Customs, Excise and Gold Tribunal - Mumbai
Commissioner Of Cen. Excise vs Reliance Industries Ltd on 10 August, 1998
Equivalent citations: 1999(63)ECC610
ORDER
K.S. Venkatararnani, Vice-President
1. The brief facts are that the proceedings were initiated against the respondents alleging that they have cleared polycondensation waste upto spinnerate stage i.e. undrawn waste in lump form during the period November, 1985 to April, 1986 without payment of duty as the said lump waste is classifiable under T. I. 15A OF THE OLD Central Excise Tariff Act. It was further alleged that they have manipulated the account of polyester waste and they have not shown the lump waste and POY waste arising from the spinnerate stage onwards separately and they have cleared the lump waste for recovering dimethyl terephthalate as per notification No. 168/76-CE under Chapter X procedure. Since this exemption has been given for the waste of polyester fibre and yarn and as the entire quantity of waste is not covered as per the description of the said notification, the lump waste was held to be dutiable and proceedings were taken for recovery thereof. Show cause notice was issued on 21.5.1986 for recovery of an amount of Rs. 3,41,647.34. The show cause notice alleged that the; lump waste was dutiable under T. I. 15A of CETA. The jurisdictional Asstt. Commissioner of Central Excise, Panvel I Division confirmed the demand. An appeal was preferred against the Asstt. Commissioner's order. The Commissioner of Central Excise (Appeals). Mumbai passed the impugned order thereon. The Commissioner (Appeals) observed that the show cause notice has been issued by the Supdt. of Central Excise and held that where the show cause notice is issued invoking the proviso to Section 11A of the Central Excises & Salt Act, the notice has to be issued mandatorily by the Collector. It was held by the Commissioner (Appeals) that this is so even if the period of demand is within the normal period of six months and not the extended period. Therefore, the Commissioner (Appeals) held that the show cause notice issued by the Supdt. is incompetent and without jurisdiction. The appeal was allowed on this ground of jurisdiction. The present appeal by the Commissioner of Central Excise, Mumbai III has been preferred against this order.
2. Shri A.R.S. Kumar the Id. DR. for the appellant Commissioner contended that the show cause notice issued by the Supdt. is well within six months period and he drew attention to the notice which is on record and pointed out that the ingredients of the proviso to Section 11A like suppression of facts, collusion, mis-statement etc. are not at all mentioned in the notice. Therefore, there is no infirmity. The Id. DR. cited and relied upon the Supreme Court judgment in the case of CCE. Baroda v. Safari Industries (India) Ltd. 1996 (84) ELT (SC), wherein the Supreme Court has held that show cause notice issued by the: Supdt. under Rule 9(2) read with Section 11A is valid for the period of six months. It was, therefore, contended by the Id. DR. that the matter should be remanded to the Commissioner (Appeals) for decision on merits.
3. Shri Rohan Shah, the Id. counsel for the respondents contended that the show cause notice in this case has invoked the proviso to Section 11A of the Central Excises & Salt Act and once that is done, the notice has necessarily to be issued by the Commissioner and the Supdt. has no jurisdiction to issue such notice. The Id. counsel relied upon in this regard the judgment of the Tribunal in the case of Alcobex Metals (P) Ltd. v. Collector of Central Excise . That decision has followed an earlier decision of the Tribunal in the case of Pratap Rajasthan Copper Foils and Laminates Ltd. v. Collector , wherein it was held that where allegation of mis-statement, fraud, collusion, suppression etc. are made in the show cause notice, only Collector is empowered to issue such notice, even if the demand is limited to six months under Section 11A. The Id. counsel also urged that the Supreme Court judgment in the case of Safari Industries cannot be a precedent because it was a disposal of the ease on the basis of memo of the two parties involved.
4. The Id. DR. Shri A.R.S. Kumar in reply relied upon the Tribunal judgment in the case of ESPI Industries & Chemicals Put. Ltd. v. Collector of C. Ex. , wherein, the Tribunal has distinguished the decision in the case of Partap Rajasthan Copper Foils & Laminates Ltd. [supra). The Tribunal observed in the case of ESPI Industries that the duty for longer period had not been demanded and no material facts constituting the invoking of proviso to Section 11A had been alleged in the show cause notice and therefore, the Tribunal held that the show cause notice does not get vitiated. The Tribunal observed that in such a situation, the ratio of the Partap Rajasthan Copper Foils and Laminates Ltd. decision will not apply. The Id. DR further pointed out that in the case of Alcobex Metals decision of the Tribunal supra ingredients of suppression of facts etc. were in the show cause notice and hence the show cause notice is considered to be distinguishable. Reliance was also placed by the Id. DR. on the Tribunal decision in the case of Noble Soya House Ltd. v. Collector . In that decision also the Tribunal had distinguished the Alcobex Metals P. Ltd. case.
5. We have carefully considered the submissions. The question is whether the show cause notice in this case dated 21.5.86 issued by the Supdt. is within jurisdiction or not. The show cause notice has demanded the duty under Rule 9(2) of Central Excise Rules read with the proviso to Section 11A CESA. The period for which the duty demanded is within the normal period of six months under Section 11A. In the Supreme Court judgment in the case of Safari Industries (India) Ltd. supra it has been held as follows:
We have heard the learned Attorney General on behalf of the appellant and Shri Dave, learned Counsel on behalf of the respondent. A memo on behalf of the appellant has been filed. The memo reads:
The show cause notice was issued on 22.1.1987 for the period covering 5.7.1986 to 10.9.1986. If the period of 6 months is counted from backward it goes to 22.7.1986. Therefore, the show cause notice may be treated as valid under Section 11A for the period 22.7.1986 to 10.9.1986 and the judgment of the Tribunal may be set aside, and fresh order may be passed by the appropriate Officer of the Central Excise. Baroda in accordance.
The appeal is disposed of in terms of the above memo.
It may be mentioned that in that case the Tribunal had set aside the show cause notice observing that the longer period of limitation has been invoked alleging suppression and misrepresentation of fact and it has been issued by the Supdt. and hence the order of the Collector demanding duty on that basis was set aside. It would also appear from the Collector's appeal before the Supreme Court against the Tribunal's order that the contention was that the show cause notice was issued under Rule 9(2). wherein, only the period specified in Section 11A of the CESA has been mentioned and proper officer mentioned in Rule 9(2) is not to he decided with reference to Section 11A and further that the demand under Rule 9(2) issued within the normal period or within the extended period can always be made by the proper officer. For the purpose of Rule 9(2) it is not stipulated that Collector has only to issue the notice. In this context, the Supreme Court decision as extracted above, clearly goes against the Respondents because in this case the show cause notice is not under Section 11A as such but under Rule (2) of CERs read with Section 11A of CESA. The Tribunal's decisions in the case of ESPI Industries & Chemicals Pvt. Ltd. supra and Noble Soya House Ltd. are also on the same lines and the decision of the Tribunal in Alcobex Metals (P) Ltd. was only on the demand under Section 11A and it was not a notice under Rule 9(2) read with Section 11A which came up for consideration. Therefore, in the light of the Supreme Court judgment in the case of Safari Industries, the present show cause notice issued by Supdt. under Rule 9(2) of Central Excise rules for a period within six months has to be held as valid. In this view of the matter, the decision of the Commissioner (Appeals) dismissing the appeal on the ground of want of jurisdiction is not sustainable. Therefore, the impugned order is set aside and the matter is remanded to the Commissioner (Appeals) for considering the case on merits. The department's appeal is allowed by remand.