products manufactured by P.C.Duraisamy, proprietor of M/s.Sakthi Trading Company, which is not the subject matter in the above writ petition. 3(l). It is also stated that the percentage of spice contents is a test for the purpose of bringing it either under Chapter 9 or 21. It is also stated that as decided by the Supreme Court, the essential characteristics of spices are lost when they are mixed and a new product emerges and therefore, the process of mixing would amount to manufacturing. It is also stated that even earlier in a case filed before this Court by M/s.Sakthi Trading Company, there was no decision on classification of the goods and the decision was merely based on the contents of the counter affidavit filed by the Department and even then this Court has given liberty to the respondents to proceed in the event of difference in the manufacture. It is also stated that the remaining three items, viz., Garlic mix (presently called garlic rice powder); lemon rice powder and bajji bonda powder have not formed part of the previous litigation.

4. Mr.N.Venkataraman, learned counsel appearing for the petitioner would contend that even under the earlier show cause notice, which was quashed by this Court, three items of same products were questioned which is conceded by the respondents in the counter and therefore, the respondents are not entitled to reagitate the issue by the impugned show cause notice. He would also submit that based on the order passed by this Court, the refund order has been passed by the Department on 06.01.2000. He would rely upon the judgement of the Supreme Court in East India Commercial Co.Ltd., Calcutta vs. Collector of Customs, Calcutta [1983 E.L.T.1342 (SC)] to substantiate his contention. As per the Constitution of India, the law declared by the highest Court in the State is binding on authorities or tribunals under its superintendence and they cannot ignore it either in initiating a proceeding or deciding on the rights involved in such a proceeding. Therefore, according to the learned counsel, by virtue of the earlier judgement passed by this Court in P.C.Duraisamy vs. Assistant Commissioner of Customs & Central Excise, Erode-1 (2002 (140) E.L.T. 77 (Mad.), it is not open to the respondents to issue a fresh show cause notice on the same issue. 4(a). In respect of the remaining three items he would also reiterated that in respect of those items, the returns were assessed and refund granted admitting that they are spices. Therefore, having given exemption in respect of the six products, it is not open to the respondents now to invoke Section 11A of the Act for the purpose of applying the extended period of five years beyond one year. According to the learned counsel, there was no suppression at all and monthly returns have been regularly filed and the goods have been well documented and therefore, it is not open to the respondents now to say that they are not spice condiments. To substantiate his contention that extended period under Section 11A of the Act cannot be invoked, learned counsel would also rely upon various judgements of the Supreme Court, viz., (i) 2003 (153) E.L.T. 14 (SC) [ P&B Pharmaceuticals (P) Ltd., vs. Collector of Central Excise ] ;

(ii) 2004 (164) E.L.T. 236 (SC) [ ECE Industries Limited vs. Commissioner of Central Excise, New Delhi ];

(iii) 2004 (166) E.L.T. 151 (SC) [ Hyderabad Polymers (P) Ltd., vs. Commissioner of Central Excise, Hyderabad ]; and

(iv) 2006 (197) E.L.T. 465 (SC) [ Nizam Sugar Factory vs. Collector of Central Excise, A.P. ].

He would also submit that mere change of opinion cannot be a ground for the purpose of invoking the extended clause under Section 11A of the Act.

5. On the other hand, Mr.Velayuthan Pichiya, learned counsel appearing for the respondents would submit that the earlier judgement reported in P.C.Duraisamy vs. Assistant Commissioner of Customs & Central Excise, Erode-1 (2002 (140) E.L.T. 77 (Mad.) has no bearing for the simple reason that it related to the proprietary concern, viz., M/s.Sakthi Trading Company, whereas the present petitioner Company is incorporated under the Companies Act and therefore, the question of applicability of various judgements referred to by the learned counsel for the petitioner does not arise. He would also state that the earlier show cause notice and the returns were filed by the proprietary concern, viz., M/s.Sakthi Trading Company represented by P.C.Duraisamy as its proprietor and therefore, M/s.Sakthi Trading Company is not a petitioner before this Court in this writ petition. According to the learned counsel, the constituents of the spices and their character in the manufactured goods are different, as found in the investigation. He would also rely upon the judgement of the Supreme Court in 2007 (214) E.L.T. 485 (SC) [A.P.Products vs. State of Andhra Pradesh]. His contention is that the petitioner is carrying on manufacturing of various goods in different names and the only registered company is M/s.Sakthi Trading Company and all other manufacturing units have been suppressed and therefore, the respondents are entitled to invoke Section 11A of the Act.

6. I have heard learned counsel for the petitioner and respondents and perused the entire records and given my anxious thoughts to various issues involved in this case.

7. At the outset it is relevant to note that the earlier judgement rendered by this Court and reported in P.C.Duraisamy vs. Assistant Commissioner of Customs & Central Excise, Erode-1 (2002 (140) E.L.T. 77 (Mad.) relates to the manufacturing of goods by the petitioner in the said writ petition, viz., P.C.Duraisamy, as proprietor of M/s.Sakthi Trading Company. That was a case relating to the show cause notice issued by the respondents regarding the manufacturing of edible preparations like Turmeric Powder, Chilly Powder, Coriander Powder, Masala Powder, Sundavathal and washing and cleaning preparations, such as soap nut powder and cleaning powder, coming within the edible preparations as classified under Central Excise Tariff sub heading 2108.90. In that case, which was by the proprietary concern of M/s.Sakthi Trading Company, the respondents have filed counter affidavit and in the counter affidavit it was specifically stated by the respondents as follows: "..... all the goods manufactured by the petitioner except branded soap-nut powder, branded sundavathal, branded appalam and un-branded Turmeric are classified under sub-heading No.0903.10 as spices and the same has since been approved."

It was based on the contents of the counter affidavit, this Court, having decided that practically the respondents have admitted the case of the petitioner, has quashed the impugned show cause notice without directing the petitioner therein to resort to alternative remedy. The operative portion of the said judgement is as follows:

" 7. It is true that where alternative remedies available, ordinarily the High Court should not entertain the matter under Article 226. Similarly even if the High Court has entertained the writ petition seeking to quash the show cause notice, it is open to the person concerned to file show cause so that the matter can be determined by the appropriate authority. While these cannot be any dispute relating to such well accepted principles, in the present case, in view of the stand taken by the respondent practically accepting the contention of the petitioner, I do not think any useful purpose would be served by directing the petitioner to undergo the process of filing show cause and pursuing the statutory remedies. In view of the stand taken in the counter affidavit itself, the show cause notice so far as it relates to articles included in 0903.00 is quashed. It is however made clear that if there is any other item manufactured by the petitioner not coming within the aforesaid entry, it would be open to the opposite party to proceed in accordance with law. Subject to the aforesaid observation, the writ petition is disposed of without any order as to costs."

8. A reading of the said judgement makes it abundantly clear that M/s.Sakthi Trading Company is a proprietary concern with Mr.P.C.Duraisamy as its proprietor. Further, the operative portion of the judgement of this Court as enumerated above, has only resulted in quashing of the show cause notice based on the contents of the counter affidavit and no legal principle has been laid down or any law has been declared. It is also on record that the earlier case was filed by only M/s.Sakthi Trading Company represented by its proprietor P.C.Duraisamy, which has been registered as per the provisions of the Central Excise Act and the present writ petitioner is M/s.Sakthi Masala Private Limited represented by its Manager M.Nachiyappan, which is admittedly a Private Limited Company registered under the Indian Companies Act and not registered under the Central Excise Act. The show cause notice issued earlier was not to the petitioner, but to M/s.Sakthi Trading Company, however the address of the petitioner as well as M/s.Sakthi Trading Company remains the same, viz., No.6, Mamarathupalayam, Erode 638 004. In such circumstances, the reliance placed on by the learned counsel for the petitioner, viz., judgement of the Supreme Court in East India Commercial Company Ltd., Calcutta vs. Collector of Customs, Calcutta [ 1983 E.L.T. 1342 (SC)] relating to the binding nature of law declared by the highest Court in the State on the authorities or tribunals under its superintendence, has no application to the facts and circumstances of the present case.

9. The necessary consequence is that the judgement in the above said case which relates to three items, viz., (i) Dal mix (Dhal rice powder); (ii) Idly, Dosa powder (Chilly chutney powder) and (iii) Tamarind mix (tamarind rice powder) cannot be stated to be binding on the respondents in respect of manufacturing of the said goods by the petitioner herein. It is the specific case of the second respondent as seen in the show cause notice that in the same address, viz., No.6, Mamarathupalayam, Erode 638 004, the products are manufactured under different names either as M/s.Sakthi Trading Company, which is the proprietary concern or as M/s.Sakthi Masala Private Ltd., (SMPC), which is a Private Limited Company registered under the Indian Companies Act, in which the said P.C.Duraisamy is a Managing Director and his wife Mrs.D.Shanthi, is functioning as Director or as M/s.Sakthi Aromatic Masala Private Ltd., started by his son D.Senthil Kumar, in which the said Shanthi and her son are Directors.

10. It is also seen that another Company by name M/s.Sakthi Hitech Food India Pvt. Ltd., with P.C.Duraisamy and his son D.Senthilkumar and Smt.D.Shanthi as Directors. That apart, they have started M/s.Santhidevi Spices (P) Ltd., with P.C.Duraisamy and his son are Directors and the registered address of all the companies is No.6 Mamarathupalayam, Erode. However, it is only M/s.Sakthi Trading Company which has been registered under the Central Excise Act and various goods like Dal powder, Idly, Dosa Powder, Chilly Powder, lemon rice power, bajji bonda mix, which have been manufactured and sold directly to buyers outside are cleared in wholesale to the sister concern like M/s.Sakthi Aromatic Masala Pvt. Ltd., which was found out on investigation and the various constituent legal personalities, which are functioning in the same address have not been registered and it was in those circumstances, after obtaining the statement from various persons, the impugned show cause notice came to be issued.

11. Whether M/s.Sakthi Trading Company, which is stated to have been founded by P.C.Duraisamy as its proprietor has subsequently become a Private Limited Company in the name of petitioner Company is a matter, which has to be decided on the facts, especially under the circumstances that the impugned show cause notice speaks about the constitution of various Companies in the same address with the said P.C.Duraisamy, his wife and son as Directors and these issues cannot be decided under the writ jurisdiction based on affidavit as it is held by this Court in 2008 TIOL 55 HC Mad.CX [ Madura Coats Limited, Madurai vs. The Commissioner of Central Excise, Madurai ] by K.Raviraja Pandian and Chitra Venkataraman,JJ. In a similar circumstance the Division Bench, after analysing the various judgements of the Apex Court on the issue, including the judgement in Siemens Ltd., vs. State of Maharashtra and others (2006 (12) SCC 33); State of H.P. and others vs. Gujarat Ambuja Cement Ltd., and another (JT 2005 (6) SC 298) apart from the judgement in U.P.State Bridge Corporation Ltd., vs. U.P.Rajya Setu Nigam Karmachari Sangh (1998 (4) SCC 268); and L.K.Verma vs. H.M.T. Ltd., and another (2006 (2) SCALE 90) it was held by the Division Bench that if there is a specific remedy available under the statute or in case where the factual issues are to be ascertained, writ petition cannot be entertained under Article 226 of the Constitution of India. Ultimately, the Division Bench has held as follows:

"7. In this case, as already stated, so many violations, which are factual in issue, have been alleged against the appellant and the appellant was only required to submit his explanation to the alleged violations, it is not expected a writ Court on the basis of an affidavit and counter affidavit, resolve the disputed questions of fact. Furthermore, what is impugned is only a show cause notice calling upon the petitioner to submit its reply. It is not a final determination. The respondent would have very well dropped the proceedings, if the cause to be shown by the petitioner are well founded. Hence, we are not able to appreciate the argument of the learned counsel Mr.Sriram Panchu that the appellant need not undergo the ordeal of replying to the show cause notice. "

12. Applying the dictum laid down based on hierarchy of judgements of the Supreme Court as stated above to the facts and circumstances of the present case, as per the contents of the impugned show cause notice, there is no difficulty to come to the conclusion that the matter requires deep appreciation of facts about the various constituents and the same cannot be decided by this Court while exercising jurisdiction under Article 226 of the Constitution of India.

13. As per Section 11A of the Central Excise Act,1944, the recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded can be done by the Central Excise Officer within one year from the relevant date, however, the proviso of the said section contemplates that where the excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded due to the reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act, the recovery can be made for a period of five years. The explanation to the said Section also states that in cases where the service of notice is stayed by the Court, then the period of such stay shall be excluded for the above determination of period of one year or five years as the case may be. For proper appreciation of the legal position, Section 11A(1) is extracted hereunder:

" 11A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded.-

(1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or [erroneously refunded, whether or not such non-levy or non-payment, short levy or short payment or erroneous refund, as the case may be, was on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under any other provisions of this Act or the rules made thereunder], a Central Excise Officer may, within [one year] from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect, Explanation.- 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 five years, as the case may be."

14. The claim made under the impugned show cause notice is for the period from September,2002 to October,2006. By computing the same the period come to only four years. However, the case of the petitioner is that the petitioner has received notice on 04.10.2007 and therefore, it goes beyond five years. Again, it is a matter which cannot be decided on affidavit. The question as to whether there is misrepresentation or deliberate suppression of material facts has to be decided by the authority only after the petitioner explains in its reply to the show cause notice and after the respondents going through the explanation submitted by the petitioner. What is impugned in this writ petition is only a show cause notice, which directs the petitioner to make its submission.

15. The judgement of the Supreme Court relied upon by the learned counsel for the petitioner in ECE Industries Ltd., vs. Commissioner of Central Excise, New Delhi [2004 (164) ELT 236 (SC)] to substantiate his contention that extended period of limitation is not invokable to the facts and circumstances of the present case is also not applicable. In that case, in earlier proceedings the same subject matter was decided under the earlier show cause notice for demand of duty and imposition of penalty for wrong availment of Modvat credit and its non-reversal and in such circumstances, the Supreme Court has held that when the issue has already been decided, the extended period under Section 11A of the Act has no application. The facts of the present case cannot be compared to the said judgement of the Supreme Court at all.

16. Again, the judgement relied on by the learned counsel for the petitioner in Hyderabad Polymers (P) Ltd., vs. Commissioner of Central Excise, Hyderabad [2004 (166) E.L.T. 151 (SC)], has no application at all. That was a case, wherein in an identical circumstance in respect of earlier notice, amount demanded was dropped and therefore, the subsequent notice on the basis of suppression of material fact was not entertained under Section 11A of the Central Excise Act,1944. The Supreme Court in that case has held as follows:

" 6. The Collector has given a categoric finding that the earlier Show Cause Notice raised a demand on a similar issue and for an identical amount. That Show Cause Notice had been dropped. In our view the Tribunal was wrong in still holding that there was suppression of fact or material. This Court has in the case of ECE Industries Limited vs. Commissioner of Central Excise, New Delhi reported in 2004 (164) E.L.T. 236 (S.C.) held as follows:- "4. In the case of M/s.P&B Pharmaceuticals (P) Ltd. vs. Collector of Central Excise reported in 2003 (153) E.L.T. 14 (S.C.) = 2003 (2) SCALE 390, the question was whether the extended period of limitation could be invoked where the Department has earlier issued show cause notices in respect of the same subject-matter. It has been held that in such circumstances, it could not be said that there was any wilful suppression or mis-statement and that therefore, the extended period under Section 11A could not be invoked.

5. In our view, the principles laid down in above case fully apply here. As earlier proceedings in respect of same subject-matter were pending adjudication it could not be said that there was any suppression and the extended period under Section 11A was not available."

On the ratio laid down in this judgement it must be held that once the earlier Show Cause Notice, on similar issue has been dropped, it can no longer be said that there is any suppression. The extended period of limitation would thus not be available. We are unable to accept the submission that earlier Show Cause Notice was for a subsequent period and/or it cannot be taken into consideration as it is not known when that Show Cause Notice was dropped. If the Department wanted to take up such contentions it is for them to show that that Show Cause Notice was not relevant and was not applicable. The Department has not brought any of those facts on record. Therefore, the Department cannot now urge that findings of the Collector that that Show Cause Notice was on a similar issue and for an identical amount is not correct."

17. Equally, the judgement of the Supreme Court relied on by the learned counsel for the respondents rendered in A.P. Products vs. State of Andhra Pradesh [2007 (214) E.L.T. 485 (S.C.)], has also no application on the facts and circumstances of the present case. In that case, it was held that in the preparation of masala powder, when the grinding and mixing of various spices and condiments in certain proportion was involved, after grinding and mixing, the ingredients lost their identity/character into a different name in the commercial world. However, in respect of the impugned show cause notice issued in the present case, such a decision cannot be arrived at at this stage by the respondents themselves unless and until the petitioner Company comes forward with its reply to the impugned show cause notice.

18. It is also stated that the point of classification is not raised. It is well settled that the question of classification relates to disputed question of facts and that cannot be decided in the writ petition and the High ,Court while exercising its jurisdiction under Article 226, should be very slow in interfering with the fiscal statute. A Division Bench of this Court in Writ Appeal No.771 of 2000 dated 19.07.2007 (The Superintendent of Central Excise, Range I "D" Division, Chennai and others vs. Mayil Mark Nilayam, A Partnership Firm rep. By its Managing Partner, Chennai) while allowing the appeal filed by the Department has held as follows:

" 4. Further, in respect of classification, in the case of Assistant Commissioner of Sales Tax, Kerala vs. P.Kesavan & Co. reported in 1996(81) E.L.T.7 (S.C.), the Supreme Court affirmed its view that the revenue authorities are in better position to seek and appreciate necessary evidence to determine whether a particular product would fall under a particular entry or not and Courts ought not entertain the writ petitions on such issues and rather direct the writ petitioner to agitate their grievances before the statutory authorities even where sufficient evidence is placed before the writ court for an unambiguous conclusion upon technical matters. Yet another decision of the Supreme Court is in the case of State of Goa vs. Leukoplast (India) Ltd. Reported in 1997(92) E.L.T. 19 (S.C.). The Supreme Court has decided that the writ jurisdiction not exercisable to decide disputed questions of fact such as whether surgical dressings and bandages were "drugs or medicines" for purposes of assessment of sales tax. Further the Supreme Court also has observed that the High court should not have allowed the assessees to by-pass statutory appellate remedies and entertain their writ petition. Another decision of the Supreme Court is in the case of Southern Engg. Industries vs. Superintendent of Central Excise reported in 1991 (52) E.L.T. 373 (Mad.) wherein the Supreme Court has held that when statutory remedies are available, in a fiscal statute, it is proper for the parties to seek such remedies.

5. It is also well settled and established principle of law that in respect of a fiscal statute, the High Court shall seldom or very slow to entertain a writ petition unless or otherwise it is established before the Court that the action of the respondent is perverse and no prudent person would take such course. In the light of the above Judgements, we are of the considered view that whether the activity of the assessee could be regarded as a manufacture or not and whether the product dealt with by the assessee would come within a particular tariff entry or not is a matter to be considered by the authorities only and it cannot be decided by means of an affidavit and counter affidavit. The order impugned in the writ appeal is hereby set aside and the respondent is hereby given eight weeks' time from the date of receipt of a copy of this order for giving reply to the show cause notice dated 26.06.1998 and thereupon the appellants are directed to proceed further by following the due process of law and pass appropriate orders in accordance with law. The writ appeal is allowed. No costs. Consequently, connected miscellaneous petition is closed.

In view of the above said facts and on the basis that what is impugned in this writ petition is a show cause notice, which requires factual assertion of material facts, I am of the considered view that the writ petition is not maintainable. In view of the same, the writ petition fails and the same is dismissed. No costs. Connected miscellaneous petitions are closed.

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To

1. The Commissioner of Central Excise

No.1, Foulks Compound

Anaimedu, Salem 636 001.

2. The Directorate General of

Central Excise, Intelligence,

Chennai Zonal Unit,

C-3, "C" Wing, "Rajaji Bhavan"

Besant Nagar,

Chennai 600 090.