Customs, Excise and Gold Tribunal - Tamil Nadu
Tungabhadra Pulp And Boards Mills Ltd. vs Commissioner Of Central Excise on 27 October, 1999
Equivalent citations: 2000(67)ECC520
ORDER S.L. Peeran, Member (J)
1. This appeal arises from Order-in-Original No. 2/98 dated 3.7.98 passed by Commissioner of Central Excise, Belgaum confirming duty demand of Rs. 49,79,970.09 under Section 11A(2) of the CE Act, 1944 as differential duty payable for the period 1.10.77 to 30.4.84. He has adjusted the deposit of Rs. 9,14,000 paid during the pendency of Writ Petition before the Hon'ble High Court of Karnataka and confirming for the balance i.e. for Rs. 40,65,970.09 and also imposed penalty of Rs. 40,00,000 under Section 173-Q(1) of the Central Excise Act for contravention of Rule 173-C with intent to evade payment of duty.
2. The short fact arising for consideration of this case is that the Assistant Commissioner of Central Excise issued a show cause notice dated 24.9.85 raising demands from 1.10.77 to 10.6.80 in respect of short levy and non-includibility of collection of handling, transport, marketing, transhipment, storage charges, etc. on the appellant's own invoices and on the invoices of the Tee Pee Bee Transports for the period from 11.6.80 to 30.4.84. This show cause notice was adjudicated by the Assistant Commissioner invoking Section 11A of Central Excise Act without brining out the facts with regard to proviso to Section 11A as regards to intent to evade duty by factors of suppression, misstatement, collusion, fraud or other ingredients as stated therein.
3. The appellants had raised the question of jurisdiction of the Assistant Commissioner who invoked the show cause notice and also had contended that he cannot issue demands beyond 5 years also. These contentions were over-ruled by the Assistant Commissioner by his adjudication Order dated 16.10.84 confirming the demands. This order was appealed before Commissioner (Appeals) raising several issues including the legality of the Assistant Commissioner issuing the show cause notice beyond the period of 6 months and invoking larger period beyond 5 years in the show cause notice. The Commissioner (Appeals) by Order-in-Appeal No. 34/85 dated 6.6.85 allowed their appeal by remand to the Assistant Commissioner to re-examine the pleas raised by them both on merits as well as on the demands being hit by limitation and also on the jurisdiction. The Assistant Commissioner took up the issue again for re-adjudication on the same show cause notice which was in subsistance during the period when proviso to Section 11A had already been amended and the powers to adjudicate a matter invoking larger period was entrusted to the Commissioner. The pleas were again reagitated by the appellants that after the amendment to the Section 11A, the Assistant Commissioner has no jurisdiction to adjudicate the show cause notice dated 15.9.82. The Assistant Commissioner of Central Excise, Bellary over-ruled all their objections and reconfirmed the demands by Order dated 25.2.87. This order was challenged before the Hon'ble High Court of Karnataka in Writ Petition Nos. 7007 to 1013/87. The Hon'ble High Court of Karnataka by their Order dated 3.10.89 quashed the proceedings and held that Assistant Commissioner had no jurisdiction to invoke the proviso to Section 11A after the said provision was amended by Act 79/85 w.e.f. 27.12.85. The Order of the High Court in the writ petition is extracted below:-
These Writ Petitions are directed against a common order passed by the Assistant Collector of Central Excise, Bellary on 25.2.87 as per Annexure-A. This order was made on a remand made by the Collector of Appeals dated 16.10.84.
The original order of adjudication came to be made pursuant to show cause notice issued on 15.9.82 proposing to levy difference of duty under the Central Excise Act from 1977 to 1981-82 on the ground that the petitioner had not filed proper and correct price list and consequently there was short-levy on account of miss-statement or suppression of facts by the petitioner.
It is unnecessary to deal with the other contentions raised in the writ petitions, except the ground relating to the jurisdiction of the Asstt. Collector to make an order under the Act in exercise of the powers falling under the proviso to Section 11A after the amendment to the said section by Act 79/85 w.e.f. 27.12.85.
The effect of the amendment was that the Collector was conferred with the powers to make a demand by issue of a show cause notice under Section 11A proviso in cases wheel the period of short-levy exceeded six months.
On 27.12.85 the matter was pending before the Assistant Collector for making a de novo order on an order of remand made by the Collector (Appeals) on 6.6.85. The order impugned in these writ petitions made by the Assistant Collector, as per Annexure-A, was passed on 25.2.87.
Therefore, by virtue of the amendment the Assistant Collector ceased to have powers to make any order demanding difference of duty for the period which exceeded six months by reason of mis-statement or suppression of facts and the like referred in the proviso to Section 11A.
In this view of the matter, the order of the Assistant Collector (Annexure-A) is liable to be set aside on the sole ground of want of jurisdiction.
The writ petition is accordingly allowed and the order passed by the Assistant Collector of Central Excise, Bellary (Annexure-A) is quashed reserving liberty to the Department to take such action as is open to it in accordance with the amended provisions.
The deposits, made by the petitioner pursuant to the directions given by this Court in the Writ petitions shall remain with the Department for appropriating the same towards any demand that may be raised pursuant to any order that may be made in accordance with law.
All other contentions raised in the writ petitions are left to be urged before the Appropriate Authority.
4. In terms of the above order of the High Court, it follows that the entire demands confirmed by the Assistant Commissioner on re-adjudication has been set aside and no demands subsist for further adjudication or confirmation. However, being not satisfied with the said order, the Collector of Central Excise, Belgaum issued a Corrigendum dated 23.10.90 on the following lines:-
OFFICE OF THE COLLECTOR OF CENTRAL EXCISE: TAKKED BUILDING: CLUB ROAD: BELGAUM - 590 001.
C.No. V/48/15/75/89 (ADJN). DATED: 23.10.90.
CORRIGENDUM TO SHOW CAUSE NOTICE CNO. V/17/2/1/85 B,6 DATED 24.9.85 ISSUED BY THE ASSISTANT COLLECTOR OF CENTRAL EXCISE, BELLARY.
....
In Main Para 2 of the above-mentioned Show Cause Notice for the words occurring in 3rd line as "THE ASSISTANT COLLECTOR OF CENTRAL EXCISE, BELLARY DIVISION, KALAMMA STREET, BELLARY" may be read as "THE COLLECTOR OF CENTRAL EXCISE, No. 71, CLUB ROAD, BELGAUM". The other conditions of the above Show Cause Notice remain unchanged.
2. THIS CORRIGENDUM TO SHOW CAUSE NOTICE is issued in pursuance of Order dated 3.10.89 on writ petition Numbers 7007 to 7013 of the Hon'ble High Court of Karnataka, Bangalore.
3. Now, please furnish your reply to this office to the Show Cause Notice within FIFTEEN DAYS of receipt of this CORRIGENDUM.
5. The appellants again filed their detailed submissions by their reply dated 23.1.91 contending that the Corrigendum was without jurisdiction, without authority of law and illegal as the entire proceedings of Assistant Commissioner was quashed as without jurisdiction. It was pointed out that the above Corrigendum does not invoke the proviso to Section 11A and no ingredients have been incorporated and even otherwise, the corrigendum is to be treated as a fresh show cause notice and if that is also taken, then the entire demands are time barred. In this regard they also pleaded on merits and contended that all the details were available with the department and there was no occasion to invoke the larger period. Further pleas on merits were also taken up and several judgments were cited to show that the duty on the said charges cannot be included in the assessable value of the goods cleared from the factory gate. In this regard also large number of judgments were cited.
6. The Commissioner over-ruled all the pleas and confirmed the demands in the impugned Order dated 3.7.98 holding that the show cause notice by corrigendum is valid and demands have not been set aside by the writ petition by High Court of Karnataka and interim deposits can be adjusted in the confirmed demands. The above order is under challenge on various pleas. However, the preliminary objection raised is pertaining to the jurisdiction of the Commissioner to issue the corrigendum in the above terms and also on the plea that the order passed by the Writ Petition is final and conclusive and it cannot be re-adjudicated by a corrigendum without invoking the ingredients in terms of Proviso to Section 11A. Therefore, it is contended by Ld. Advocate Shri Puranik that the issue could be disposed of on this point without going into the other questions raised by the appellants. The Tribunal by their Note Order dated 18.8.99 had called for a report on this matter and the matter had been listed for 10.9.99. From 16.9.99 the matter was adjourned for 26.10.99 as the matter did not reach for hearing. The same was taken up for consideration today. The Tribunal has also granted Interim Stay by Order No. 427/99 dated 8.3.99 by up holding the preliminary objection raised and granting full waiver of recovery and stay of the proceedings. In the stay order as well as on the Note order, the Commissioner has not responded. Therefore, the matter was taken up for hearing today. Both sides were heard. The respective sides have putforth their pleas.
7. Ld. D.R. submits that the Commissioner in the Order-in-Original had already dealt with all these points and the same may be taken as reply on behalf of the department.
8. On a careful consideration of the submission of both sides and on perusal of the High Court's order extracted above, we notice that the High Court has clearly indicated that the original order of adjudication came up in pursuant to show cause notice dated 15.9.82 proposing to levy difference of duty under the Central Excise Act from 77 to 81-82 on the ground that the petitioner had not filed proper price-list and clearly there was short levy on account of mis-statement/suppression of fact by the petitioner. The High Court of Karnataka has noted that after the amendment to Section 11A w.e.f. 29.12.85, the Assistant Commissioner had no powers to issue show cause notice and raise demands under proviso to Section 11A. On that premise the show cause notice as well as the Order-in-Original have been quashed. It follows that the show cause notice does not exist in law as there was no jurisdiction for the Assistant Commissioner to issue the show cause notice. This matter was also clarified by the Commissioner (Appeals) in the first stage, when he remanded the case by his Order No. 34/85 dated 6.6.85. The Commissioner (Appeals) in this order had clearly indicated to the Assistant Commissioner to come out with the findings on the aspect pertaining to the demands being hit by limitation and about the jurisdiction also. The Assistant Commissioner when re-adjudicated the matter had no powers to do so as the proviso to Section 11A had been amended. The Assistant Commissioner ought to have transferred the proceedings to Commissioner. At this point of time the Commissioner should have taken up the matter by mending the show cause notice and he could have adjudicated the matter. However, the Commissioner did not choose to do it and the Assistant Commissioner has proceeded to adjudicate the same show cause notice which had been issued on 19.6.82. The said proceedings were challenged before the High Court as noted and the High Court of Karnataka has set aside the show cause notice as well as the Order-in-Original on the ground that the Assistant Commissioner had no jurisdiction after amendment to the proviso of the Act was passed amending Section 11A. Therefore, it follows that the corrigendum as noted above cannot be treated as a corrigendum. Furthermore, we notice that for issue of corrigendum, a subsisting legal show cause notice should have been in existence. In the facts of the present case, no such show cause notice existed as the first show cause notice of 19.6.82 has been quashed by the High Court. Therefore, the Collector's corrigendum dated 23.10.90 is misconceived. Further, we notice that when the Commissioner was to invoke proviso to Section 11A, he was to have brought out all ingredients of Section 11A as has been held by the Hon'ble Supreme Court in the case of CCE v. HMM Ltd. as . The Commissioner instead of issuing a fresh show cause notice on these lines in terms of law has merely stated that he is issuing this corrigendum in pursuance of order dated 3.10.89 on Writ petition Nos. 7007 to 7013/89 of Hon'ble High Court of Karnataka. We have perused the High Court's order. We do not find any such direction to Commissioner to issue a corrigendum. The High Court has instead set aside the proceedings of Assistant Commissioner. Therefore, as we have stated, the Commissioner was not correct in assuming that there was a direction in the High Court's order in issuing corrigendum to amend the proceedings, as if in continuation of the show cause notice of 1982. In that view of the matter, we uphold the preliminary objection raised by the counsel in this matter and hold that the impugned order is totally not sustainable for the reasons given above and the same is set aside both on jurisdiction as well as on time bar. Appeal is allowed with consequential relief, if any.