Acron Pharmaceuticals vs Union of India (UOI) and Others

A.M. Ahmadi, J.—The short question which arises in this petition is, whether it is open to the revenue authorities to make a demand without following the procedure laid down in Section 11-A of the Central Excises and Salt Act, 1.944 (''the Act, hereafter). In the present case a notice of demand. Annexure ''A'' dated 19th April, 1988, came to be issued by the Superintendent of Central Excise-Range 111, Division I, Ahmedabad, calling upon the petitioner to pay the basic excise duty of Rs. 24,487,91 being the difference between the duty paid at 5 per cent and to be paid at 15 per cent in respect of the clearances effected between 1st October, 1987 and 29th February, 1988 on behalf of Messrs Acron Laboratory Private Limited and a further sum of Rs. l1,883.49 being the difference in duty in respect of clearances effected between 1st October, 1987 and 29th February, 1988 on behalf of Messrs Goplani Pharmaceuticals. Admittedly this demand was not preceded by any notice u/s 11-A of the Act. The contention of the revenue that Annexure ''A'' is a show cause notice issued u/s 11-A of the Act cannot be entertained. On the face of it, Annexure ''A'' is merely a demand notice calling upon the petitioner to pay the difference in the duty within the time allowed by the notice. It is, therefore, obvious that before this demand was made, no notice as required by Section 11-A of the Act was issued Such a demand without following the requirements of Section 11-A of the Act is clearly unsustainable.

In Gokak Patel Volkart Limited Vs. Collector of Central Excise, Belgaum, precisely the question arose for determination in almost identical circumstances. In paragraph 6 of the judgment the Court observed that the provisions of Section 11A(1) and (2) make it clear that the statutory scheme is that in the situations covered by Sub-section (1), a notice of show cause has to be issued and Sub-section (2) requires that the cause shown has to be considered by the prescribed authority in consonance with the principles of natural justice and then only the amount has to be determined, la that case also, no notice was issued before making the demand. The Supreme Court, therefore, took the view that there was non-compliance with the statutory requirements and the demand was clearly illegal and untenable. this decision has been followed in a recent decision in Union of India (UOI) and Others Vs. Madhumilan Syntex Pvt. Ltd. and Another, . In the said case also the demand was not preceded by any notice u/s 11-A and was, therefore, held to be bad in law. The point at issue in this case, therefore, is clearly covered by the aforesaid two decisions of the Supreme Court. We are, therefore, of the view that the notice of demand, Annexure ''A'' dated 19th April, 1988 must be quashed and set aside.

In the result this petition succeeds. The notice of demand, Annexure ''A'', is quashed and set aside. The rule is made absolute accordingly with no order as to costs.