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2006 Supreme(Mad) 1115
High Court of Judicature at Madras
A.P. SHAH & PRABHA SRIDEVAN
The Commissioner of Central Excise
Versus
Sun Pharmaceuticals Industries Ltd. & Others
Writ Appeal No. 323 of 2006
Decided On :Decided On : 20-04-2006
For the Appellant: K. Veeraraghavan, S.C.G.S.C.
For the Respondents:A. Ramesh Kumar, Advocate.
The main legal point established is that the territorial jurisdiction of the court is determined by the cause of action, and even a small fraction of cause of action accruing within the jurisdiction gives the court the authority to decide the matter.
Headnote:
Customs Act - Territorial Jurisdiction - Sections 28(1), 114-A, 28-AB, 58, 59, 68, 71, 72 - The judgment discusses the application of Sections 28(1), 114-A, and 28-AB of the Customs Act, 1962, along with Sections 58, 59, 68, 71, and 72. It highlights the court's interpretation of territorial jurisdiction under Article 226(2) of the Constitution of India and the relevance of cause of action in determining jurisdiction.
Fact of the Case:
The appellant challenges the order of the 15th respondent admitting the case of respondents 1 to 13 under Section 127-B of the Customs Act. The court analyzes the territorial jurisdiction and the cause of action arising within its jurisdiction.
Finding of the Court:
The court finds that the cause of action had arisen within its jurisdiction, allowing the appellant to file a writ petition in this Court.
Issues: The main issue is the territorial jurisdiction of the court in relation to the cause of action and the application of Section 127-B of the Customs Act.
Ratio Decidendi: The court's decision is based on the interpretation of Article 226(2) of the Constitution, the relevance of cause of action, and the application of the Customs Act provisions.
Final Decision: The order of the learned single Judge is set aside, and the matter is sent back to be dealt with in accordance with law. The writ appeal is allowed with no order as to costs.
P. Rabha Sridevan, J.
1. The writ petitioner is the appellant. He is aggrieved by the order of the learned single Judge dismissing the writ petition on the preliminary ground of territorial jurisdiction. The fifth respondentCompany, which has since merged with the first respondent-Company, was issued with a show case notice under the provisions of Sections 28(1), 114-A and 28-AB the Customs Act, 1962 for violation of the statutory provisions in Sections 58, 59, 68, 71 and 72 of the Customs Act to show cause as to why a penalty of Rs.1,71,91,550 should not be demanded and also the mandatory penalty along with interest. The show cause notices were received by the first and fifth respondents. The Revenue Authorities discovered, while checking the "Input Output Ratio", that there was a systematic, meticulous and willful evasion of duty by the fifth respondent in collusion with the first respondent. According to the appellant, the fifth respondent had inflated the quantity of raw materials required for production of the finished products such as Erythromycin, Raxythromycin and Erythromycin Azithromycin, so that after utilizing the actual quantity of raw materials and final products, the remaining quantity was utilized in the account of the first respondent under the pretext of job work placed by the first respondent. It is alleged that having taken advantage of the so called job work system, the fifth respondent had started clearing the in-bound materials, namely the raw materials, without payment of customs duty for the manufacture of the finished products. It is also alleged that the fifth respondent had fraudulently fabricated bogus records with relation to the mother liquor, "the mixture of spent solvents". According to the appellant, the key persons of the fifth respondentCompany have admitted the evasion of duty and the part played by them. It is in these circumstances that the show cause notice was issued to respondents 1 to 13.
2. Instead of replying to the show cause notice, the first respondent filed Writ Petition No.6157 of 2003 on the ground that the second respondent in that writ petition had no jurisdiction to issue the show cause notice. This writ petition was disposed of by a learned single Judge of this Court on 24.9.2003 by directing the authorities therein to furnish the copies of the documents required by the respondents herein within a period of 15 days and with a further direction to the respondents to file its objections thereafter to the show cause notice. But, instead of complying with the said direction, the respondents directly approached the Settlement Commission at Chennai, the 14 th respondent herein, by filing an application under Section 127-B of the Customs Act for settling the case and for immunity from fine, penalty, payment of interest and prosecution. The appellant herein filed his counter and prayed for dismissal of the application, inter alia, contending that the respondents, instead of complying with the directions given by this Court in W.P. No.6157 of 2003, have approached the Settlement Commission to scuttle the process of law. The various factual averments made by the respondents were specifically denied by the appellant herein. It was specifically stated that the application itself was inadmissible.
3. Pending the proceedings before the 14th respondent, an interim application was filed by respondents 1 to 13 for transfer of the proceedings to the 15th respondent. This was resisted by the appellant on the following grounds:
(1) The place of occurrence of the offence is the factory of the applicant located in the present jurisdiction of Pondicherry Commissionerate and hence, it would be natural, logical, legal and more appropriate for the Chennai Bench to deal with the application.
(2) If the applications are to be dealt with by the Chennai Bench of the Settlement Commission, the officers would be able to render more assistance easily.
(3) The documents seized/obtained relating to
