SCA/5478/1998 1/5 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 5478 of 1998 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA HONOURABLE MS.JUSTICE H.N.DEVANI ========================================= = 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================= = HARYANA SHEET GLASS LIMITED & 1 - Petitioner(s) Versus UNION OF INDIA & 29 - Respondent(s) ========================================= Appearance : MR RAKESH GUPTA, MR.UDAY JOSHI AND MS.POOJA GUPTA, ADVOCATES FOR M/S TRIVEDI & GUPTA for Petitioners MRS VASAVDATTA BHATT for Respondent(s) : 1 - 2,4 - 5. MR HARIN P RAVAL for Respondent(s) : 3, NOTICE SERVED for Respondent(s) : 6,8 - 30. NOTICE UNSERVED for Respondent(s) : 7, ========================================= = CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI SCA/5478/1998 2/5 JUDGMENT Date : 11/07/2008 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA) 1. This petition was admitted by an order dated 18.8.1999 and interim relief was granted by the same order after recording various contentions of both the sides and the peculiar facts of the case. Against a demand of Rs,6,76,07,490/-, the petitioner was called upon to deposit a sum of Rs.1,30,00,000/- on or before 29.9.1999 and another sum of Rs.1,00,00,000/- on or before 20.10.1999. The operative part of the directions reads as under : “It was submitted that the amount to be paid by the petitioners is about Rs. 6,76,07,490.00 and at present under the interim relief the amount which will be made payable in two installments would come to only Rs.2.3 crores i.e. 1.3 crores and Rs. 1 crore. Even if the amount of bond will be taken into account which is Rs.1.5 crores then also,the total amount would come to Rs.3.8 crores. The petitioners, therefore, must be directed to furnish a bank guarantee and/or security for the remaining amount of Rs. 4.46 crores as in case of failure, the petitioner would be liable to pay the said amount. We may, however, state that prima- facie we are satisfied that without issuance of show cause notice, affording opportunity of hearing and without adjudication, the petitioner could not have been asked to pay the amount of Rs. SCA/5478/1998 3/5 JUDGMENT 6.76 cores . Again, prima-facie we are satisfied that when the petitioner unit is permitted to be converted from EOU to EPCG, the amount of Rs.3.14 crores would be substantially reduced, by more than Rs. 2.70 crores.. Again in our opinion, the order passed by us would not adversely affect the interest of revenue. “ 2. The petition is required to be decided on a limited count. It is an admitted position that the demand was raised for payment of differential duty amount vide communications dated 5.9.1997 and 14.10.1997, but ultimately, the said demand came to be quantified vide communication dated 14.12.1998 at a figure of Rs.6,76,07,490/-. 3. The principal case of the petitioner is that even during pendency of the request of the petitioner before the Development Commissioner to extend the gestation period of 12 months from the date of re-starting of the production and before the request of the petitioner for conversion from EOU to EPCG could be granted, the three communications dated 5.9.1997, 14.10.1997 and 14.12.1998 came to be issued demanding the aforesaid differential amount of duty without issuing any show cause notice or without any adjudication order as to the liability of the petitioner. It was, therefore, submitted that the said three communications are required to be quashed and set aside. In support of the submissions made, reliance has been placed on the Apex Court decisions in the case of Metal Forgings v. Union of India, 2002 [146] ELT 241 and Akay Cosmetics Pvt. SCA/5478/1998 4/5 JUDGMENT Ltd., 2005 [182] ELT 294. The learned counsel appearing on behalf of the respondent authority was not in a position to dispute the fact that no show cause notice was issued and that, there was no adjudication fixing the liability to duty, on the basis of which the aforesaid amount came to be demanded under the impugned communications. 4. In the case of Commissioner of Central Excise v. Akay Cosmetics Pvt. Ltd. (supra), the Apex Court has reiterated the earlier statement of law in the following words : “[46] Lastly, we find that the demand for differential duty for the period 1/1/1988 to 31/8/1988 without issue of show cause notice under Section 11A, was sustainable. [47] In the case of Union of India & Others v. Madhumilan Syntex Pvt. Ltd., reported in 1988 [35] ELT 349, this Court held that the demand raised without notice was invalid. That, Section 11A clearly proceeded to say that prior show cause notice must be issued to the person against whom any demand on grounds of short-levy or non-levy was proposed and, therefore, post-facto show cause notice cannot be regarded as adequate in law.” 5. Applying the well settled legal position to the facts of the case, it is apparent that, in absence of any show cause notice and consequential adjudication, the impugned SCA/5478/1998 5/5 JUDGMENT communications dated 5.9.1997 and 14.10.1997 (Annexure “K” collectively) and the letter dated 14.12.1998, cannot be permitted to hold the field. Accordingly, all the three communications are quashed and set aside. As a consequence, the amount paid under order dated 18.8.1999 shall be returned to the petitioner within a period of four weeks from the date of receipt of a certified copy of this order, without the petitioner having to make a claim therefor. In relation to the other prayers made, suffice it to state that, in the facts and circumstances of the case, the Court has not thought it fit to enter into merits of the controversy considering the fact that no show cause notice has been issued and the said issues can be decided as and when the same are raised in appropriate proceedings, if any. 6. The petition is allowed, accordingly, in the aforesaid terms. Rule made absolute. There shall be no order as to costs. [D.A.MEHTA, J.] [HARSHA DEVANI, J.] parmar*