BALIA, J. - (1.) BY this petition, the petitioner challenges show cause notices dated 15. 1. 99 (Annex. 2) issued by Commissioner, Central Excise, Jaipur-II, and dated 11. 6. 99, 30. 9. 99, 23. 12. 99 & 16. 3. 2000 by Assistant Commissioner, Bhilwara (Annex. 4 to 7 respectively of the writ petition) covering different periods for which the liability to pay excise duty under the Central Excise Act is sought to be determined and raised against the petitioner from 3. 06. 1997 onwards excluding the period from 24. 02. 1998 to 15th December 1998.
(2.) THE facts necessary for the present purposes may be noticed. M/s. Suzuki Processors is a unit of M/s. Suzuki Textiles Ltd. , a company registered under the Indian Companies Act. M/s. Suzuki Textiles Ltd. had set up a process house and a weaving unit under the name Suzuki Processors in village Guda, Tehsil Mandal, District Bhilwara and finances for the purposes were arranged by securing loans from IDBI. According to the case set up by the petitioner, the processing section of the Suzuki Processors was leased out to another company namely PGO Processors (Pvt.) Ltd. which was incorporated in 1994 and the said lease was duly registered on 3. 06. 1997. As a result of this transaction, M/s. Suzuki Processors applied for amending its certificate of registration under the Central Excise Rules on 2. 6. 97 and PGO Processors (Pvt.) Ltd. applied for grant of registration certificate under the said Rules so that with effect from 3. 6. 97, the date of lease the manufacturing activities carried out in the process house become the manufacturing activities of the lessee and the lessee become liable for payment of excise duty under the Central Excise Act. To the extent manufacturing/processing done at the unit leased out to the PGO Processors the lessor is denuded of its liability to account for and pay excise duty on the manufacture of goods (processing of man-made grey fabrics) carried on by the lessee at the said process house since 3. 6. 97. THE registration was also granted to PGO Processors (Pvt.) Limited with effect from 3. 06. 1997 and the certificate of registration of the petitioner was amended in consonance with it. As a result of this arrangement, the goods processed at the leased unit since 3. 6. 97 neither formed part of the price list furnished by the lessor nor it remained responsible for classification of goods manufactured at the processing house y the lessee. THEre is no dispute between the parties that as per the arrangements stated above, the lessee was only carrying out the job work for various customers including that of the lessor-petitioner but was not processing its own goods, that is to say the lessee was himself not selling the goods processed at its unit. Accordingly, the basis for determining the excise duty in the hands of the lessee was not on the sale price charged by the lessor-owner of the fabrics but was covered by the principle enunciated by the Supreme Court in Ujagar Prints vs. Union of India's case (1 ). THE excise duty was paid by and recovered from PGO Processors (Pvt.) Ltd. on said basis until 23rd Feb. , 1998, During this period, the search was conducted on the premises of the petitioner and of the PGO Processors (Pvt.) Ltd. on 19th/20th Jan. , 1998 and 19th/20th Feb. , 1998. As a consequence of that search, the immediate effect was that with effect from 24th Feb. , 1998 the basis for determining the Excise duty on the processed fabric as job work on behalf of the lessor in the hands of PGO Processors (Pvt.) Ltd. was shifted from the principle enunciated in Ujagar Print's case (supra), to the sale price of the commodity, which was processed as job work for petitioner company, at the sale price at which the petitioner company (Suzuki Processors) sold such processed fabrics and the same was paid by PGO Processors (Pvt.) Ltd. for which PGO Processors (Pvt.) Ltd. raised objection and filed refund applications which have been rejected and appeal against such rejection is going to be filed by the said company. In the meantime, there was a Notification No. 36/98 by the Central Govt. on 10. 12. 98 which came into operation with effect from 16. 12. 98 which provided certain benefits to the independent processors on the processed textile fabric falling under heading Nos. 52. 07, 52. 08, 52. 09, 54. 06, 54. 07, 55. 11, 55. 12, 55. 13 and 54. 14 manufactured or processed by it with the aid of hot air stenter. This required a declaration to be filed by the `independent processors' claiming benefit under the notification. THE PGO Processors, the lessee, which was registered under the Central Excise Rules, sought to file declaration as `independent processor' under the Notification No. 36 of 1998 which was refused to be accepted by the respondent officers, presumably on the basis of pending investigation as a consequence of the aforesaid search. This action on the part of the respondents of not accepting the declarations by the PGO Processors (Pvt.) Ltd. under Notification No. 36 of 1998 led to filing of writ petition No. 11 of 1999 seeking a writ of mandamus for directing the Deputy Commissioner to entertain the declaration filed by the petitioner and to determine the annual capacity of the production of the process house under the notification and determine the levy of excise duty under the said notification in its favour and it was prayed that the petitioner be allowed to clear the goods availing the benefit of Notification No. 36 of 1998 dated 10. 12. 98. THE controversy raised before the Division Bench in the said writ petition was whether the respondents could refuse to allow the petitioner (PGO) to clear the goods by not treating the petitioner (PGO) as `independent processor' of fabrics under Notification No. 36 of 1998 dated 10. 12. 98 even before deciding finally as to whether they are covered under the Notification or not. In reply to the challenge, it was contended on behalf of the Central Excise Department that the PGO could claim to be covered under Notification No. 36 of 1998 only after its declaration was accepted by the Department and not before that. It was submitted before the Court that the Department of Central Excise had on investigation found out material to support the contention that the said petitioner company was not independent processor and it had virtually no capital assets of its own and it did not own any land, building plant or machinery and all these have been taken on lease from M/s. Suzuki Textiles Limited. It was also alleged that the entire goods processed by the said petitioner company either belong to M/s. Suzuki Textiles Limited (about 97%) or goods of other manufacturers sent for processing to the petitioner company for processing through the present petitioner and the petitioner (PGO) is only an instrumentality of M/s. Suzuki Textiles Limited and it is used only as a facade for avoiding excise duty. in support of their contention, the revenue has also filed joint show cause notice issued after the filing of the petitioner on 15. 1. 99 to M/s. Suzuki Textiles Limited as well as to the PGO Processors (Pvt.) Limited and their Directors and offices. In the said show cause notice the validity of agreement of M/s. Suzuki Company and the PGO Company has been doubted. Those notices had not been adjudicated. Taking into consideration the defence taken by the respondents and the challenge made by the petitioners, the Court ruled in favour of the PGO Processors (Pvt.) Ltd. , wanting to secure benefit under Notification No. 36 of 1998, by holding that in the face of registration of the petitioner's unit under Rule 174 of the Central Excise Rules, the contention of revenue cannot be countenanced till the registration is cancelled by following the procedure and principles of natural justice. Referring to the shows cause notice dated 15. 1. 99, which was issued to M/s. Suzuki Textiles Limited as well as the petitioner then before the Court, M/s. PGO Processors (Pvt.) Ltd. , the Court said: " The respondents have issued show cause notice for cancellation of registration certificate granted under Rule 174 of the Central Excise Rules though they have not issued for revocation/ suspension of the registration certificate and have not as yet decided to revoke/suspend the registration certificate. Grounds on which Registration Certificate once granted can be revoked/suspended under Sub Rule (11) of Rule 174 have also not been taken in the show cause notice which has been issued on the premises that the petitioner Company does not own the unit and in fact the unit is owned by M/s. Suzuki Textiles Ltd. They cannot therefore contend that the petitioner company is not an independent manufacturer or independent processor at this stage and cannot stop the petitioner company from exercising its right to clear goods on payment of excise duty u/s. 3-A of the Act and notifications issued thereunder. " The Court also held as a premise for reaching its conclusion that the registration certificate granted to the company will have to be taken as valid recognition of tits status as distinct and separate manufacturer or possessors irrespective of the activities of its members or shareholders so long as it is not revoked or suspended under sub rule (11) of Rule 174. The Court did not consider it necessary to go into the question of the identity and unity of interest of two companies by piercing through the veil to find out whether in reality one company can be taken to be a part or extension of another company created only for the purpose of evasion of tax or duty. With these findings the action of the officers of the Excise Department in refusing to accept the declaration from given under Notification No. 36 of 1998 was not approved and direction was issued to the respondents to allow clearance of excisable goods on payment of maximum duty under the notifications provisionally on the basis that it is `independent processor' covered by Notifications No. 36 of 1998 and 42 of 1998 dated 10. 12. 98 issued in exercise of powers under sub-sec. (3) of Sec. 3-A of the Act till the question is finally decided by the respondents by following due process of law. This order was made by this Court on 22. 04. 1999 and has been placed on record as Annex. 3 of this petition. As noticed above, while the PGO Processor was contending to get benefit of Notification No. 36 of 1998 and has challenged the refusal on the part of the officers of the Central Excise Department to accept the declarations about its status furnished under the said notification, show cause notices have been issued to Suzuki Processors as well as PGO Processors on 15. 1. 99 calling upon them to show cause on various matters referred to therein. The show cause notice dt. 15. 1. 99 was made subject matter of challenge of D. B. C. W. Petition No. 1266/99 by the present petitioner. It appears that that petition was filed before the decision rendered in D. B. C. W. Petition no. 11/99 and during the pendency of that petition subsequent notices dt. 11. 6. 99, 30. 9. 99 and 23. 12. 99 had also been issued to the petitioner. In the wake of these developments, the petitioner sought permission to withdraw the petition with liberty to file fresh writ petition which was granted vide order dated 24. 3. 2000 (Annex. 8 of the petition ). Thereafter the present petition has been filed challenging the aforesaid notices. Before adverting to the contentions, we may also notice one fact which during the course of the arguments has been brought to our notice that the very show cause notice Ex. 2 dt. 15. 1. 99 as well another show cause notice dated 31. 5. 99 issued to PGO Processors (Pvt.) Ltd. were also made subject matter of challenge in D. B. C. W. Petition No. 2179/99 filed at the behest of by M/s. PGO Processors (P) Ltd. The common notice dt. 15. 1. 99 was subject matter of challenge to the petition No 1266/99, 2179/99 as well as the present petition. The said petition No. 2179/99 by PGO was decided with direction to the respondent No. 1, the Commissioner Central Excise, Jaipur, to furnish authenticated copies of the documents relied on in the notices dated 15. 1. 99 and 31. 5. 99 as enumerated in the petitioner's (PGO's) letter dt. 19. 6. 99 addressed to the respondent No. 1 and proceed to adjudicate on the show cause notice only after supply of such copies. Substantive relief to quash notice itself was not granted.
(3.) THE principal contention is this petition is that in view of the categorical finding of the Court in its order dated 22. 4. 99 in Writ Petition No. 11/99 that until registration of PGO Processors (Pvt.) Ltd. is cancelled in accordance with the provisions of Rule 174 (11), the PGO Processors (Pvt.) Ltd. has to be treated as independent processor for the purposes of benefit under Notifications No. 36 of 1998 and 42 of 1998 and that the show cause notice does not have necessary ingredients of revocation or suspension of the registration of PGO Processors (Pvt.) Ltd. as required under Rule 174 (11) and the notice can only be considered to be a notice of cancellation; the exercise of enquiry into the show cause notice against present petitioner shall remain futile inasmuch as so long as the notice of cancellation of registration under Section 174 (11) is not issued to the PGO Processors (Pvt.) Ltd. for revocation of the registration, its existence as independent unit will have to be accepted by the revenue and even if the registration were to be cancelled it can only act prospectively, therefore, for the periods for which the notices in question relate, no liability can be fixed on the petitioner even on revocation/suspension of registration certificate of PGO (P) Ltd. under the pending proceedings. Mr. Lodha, learned counsel, who appears for Union of India, urged that the respondents have been served only with show cause notice to afford opportunity of taking defence to the proposed action against the petitioner company for determining its liability to pay excise duty in respect of fabrics processed apparently by PGO Processors (Pvt.) Limited as a job work for the petitioner which infact are believed to be processed by the petitioner itself which would alter the basis of determining the duty payable on such goods at the time of clearance. No conclusion for holding petitioner so liable has yet been reached. All the objections, the petitioner is raising now, it is entitled to raise before the Competent Authority and will be adjudicated in the course of determination by the respondents, no present cause of injury arises inasmuch as no demand as such has yet been raised against the petitioner in respect of the goods cleared in the name of PGO Processors for the periods governed by the show cause notices which could be recovered by coercive process against the petitioner. That can only be done after the show cause notice have been adjudicated and the conclusion is reached against the petitioners. Once, determination of show cause notice is made, and if it is against the petitioner, the petitioner has its remedy to proceed against such adjudication under the provisions of Central Excise Act and Rules, which provide complete code of levy and collection of Excise Duty payable thereunder. No question as to vires of any provision or and inherent lack of jurisdiction to initiate such proceedings under Section 11-A of the Central Excise Act has been made out. Therefore no ground is made for examining the merits of the show cause notices at this stage by this Court in exercise of its extraordinary jurisdiction. The petition deserves to be dismissed. There cannot be any dispute about the settled principle that extraordinary jurisdiction is not ordinarily to be exercised to interfere with the show cause notices where the question as to the final outcome of the show cause notice can be adjudicated by the authority itself except where it is shown that the authority issuing show cause notice has no jurisdiction to invoke his authority either on account of non fulfilment of any condition precedent, existence of which is required before assuming jurisdiction as in the case of issuing notices under Sec. 148 of the Income Tax Act or for re-assessments under various other taxing statutes, or the authority inherently lacks jurisdiction on the subject matter which it intents to deal with under the guise of show cause notice. So also if a case is made out that on the undisputed and admitted facts the continuance of the enquiry in exercise of jurisdiction by the statutory authority would be futile exercise, the jurisdiction of this Court to examine the issue and entertain the petition under Article 226 is not totally prohibited. The ordinary rule of exercising judicial restrains at the pre-decisional stage by the Court cannot be raised to the height of denuding the Court of its jurisdiction to entertain the petition at all in any appropriate case, merely by showing that it is a show cause notice. While we agree with the learned counsel for the respondents that ordinarily the jurisdiction of this Court under Article 226 is not invoked against mere show cause notices subject to certain exceptions, since the contention has been raised by the learned counsel for the petitioner that in view of the earlier decision of this Court which has become final and binding on the respondent, they cannot proceed with the enquiry and reach to any other different conclusion to hold the petitioner liable for the excise duty for the periods in question until the registration of PGO processors (Pvt.) Ltd. under the Central Excise Act is revoked in accordance with the provisions of Rule 174 (11) and as the Court has already reached the finding that the show cause notice in that regard does not contain the genes of sustaining action under Rule 174 (11), subjecting the petitioner to further enquiry under the show cause notices would be futile exercise, we deem it proper to examine the contentions raised by the petitioner on merit, on such aspects of the matter, which are urged before us to bring the case under exception to the rule. ;