Calcutta High Court
Uniworth Textiles Ltd. vs Joint Development Commissioner on 2 May, 2002
Equivalent citations: 2002ECR325(CALCUTTA), 2002(144)ELT515(CAL)
Author: Dilip Kumar Seth
Bench: Dilip Kumar Seth
ORDER Dilip Kumar Seth, J.
1. The Subject:
The proceeding under the Excise Act was initiated under Section HA against the petitioner company having its office at Calcutta in respect of certain excise duty payable on account of certain transactions carried out at Raipur and Nagpur Units of the Company.
Submission on behalf of the Petitioners :
2. The writ petitioner had contested the said proceeding, which resulted in demand. Against the said demand, the petitioner had preferred an appeal before the CEGAT, Bombay. Ultimately, the said proceeding before the CEGAT, Bombay was transferred to CEGAT at Calcutta. The learned Cousnsel for the petitioners contended that the demand was raised not on the units but on the company, which had its office at Calcutta. He further contended that different units of the petitioners are spread over all over India. But the excise demand is raised on the company. Therefore, he contended that by reason of the transfer of the proceeding to CEGAT at Calcutta in respect of the petitioners company, which has its office at Calcutta, this Court has jurisdiction to entertain this writ petition, even on the ground of the question of territorial jurisdiction.
2.1 On the question as to the maintainability that the writ petition in view of availing of the alternative remedy, the learned Counsel, Mr. A. Singhvi appearing with Mr. Goutam Mitra contended that the CEGAT had no jurisdiction to interpret the question with regard to the authority of the Joint Development Commissioner to issue certain clarification, which by reason of Section 13 of the Foreign Trade (Development & Regulation) Act, 1992 (FTDR Act) is conferred upon the Director General alone. The CEGAT has no jurisdiction to entertain determination of the proposition of the FTDR Act. Therefore, this question can only be entertained and gone into by this Court.
2.2 The third ground he has raised is that under Section 11A of the Excise Act, the excise duty can be recovered only for a period of 6 months from the date it became due. However, the proviso to Section 11A prescribes that it can be dated back to a period of 5 years, provided there was fraud or collusion. Relying upon certain documents and annexures annexed with the writ petition, he contended that these questions were revealed in the return submitted by the petitioner and was always known to the respondents. Similar question was raised against the petitioner in another proceeding, when objected to, the said proceeding proceeded on grounds other than then ground covered under the proviso relating to the period beyond 6 months. Therefore, the initiation of the proceeding is incompetent and without jurisdiction.
2.3 If it is a question of jurisdiction, in that event, the question of fraud or collusion, though are matters relating to facts but it constituted jurisdictional fact, which this Court can go into, if raised. According to him, this question cannot be gone into by the CEGAT, since it would be in respect of interpretation of the statute under which CEGAT is constituted, which it cannot question. He had relied on various decisions to which reference would be made at appropriate stage.
Submission on behalf of the Respondents :
3. Mr. Shiv Das Banerjee, learned Counsel appearing on behalf of the respondents, on the other hand, pointed out that the entire cause of action arose outside the territorial jurisdiction of this Court. The cause of action that is being alleged is against the action of the authority, who has its office at Western Region of the country, over which this Court has no territorial jurisdiction. So far as this question is concerned, this Court cannot assume jurisdiction in respect thereof. He further contended that transfer of the proceeding to CEGAT will not create jurisdiction so far as this Court is concerned. It will not create jurisdiction by reason of raising the demand against the petitioner company at Calcutta. Since the cause of action arose and all the respondents are outside the territorial jurisdiction of this Court, this Court cannot assume jurisdiction.
3.1 He had also relied on the decision in the case of State of Rajasthan v. Swaika Properties and Anr. Reported in . He has also relied of an unreported decision of this Court in the case of Suprabhat Steels Limited and Anr. v. Customs, Excise & Gold (Control) Appellate Tribunal, Eastern Zonal Bench, W.P. No. 15484 (W) of 2001, disposed of on 13th February, 2002 ] by his Lordship Amitava Lala, to support his contentions. He further contended that this question of jurisdiction, which has been raised by the petitioner can very well be gone into by the CEGAT.
3.2 He further contended that the petitioner is guilty of delay and laches, since he could have challenged the same as soon as the notice to show cause was issued; but he waited till it was required to deposit the demand as condition precedent for hearing of the appeal under Section 35(F) of the Excise Act. He further contended that the petitioner has raised this question before the Commissioner, which has since been gone into and can very well be thrashed out in the appeal itself. On this ground, he prays that the writ petition be dismissed.
Reply of the Petitioners :
4. In reply, Mr. A. Singhvi, learned Counsel appearing for the petitioners, contended that the decision cited by Mr. Banerjee are distinguishable in view of the fact that there is an office of the petitioner situated at Calcutta and that proceeding has been transferred to CEGAT at Calcutta, therefore, the unreported decision will not apply, having regard to the facts and circumstances of this case. He further contended that the decision in Swaika Properties (supra) will also not apply having regard to the present fact of the case.
Jurisdiction of this Court:
5. After having heard the learned Counsel appearing for the parties, it appears that all the respondents except CEGAT are outside the territorial jurisdiction of this Court. The cause of action, which had arisen are also outside the jurisdiction of this Court. Therefore, this Court cannot exercise jurisdiction in respect of the cause of action raised in the proceeding under the Excise Act before an authority having its office outside the territorial jurisdiction of this Court. But the question assumes different dimension when the demand is made on the petitioner at Calcutta. Prima facie it appears that the demand is to be made on the petitioner, which has units in different parts of India and that such demands are not raised on the units, it is raised on the company. It may be a case that the demand may be related to a particular unit of the petitioner, but the demand is raised on the petitioner. It assumes different dimension when proceeding of the appeal preferred before CEGAT, Bombay was transferred to CEGAT, Calcutta.
5.1 In the present writ petition, the question of pre-deposit before the appeal is taken up for hearing is involved at the same time. The question of stay of proceeding before the CEGAT, Calcutta, is also involved in this writ petition. Thus, when this fact emerges, the jurisdiction of this Court cannot be ruled out, since it relates to taking up of the appeal for hearing by CEGAT at Calcutta.
5.2 The decision in Swaika Properties (supra) does not help in the present case in view of the distinguishing feature viz : the CEGAT, Calcutta is a party and some direction upon it is sought for, particularly, in respect of pre-deposit and question of jurisdiction of CEGAT, Calcutta to decide certain questions in the case pending before it and that the demand is raised on the company not on the Unit.
5.3 The unreported decision in Suprabhat Steel (supra) is also distinguishable. CEGAT, Calcutta exercise jurisdiction over the eastern region. When a case from Patna comes to CEGAT, Calcutta, then CEGAT Calcutta exercises its jurisdiction in respect of Bihar, not in respect of Calcutta. But, here in this case, the jurisdiction is in western region over which CEGAT, Bombay exercise jurisdiction. CEGAT, Calcutta does not exercise jurisdiction over Raipur or Nagpur. CEGAT, Mumbai has transferred this case to CEGAT, Calcutta within whose jurisdiction the petitioner's office is situated. It is the petitioner against whom the demand is made. The petitioner is carrying on business from its principal seat at Calcutta, though it also carries on business at Nagpur and Raipur on account of which the liability has accrued. The liability is that of the petitioner, though arising out of the two units. Thus, the said decision does not help Mr. Banerjee in the facts and circumstances of the case. Clarification by Joint Development Commissioner:
6. The question on the basis whereof the writ jurisdiction is invoked is related to two questions. The first question relates to the jurisdiction of the Joint Director under the FTDR Act issuing the clarification by reason of Section 13 of the FTDR Act.
6.1 According to Mr. Singhvi, this question cannot be gone into by the Tribunal, since it relates to an interpretation of a different statute. In my view, this contention does not seem to be of any substance. CEGAT is empowered to decide the appeal. It can very well determine the implication of the particular clarification issued by any other authority. However, issue involved before it whether such clarification could have been issued by the authority can also be a question, which can be decided in the appealitself. It is a question of interpretation of the particular section, namely, Section 13 FTDR Act as to whether such clarification could be issued by any authority other than the Director General or not.
Effect of Section 13 FTDR Act:
7. Mr. Singhvi contends that the Export and Import Policy in Chapter III provides that all these questions are to be decided by the Director General, which commensurate with Section 13 of the FTDR Act. Therefore, the clarification issued by an officer other than the Director is incompetent and without jurisdiction, as such void. Whether the said clarification is competent or void can be decided only by this Court and not by CEGAT, which is also, not an authority contemplated under the Foreign Trade (Development & Regulation) Act, 1992.
7.1 This point is related to the interpretation of Annexure "P-3" contained in Pages 114 and 115 respectively. Annexure "P-3" at Page 114 is a clarification dated 27th March, 1998 and that in Page 115 is dated 30th of April, 1998. These two clarifications have been issued by Joint Development Commissioner appointed under the FTDR Act. Mr. Singhvi had contended that the implication or effect of these two clarifications cannot be adjudged, adjudicated or examined or determined or decided by CEGAT. He contends that these two clarifications are void since under Section 13 of the FTDR Act, it is the Director General, who is the person authorized to issue such clarifications, no one else can do the same.
7.2 In order to examine this contention, we may refer to the provisions of FTDR Act, Rules and Regulations framed thereunder and the notification issued pursuant thereto. In Section 9 of FTDR Act, provisions for issue suspension and cancellation of licence have been provided. Licence can be granted and renewed under Sub-section (2) of Section 9. It can be suspended or cancelled under Sub-section (4). So far as the question relating to the grant of licence or its validity or clarification with regard to the conditions contained in the licence, definitely falls within the jurisdiction and competence of the authority competent to grant or renew the licence. Whereas Section 13 FTDR Act, on which Mr. Singhvi had relied upon, deals with adjudication of matters relating to imposition of penalty or confiscation of goods. It provides that any penalty can be imposed or the question of confiscation can be adjudged under the FTDR Act by the Director General. It can be done by such other officer as the Central Government by notification in the Official Gazette, authorizes subject to the limits specified. Application of Section 13 is confined to the imposition of penalty and adjudication or confiscation under the FTDR Act. Admittedly, this case does not involve any question that falls within Section 13 of FTDR Act. The clarifications contained in Annexure "P-3" have not been issued in exercise of the authority under Section 13, It is not an adjudication with regard to the imposition of penalty or confiscation contemplated under FTDR Act. Therefore, there is no scope of deciding any question within the scope of Section 13, so far as this case is concerned. Therefore, the contention of Mr. Singhvi is wholly misplaced. In the present case, CEGAT is not called upon to adjudicate anything within the scope of Section 13 of FTDR Act, even while interpreting the clarifications contained in Annexure "P-3". Inasmuch as, these clarifications have no nexus with the question of imposition of penalty or confiscation under FTDR Act. Having gone through the contents of the said clarification, it appears that there is nothing in the said clarification, which indicates that it was intended to apply in respect of any question having relevance to Section 13. Admittedly, it neither suggests imposition of penalty nor confiscation of any goods under the FTDR Act.
7.3 On examination of the text of Annexure "P-3", it is clear that these were simple clarifications with regard to the validity period of the licence and the extent of the conditions imposed in the licence. It relates to utilization of the condition contained in the licence, granted for a particular unit through a sister unit not included in the licence. It also clarifies the Export Import (EXIM) Policy. Or in other words, these are not clarifications, but are only reference to the EXIM Policy. Inasmuch as, the one dated 27th March, 1998 points out that the validity period for DTA sale is extended up to 31st July, 1996 and that the EXIM Policy does not provide for utilization of DTA sale permission by sister unit and that EXIM Policy does not provide for clearance from sister unit. Thus, it is not a clarification, but only a reference to the provisions of EXIM Policy and statement of the validity of the licence granted to the petitioner. It does not purport to adjudicate any dispute. It only refers to the validity period of the licence with reference to the extent of its scope of utilization having regard to the EXIM Policy. The second one dated 30th of April, 1998, again refers to the extension of the validity period. It also points out to the conditions of the licence granted to the petitioner with regard to quantity and the value permitted by the Development Commissioner and that it cannot exceed the limit both in quantity and value as approved. It points out that if it exceeds, then it would be wrongful sale and it may be liable to penal action under the FTDR Act, which is without prejudice to any action that might be taken by the jurisdictional Central Officer or Customs Authority under the respective Acts. It had further pointed out that the unit was not granted permission for sale in the DTA other than what has mentioned in the said letter and that DTA sales can be utilized only to the extent of the approval granted by jurisdictional Development Commissioner of the EPZ and it cannot be utilized on the basis of any approval granted to a sister concern and that the office of the Development Commissioner did not issue any certificate for concessional rate of duties of Customs and Excise under the provisions of notification dated 4th January, 1995. This also does not purport to clarify anything except pointing out the conditions and situations with regard to the licence granted by the office of the Development Commissioner. It is not an adjudication of any liability under the FTDR Act. It has only pointed out the conditions contained in the licence.
7.4 Thus, the said two letters clearly indicate that these are related to the extent of the conditions under which the licence is granted without attempting to adjudicate any dispute or the question of imposition of penalty or confiscation. Thus, it is a statement with regard to the question of licence so granted and is exercised to explain the conditions, under which the licence is granted, in terms of Section 9 of FTDR Act. Therefore, such an exercise is permissible to be undertaken by an authority, which is empowered to discharge its function under Section 9 of the FTDR Act. In Foreign Trade (Regulations) Rules, 1993 provides for the conditions of licence. The conditions of licence are provided in Section 6, which had made provisions as to how the goods are to be utilized under the said licence. The question of such licences is to be dealt with by the Director General or the licencing authority. The scheme of the Rules while dealing with licence almost in every rule, viz : Rules 7, 8, 9 and 10 refer to the licencing authority. Thus, it is the licencing authority, which is capable of stating as to the conditions and extent of the licence granted under FTDR Act. The Central Government by its notification dated 31st December, 1993 authorized the persons, described in the said notification, to grant, renew, suspend or cancel licence for the purpose of import or export of goods in exercise of power conferfed by Sections 9(2) and (4) of FTDR Act. In Item 7, it includes Joint Development Commissioner within the respective territorial jurisdiction of such authority, while there are some authorities, which are capable of granting such licence throughout India. Thus, this question can very well be decided or gone into by CEGAT. In any event, from the said clarification and from the facts and circumstances of the case, the clarification has nothing to do with the present case in the context in which it is to be decided. The clarifications are mere statement of facts. In case there is any mis-statement, the same can be tested on the basis of the law and on the basis of the provisions contained in the licence, so far as it relates to the jurisdiction or the authority by the authorities under the Customs Act. In any event, these are opinion of the Joint Commissioner, which is to be tested by the CEGAT for the purpose of arriving at the right conclusion. Therefore, such question as raised by Mr. Singhvi is wholly out of place. The question is dependent on the conditions contained in the licence under which DTA sale is permitted and the EXIM Policy and other relevant materials, which are to be gone into and determined. Such power of determination is available to CEGAT. In my view, these two clarifications in no way affect the jurisdiction of CEGAT or the implication of the provisions contained in the Customs Act, 1962, under which the proceeding is being proceeded. This question seems to be of not much relevance except as an evidence having reference to the contents of the licence, which has to be found out by the authority from the licence itself, which is within the jurisdiction of the CEGAT, viz : to find out as to whether the goods are dutiable or free being in the nature of DTA sale. The CEGAT has every jurisdiction to examine as to whether the sales are DTA sales or not and are dutiable or not in the process to examine all questions that might be incidental to the proceedings. Therefore, this contention of Mr. Singhvi is overruled.
Can the case be re-opened :
8. The question of jurisdiction relating to re-opening of the case beyond 6 months under the proviso to Section 11A of the Excise Act may now be examined. As rightly contended by Mr. Singhvi, this question relates to the jurisdictional fact, namely whether this question could be raised or not. Whether the proceeding can be initiated or not. Admittedly, this was initiated by the authority outside the territorial jurisdiction of this Court, but since this question is to be gone into by CEGAT, Calcutta, therefore, this Court can invoke jurisdiction in respect thereof, provided the CEGAT, Calcutta cannot go into such question. In my view, such question can also gone into by CEGAT, Calcutta to find out as to whether under the authority under Section 11A of Excise Act such notice could have been issued or whether the Commissioner could have assumed jurisdiction in respect of the period, which is, otherwise prohibited under the law. It cannot be said that if the CEGAT undertakes such exercise, it would be questioning the statute itself, under which it is established, as was held in L. Chandra Kumar v. Union of India - . In the said case, it was held that except the vires of the Act under which the Tribunal is established, all other question can be gone into by such Tribunal.
8.1 Mr. Singhvi had relied upon Padmini Products v. Collector of Central Excise, 1989 (43) E.L.T. 195 (S.C.), in order to support his contention that the re-opening beyond six months up to five years, could be made only when there is allegation of fraud, collusion or mis-statement or suppression of facts or contravention of rules with intent to evade duty. In the said decision, it was held that mere failure or negligence to take out a licence or not to pay the duty, in case where there was scope for doubt, does not attract the extended limitation, unless there is evidence that the manufacturer knew that the goods were liable to duty. The action must be a positive one and must be a result of fraud or collusion or wilful mis-statement or suppression. These are questions, which are dependent on determination of facts. In fact, these are jurisdictional facts, which can be gone into by this Court. But, an appeal having already been filed, this Court may not exercise its discretion, particularly, when this question can very well be determined by the CEGAT, which is capable of determining those facts and find out as to the validity of the reopening of the case within the extended limitation. He has also relied on Gulabchand Harekchand and Anr. v. State of West Bengal and Ors., 1986 (23) E.L.T. 306 (Calcutta). In this case, it was held that this Court in exercise of writ jurisdiction can very well examine facts, which are jurisdictional in nature. The Court has every right to find out as to whether jurisdictional facts have been rightly determined or not. This question is answered with the same reasoning as given above.
8.2 He relied on Collector of Central Excise v. Chemphar Drugs & Liniments, in order to contend that there could not be any fraud if the department had knowledge of the activity of the manufacturer. In such a case the extended period of limitation will not be applicable. Relying on this decision, he wanted to contend that the activities of the petitioner was always known to the respondent authorities, despite which the licence was being renewed from time to time and of the return which was being furnished to the respondents. But, since I have kept this question open, it is not necessary to go into the question at this stage, particularly, in view of the pendency of the appeal before CEGAT, which is supposed to decide all these questions on the basis of the facts.
8.3 Here in this case, it is a question of the jurisdiction of the Commissioner as to whether it could have initiated the proceeding having regard to the proviso to Section 11A of the Excise Act. Therefore, the CEGAT is competent to go into such question.
8.4 It is contended by Mr. Banerjee that the CEGAT is not subordinate to the jurisdiction of this Court. But this contention is no more a res integra, in view of the decision in L. Chandra Kumar (supra). In such circumstance, the decision given by the CEGAT is amenable to the writ jurisdiction of this Court before the Division Bench. Therefore, this Court has jurisdiction to issue appropriate direction to CEGAT.
Pre-deposit: Alternative remedy : Onerous :
9. Now comes the question with regard to the pre-deposit as required under Section 35(F) of the Excise Act, before hearing of the appeal is taken up. These are provisions provides within the Excise Act itself, which empowers the CEGAT to consider the question of waiver or reduction of pre-deposit. In the present case, prima facie it appears that the period beyond 6 months could not have been re-opened, on the alleged ground, in the absence of allegation of existence of fraud or collusion, as pointed out by Mr. Singhvi. Therefore, until these questions are decided, the CEGAT may take a considerate view with regard to the requirement of pre-deposit of the demand for the period, which is beyond 6 months and shall pass appropriate order in respect thereof. However, it may not exempt the petitioner from depositing the amount, which is not beyond 6 months.
9.1 The Apex Court had held in Himmatlal Harilal Mehta v. State of Madhya Pradesh and Ors., , that in case where alternative remedy is onerous namely which requires pre-deposit of the amount and if the amount is not deposited, the remedy will not be available and are heavy, in such event, existence of alternative remedy is held not to be efficacious. Having regard to the proposition, the CEGAT shall pass an appropriate order so that the pre-deposit may not be onerous, so as to preclude the petitioner from pursuing the alternative remedy. Mr. Banerjee contended that since the petitioner had availed of the alternative remedy, it cannot approach this Court for the same relief. It seems that there may be some substance in the submission of Mr. Banerjee. But this question has to be looked into having regard to the facts of this case. Resorting to alternative remedy may preclude a person from invoking writ jurisdiction. But when the alternative remedy does not seem to be efficacious and appears to be onerous, the Court may attempt to dilute to the extent of making it less onerous and increase the efficacy. Therefore, this Court can assume jurisdiction and issue appropriate direction with regard to the pre-deposit, so as to make the alternative remedy less onerous.
9.2 He has also relied on the decision in Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and Ors., . In this case, in certain circumstances, it was held that bar of alternative remedy shall not prevail upon the Courts to exercise its discretion. It had laid down certain proposition, where it would not operate as a bar, viz : where the writ petition seeks enforcement of any fundamental right or where there is violation of principle of natural justice or where the order of the proceedings are wholly without jurisdiction or the vires of an Act is challenged. But, in this case, it is not enforcement of a fundamental right, neither it is a question of violation of principle of natural justice. However, it has been sought to be brought within the purview of the third conditions that the proceedings are wholly without jurisdiction. However, the vires of the Act has not been challenged. In the present case, question of jurisdiction has since been raised on the ground that it does not come within the extended limitation and, therefore, the re-opening is without jurisdiction. But, this is not a clear case, which is free from any doubt. This question is dependent on determination of certain disputed question of facts which are jurisdictional facts and can be gone into, but still then the alternative remedy having been resorted to where such question can also be gone into, I do not find it a fit case where this Court will undertake upon itself the exercise to enter into the said question. In any event, the petitioner is not remediless even if it suffers an order before CEGAT, it can still challenge it by way of a writ petition or under Article 226 or 227 before the Division Bench on the basis of the ratio laid down in L. Chandra Kumar (supra).
Order:
10. In the circumstances, this writ petition is disposed of by directing the CEGAT to consider the question of waiver of pre-deposit having regard to its onerous nature, if applied for, within a period of 4 weeks from date, if not already applied for by the petitioner, in the light of the observation made above, within a period of 4 weeks from the date of making such application. The CEGAT may also dispose of the appeal, as early as possible preferably within a period of 3 months from the date of communication of this order. It shall dispose of the same in accordance with law. All points raised herein shall remain open to be agitated before the CEGAT, which will decide the same according to its own wisdom and discretion, having regard to the facts and circumstances and the question of law raised before it. However, the question with regard to jurisdiction as raised by Mr. Banerjee as well as by Mr. Singhvi shall remain open. The question decided herein shall be without prejudice to the rights and contentions of the parties and it will be open to assail the same in any appropriate proceeding, after the decision of CEGAT.
11. Since no affidavit has been used, allegation if any in this petition will not be deemed to be admitted by the respondents.
Let xerox plain copy of the operative portion of this order duly coun- tersigned by the Assistant Registrar (Court) be made available to the learned Advocates appearing for the parties, on usual undertaking.