ORDER
T. Raja, J.
1. The Writ Petitions have been filed seeking issuance of a Writ of Certiorari calling for the records of the proceedings of the second respondent in C. No. VIII/10/368/04-Adj, C. No. VIII/10/367/04-Adj, C. No. VIII/10/366/04-Adj and C. No. VIII/10/365/04-Adj respectively dated 24.12.2004 and quash the same.
2. In view of the interconnectivity of the facts and circumstances of the case, the writ petitions are disposed of by a common order.
3. The petitioners are manufacturers of refined Palm Oil of Edible Grade, for which the petitioners were issued RBD Palmolein. The petitioners' requirement was met by imports from Malaysia and Indonesia through Tuticorin Port.
4. Mr. R. Thiagarajan, learned Senior Counsel appearing for the petitioners submits that the petitioners have cleared their import of RBD Palmolein by claiming exemption under notification No. 45/2002, Customs, dated 22.04.2002 as amended from time to time. The said notification provides for clearance of the imported goods by production of DEPB licence by the importer in lieu of payment of duty.
5. The Government of India, by its Import and Export Policy, announced various types of incentives for exporters so as to enable them to compete with others in the international market. DEPB licences are issued by the Director General of Foreign Trade constituted by the Ministry of Commerce. The said licences are issued with the endorsement like Transferable and Non-Transferable. The exporters who export specified goods as per the standard input and output norms are eligible for a fixed percentages of credit as per the norms fixed by the Director General of Foreign Trade. If a person is having the licence with the Transferable endorsement, the licence being freely transferable, the same is being sold to other persons in the open market. Therefore, in view of the transferable DEPB licences, the imports can be made through ports from where the exports are made.
6. The petitioners are said to have purchased the transferable lincences through a reputed broker at Tuticorin, namely, M/s.R.Somanathan & Co. The said broker arranged for the purchase of these licences from Kanpur. At the time of imports at Tuticorin Port, the licences in original along with the Transfer Release Advice (TRA) and shipping documents were presented by the petitioners through its Customs House Clearing Agent for clearing the goods imported under the above said three licences. The goods were cleared in January, 2004 against the production of DEPB licences referred to above in lieu of payment of duty. Since the petitioners have imported their RBD Palmolein under DEPB licences, availing the transferable licences, purchased by the petitioners, the same were produced at the Tuticorin Port Customs House. On the basis of the transferable licences, the goods were also cleared in January, 2004 on the production of transferable DEPB licences without payment of duty.
7. The respondents have sent the above said transferable licences stated to be TRA shown to have been issued by ICD, Chakeri, Kanpur and produced at the time of clearance to Tuticorin Customs to ICD, Chakeri, Kanpur for verification of its genuineness who vide their letter C. No. VIII (6) ICD/CUST/KNP/53/2003, dated 02.06.2004 and 15.06.2004 informed that the above TRAs had not been issued by them. It was also informed that only 18 TRAs had been issued by them. The above said transferable licences / DEPB licences were sent to the Joint Director General of Foreign Trade, Kanpur for verification of genuineness of the documents. The Joint Director General of Foreign Trade, Kanpur, by letters dated 30.06.2004 and 03.08.2004 informed that the copies of DEPB licences sent to ICD, Chakeri, Kanpur for verification from Tuticorin Customs were not genuine and furnished the copies of genuine licences. Further, in his letter, dated 27.09.2004, the Joint Director General of Foreign Trade, Kanpur informed that the copies of the transferable licences sent for verification from Tuticorin Customs were found fake and forged documents. In these circumstances, since the petitioners had imported RBD Palmolein under various bill of entries without payment of duty by wrongly availing DEPB credit on fake and forged transferable licences to the tune of Rs. 35,45,116/-, Rs. 23,11,837/-, Rs. 49,70,109/- and Rs. 87,77,036/- it was found that the Department had incurred a heavy loss of revenue.
8. In view of the said irregularities and evasion of payment of duty, the petitioners were directed to pay the above said duty by individual demand notice dated 25.06.2004, but the petitioners filed Writ Petition Nos. 1196, 2617, 2618 and 2630 of 2004 with a plea to quash the said demand notice on the ground that without show cause notice, no demand is legally maintainable. The said Writ Petitions were admitted and orders of interim stay were granted by a learned Single Judge. Subsequently, the said Writ Petitions came to be dismissed as infructuous on the submissions that the show cause notices have already been issued. Thereafter, the respondents have issued the present show cause notices, dated 24.12.2004. Again by challenging the same show cause notices, the present Writ Petitions have been filed.
9. The question raised in the present Writ Petitions is whether the Writ Court should entertain the present Writ Petitions questioning the notice to show cause or not. Today, it is well settled that both the High Courts as well as the Hon'ble Supreme Court have repeatedly held that the Court shall not exercise its jurisdiction under Article 226 of the Constitution of India to test the correctness of the show cause notice. In the case of L.K. Verma v. HMT Limited reported in : (2006)ILLJ1074SC , the Hon'ble Supreme Court has held that except in cases where the Court or Tribunal lacks inherent jurisdiction or for enforcement of a fundamental right or if there has been a violation of a principle of natural justice or where vires of the act was in question, the court shall not exercise its jurisdiction under Article 226 to test the correctness of the show cause notice, particularly, when factual issues are involved. A Division Bench of this Court in the case of Tamil Nadu State Transport Corporation v. C. Durai and Anr. reported in 2005 WLR 136 has held that no Writ Petition should ordinarily be entertained when there was an alternative remedy except in very rare cases if there is some compelling reason to do so. Even if there was violation of natural justice or the order was without jurisdiction, the writ petition could still be dismissed if there was an alternative remedy. In the said judgment, the decision of the Hon'ble Supreme Court in U.P. State Bridge Corporation Ltd. v. U.P. Rajya Setu Nigam Karmachari Sangh reported in (1998) 4 SCC 268 was relied on wherein the Hon'ble Supreme Court has held that if there was a specific remedy available under a statute, Writ Petition should not be entertained.
10. In another judgment of the Apex Court in Siemans Ltd. v. State of Maharashtra and Ors. reported in (2006) 12 SCC 33, it has been held that ordinarily the Writ Court may not exercise its discretionary jurisdiction in entertaining a Writ Petition questioning a show cause notice unless the same inter alia appears to have been without jurisdiction. Further, it was held that the Writ Petition was maintainable on the ground that the parties have pre- determined the issue. Similarly, in the case of State of H.P. and Ors. v. Gujarat Ambuja Cement Ltd. and Anr. reported in 2005 (6) SCC 298 also, the Hon'ble Supreme Court in unequivocal terms has held that when a person approaches the High Court without availing the alternative remedy, the court ought to ensure that he has made out a strong case or there exist good grounds to invoke the extraordinary jurisdiction, where under a statute, there was an allegation of infringement of fundamental rights or when on the undisputed facts the taxing authorities were shown to have assumed jurisdiction which they did not possess.
11. The learned Senior Counsel appearing for the petitioners further invited the attention of this Court to the show cause notices stating that the said show cause notices issued under Section 28(b) of The Customs Act, 1962 are without jurisdiction, because the said show cause notices have been issued beyond the period of limitation. Therefore, the show cause notices issued are barred by time under Section 28(b) of the Customs Act, 1962.
12. It is further submitted that the case of the petitioners has been covered by a judgment of the Hon'ble Supreme Court reported in 1997 (94) E.L.T. 289 (S.C.) (Kaur & Singh v. Collector of Central Excise, New Delhi) wherein, it has been held that show cause notice issued beyond the period of limitation of one year under Section 11A of the Central Excise Act 1944 was held to be without jurisdiction and on that basis the said Writ Petition was allowed. But, in the present case the show cause notices have been issued under Section 28(b) of the Customs Act 1962. Section 11A of the Central Excise Act, 1944 gives the authorities concerned to issue show cause notice period of one year as limitation. The present show cause notices are not issued under Section 11A of the Central Excise Act, 1944 by the concerned authorities. Since the show cause notices have been issued under Section 28(b) of the Customs Act, 1962 which contemplates only six months time, whether it is barred by limitation has to be gone into taking into account excluding the period of stay granted and enjoyed by the petitioners. But these facts are not mentioned in the affidavit. Further, since the petitioners have already challenged the demand notices which were issued in time and since there has been an order of stay granted by this Court against the demand notices issued by the very same respondent, once again challenging the show cause notices issued under Section 28(b) of the Customs Act, 1962, will not be sustainable, because there has been a stay of demand notice. In view of the stay granted, the respondents could not further proceed to issue show cause notices. This fact was neither mentioned in the affidavit nor argued. If the period of stay granted by this Court in the earlier Writ Petition No. 1196 of 2004 and enjoyed by the petitioner is excluded, the plea of limitation is not available to the petitioner. Therefore, the petitioners should not be permitted to take advantage of delay caused by them.
13. Further, the petitioners have neither taken any ground in their Writ Petitions that the show cause notices are barred by period of limitation nor mentioned that the authorities lacks jurisdiction in issuing time barred notice. Only at the time of arguments, it is mentioned that the show cause notices are barred by period of limitation.
14. In para 11 of the affidavit filed in support of the Writ Petitions, it is mentioned that the second respondent after a period of five months raised a demand against the petitioners for payment of duty. In para 13 of the affidavit again it is stated as follows:
I further respectfully state that the Foreign Trade Regulation Rules of 1993 framed under Section 19 of the Foreign Trade Development and Regulation Act, 1992 provides for a cancellation of a licence on certain grounds. Such grounds include those relating to obtaining the licences by fraud and suppression of fact, mis-representation and also tampering with the licences in any manner. Under the same rules it is only the licensing authority that is competent to cancel the licences on any of the grounds prescribed. No proceeding has been initiated under the provision of the Foreign Trade Development and Regulations Act, 1992 or under the Foreign Trade Regulation Rules, 1993 for rendering the licences 'nonest', since in law those licences do not automatically become nonest but could be avoided only by process known to law.
15. In fact, the second respondent after seeing that the petitioners have not purchased genuine DEPB licences, has issued demand notices dated 25.06.2004 demanding the petitioners to pay Rs. 35,45,116/-, Rs. 23,11,837/-, Rs. 49,70,109/- and Rs. 87,77,036/- respectively. Immediately, the said demand notices were challenged by the petitioners by filing Writ Petitions in W.P.Nos.1196, 2617, 2618 and 2630 of 2004. This Court was also pleased to grant stay of entire proceedings. But both sides were not in a position to inform as to what happened to the earlier petitions. Subsequently, it appears the present show cause notices have been issued. Again the show cause notices have been challenged in the present Writ Petitions without mentioning the earlier Writ Petitions, order of stay, limitation etc.
16. In para 12 of the affidavit filed in support of the writ petitions, the petitioners have admitted that till date there was no adjudication on the truth, genuineness or validity of the above said licences. No proceeding has also been initiated to pronounce on the validity or otherwise of the licence.
17. In this case, the petitioners obtained DEPB transferable licences from one Mr. R. Somanathan and Co., Tuticorin. All the DEPB licences obtained by the petitioners were fake, and on the basis of such fake and forged DEPB licences, the petitioners imported their goods duty free and thereby caused wrongful loss of Rs. 35,45,116/-, Rs. 23,11,837/-, Rs. 49,70,109/- and Rs. 87,77,036/- respectively. This Court in W.P. No. 2904 of 2005 dated 24.09.2008 (S. Chellakkannu v. The Tahsildar, Karaikkudi, Sivaganga District), has held that when fraud and deceit were brought to the notice of the Court, this Court can never issue a Writ of Mandamus. In the case on hand also, if the plea of the petitioners is allowed that they were not the parties to the fraud committed, then the respondents would not be in a position to take adequate steps to nab the wrong doers responsible for issuance of fake and forged DEPB licences causing a huge revenue loss of Rs. 1,96,04,098/- and the public money also would not be recovered. Therefore, it is proper for this Court to direct the petitioners to give explanation to the show cause notices. Further, whether the petitioners/assessees were the parties to the fraud or not, cannot be decided by this Court in these Writ Petitions, because admittedly, the petitioners who purchased DEPB licences from one M/s.R.Somanathan and Co., Tuticorin, said to be fake and forged. All these disputed facts are to be gone into by the respondents. Further, if the petitioners are allowed to go from the payment of duty, the respondents would not be in a position to further prosecute the case to find out the real culprits.
18. The main grounds urged by the learned Senior Counsel appearing for the petitioners in support of his arguments to quash the impugned show cause notices are that it is barred by period of limitation and since no allegations of fraud or collusion or wilful mis-statement or suppression of facts are made in the show cause notices, the show cause notices issued by the respondents under Section 28(b) of the Customs Act 1962, are not sustainable in law. In support of his contention, he referred to a judgment of the Karnataka High Court reported in : 1992(61)ELT364(Kar) (Applied Industrial Products Private Ltd. v. Collector of Central Excise) wherein, it has been held that the show cause notice issued beyond the limitation has to be quashed on the ground of limitation under proviso to Section 11A of the Central Excise Act 1944. Even if the petition is dismissed by directing the petitioner to go back to the respondent to show cause to the notice, again the respondent has no power to pass any order since it is barred by time. In which event, the exercise going to be taken by the respondent will also be without jurisdiction. Therefore, the arguments advanced by the learned Senior Counsel appearing for the petitioners on these subjects that the show cause notices in the present case do not satisfy any one of the ingredients of the proviso to Section 11A of the Act, was also duly considered under the law. Reliance is also placed on the observations made by the Hon'ble Supreme Court in Union of India v. Madhu Milan Syntex reported in : 1988(35)ELT349(SC) wherein, it is held that the notice should contain the basis for the short levy and the notice merely asking the assessee to show cause against determination of the short levy without disclosing the grounds to alter the classification list, on the basis of which the short levy is alleged, would be bad in law. The Hon'ble Supreme Court also observed that any notice issued under the proviso to Section 11A should contain allegations of fraud, collusion or wilful mis-representation or suppression of facts, etc., as contemplated in the proviso. On this view, the Hon'ble Supreme Court struck down the show cause notice.
19. The learned Senior Counsel appearing for the petitioners further urged this Court, to interfere at the stage of show cause notice and quash it, by citing another decision of Karnataka High Court in the case of Victory Glass v. Collector reported in : 1990(47)ELT540(Kar) wherein, it was pointed out that the High Court interfered at the stage of show cause notice to prevent harassment to the petitioner pursuant to the show cause notice issued to the petitioner in that case which was found to be vague and vexatious.
20. Mr. B. Vijay Karthikeyan, learned Standing Counsel appearing for the respondents submits on the basis of general principle that no High Court should interfere at the stage of show cause notice calling upon the party to submit his explanation to the alleged violation. It is also prayed that this Court not to entertain the Writ Petition against the show cause notice thereby scuttling the adjudication before the statutory functionaries under the Act. Further, submitted that the petitioners would be directed to show cause and resort to the machinery provided under the Act by holding that the above said Writ Petitions cannot be maintained against show cause notices. In support of his submissions, the learned Standing Counsel appearing for the respondents relied upon catena of judgments of the Hon'ble Apex Court.
21. In reply to the arguments advanced by the learned Senior Counsel for the petitioners, the learned Standing Counsel would submit that since the licences have been issued under the Foreign Trade Development Regulation Act by the Director General of Foreign Trade, the same could be cancelled only under the said Act and the authorities functioning under the Customs will not have the jurisdiction to deal with the said licences. For this contention, it is submitted that in a judgment of a Division Bench of this Court in W.P.Nos.4320 to 4321 of 2002 dated 01.10.2002 in Adani Exports Ltd. v. UOI, this Court has categorically held that both the authorities will have jurisdiction to deal with a licence when violations had been committed in respect of the said licence which are actionable under both the enactments.
22. The main thrust of the arguments of the learned Senior Counsel appearing for the petitioners is that when the demand ex facie barred, the authorities lacks jurisdiction in issuing such notices and also submitted that the authorities cannot even take the benefit of proviso to issue the show cause notices belatedly. The petitioners have already challenged the show cause notices dated 25.06.2004 by filing Writ Petitions. The said Writ Petitions were admitted and order of stay was granted. After some time, the petitioners withdrew the Writ Petitions. Subsequently, the present show cause notices have been issued on 24.12.2004. Neither the fact of challenging the earlier demand notices by filing Writ Petitions by the petitioners have not been explained in the affidavit nor the petitioners explained in their argument as to how the period of stay granted by this Court in W.P. No. 1196 of 2004 against demand notice, can be excluded while calculating the period of limitation. Therefore, the petitioners cannot be allowed to take advantage of limitation because they should be thankful for their own act of delaying tactics by filing Writ Petitions and getting stay order at the initial stage. Because, the first demand notice was issued in time and that was challenged and this Court also granted stay and the matter was pending for sometime. Subsequently, the said writ petition was withdrawn and after the withdrawal of the said Writ Petition, the present impugned show cause notices have been issued. In view of the same, in my view, the plea of limitation cannot be taken on the basis of time barred notice.
23. Admittedly, the petitioners have filed a Writ Petition in W.P. No. 1196 of 2004 and interim stay was granted against the demand notice. The second respondent has issued the present show cause notices. By withdrawing the earlier Writ Petitions challenging the demand notice as infructuous, the petitioners have challenged the present impugned show cause notices. It is a trite law that this Court should not interfere against the show cause notice. Even if the show cause notice is barred by limitation, there is nothing wrong in approaching the respondent by giving a detailed reply to the show cause notices mentioning that the show cause notices have been issued without any jurisdiction. Further, the affidavits filed in support of the Writ Petitions by the petitioners have not even mentioned that it is barred by limitation. Had they mentioned so, the respondents also could have replied suitably in their counter. Since the payments of duty involved in these petitions are Rs. 35,45,116/-, Rs. 23,11,837/-, Rs. 49,70,109/- and Rs. 87,77,036/- respectively and further the said duty payments have been wrongly evaded by production of fake transferable licences which are factual in the issue, it is better for the petitioners to submit their explanation to the alleged allegations.
24. In the show cause notices challenged by the petitioners, it is clearly mentioned in para 7 that investigations were conducted on 21.08.2004 and 22.08.2004 through the DRI, Lucknow at the premises of M/s. Jyoti Enterprises, Kanpur and M/s. Paras International, Kanpur at 24/164 and 24/164A, Patkapur, Kanpur. In his letter dated 27.09.2004 the DRI, Lucknow has informed that the premises (shops) were taken on rent from the house owner by one Shri. Mritunjay Paras, who is the Proprietor of both M/s.Jyoti Enterprises, Kanpur and M/s. Paras International, Kanpur and he had left the premises two and a half months earlier and the house owner as well as the neighbours could not provide any clue about the whereabouts of these firms and their owner. In a situation like this, if the show cause notices are quashed, the petitioners would not be in a position to cooperate with the further investigations to find out the real culprit involved in selling the fake DEPB licences. In view of this, in the case of Madura Coats Limited v. Commissioner of Central Excise, Madurai reported in 2008 (227) E.L.T. 355 (Mad), this Court has held that it is not expected a Writ Court on the basis of an affidavit and counter affidavit to resolve the disputed questions of fact. Further, what is challenged is only a show cause notice calling upon petitioners to submit its reply. Therefore, it is not a final determination.
25. In view of the foregoing reasons and discussions, I am of the view that there is no point merit consideration in quashing the show cause notices and accordingly, these petitions are liable to be dismissed. Further, the petitioners are hereby given four weeks time to file their objections, if any, to the impugned show cause notices, if they are so advised and thereafter, it is for the respondents to proceed further in accordance with law and pass appropriate orders. It is needless to mention that it is open for the petitioners to raise the plea of limitation and it is for the respondents to deal with all the points in accordance with law.
26. In the result, these Writ Petitions are dismissed. No costs. Consequently, connected miscellaneous petitions are closed.