Madhya Pradesh High Court
Union Of India (Uoi) vs Precitex Rubber Industries Ltd. on 19 September, 2006
Bench: Chief Justice, S.K. Seth
ORDER A.K. Patnaik, C.J.
1. This is an application under Section 35H of the Central Excise Act, 1944 (for short 'the Act')-
2. Respondent No. 1 carries the business of manufacture of synthetic rubber products. The Additional Commissioner, Central Excise, Indore issued a show cause notice dated 12-3-1998 to the respondent No. l under Section 11A of the Central Excise Act, 1944 and thereafter passed an order of adjudication dated 31-3-1999 under the said Section 11A of the Act. Aggrieved respondent No. 1 filed an appeal before the Commissioner (Appeals) who by his order dated 29-9-2000 confirmed the order of the Additional Commissioner, Central Excise, Indore. Respondent No. 1 then filed an appeal before the Customs Excise & Gold (Control) Appellate Tribunal, West Regional Bench at Mumbai and by order dated 11-11-2002, the Tribunal accepted the contention of the respondent that the notice issued and adjudicated upon by the Additional Commissioner suffers from want of jurisdiction and was bad in law and allowed the appeal with consequential relief. Aggrieved by the said order dated 11-11-2002, the Revenue has filed this application under Section 35H of the Act praying for direction to the Appellate Tribunal to refer the following question of law:
Whether the Additional Commissioner is competent to issue show cause notice and adjudicate the same for recovery of duty under proviso to Section 11A1 of the Central Excise Act, 1944 on or after 13-8-1997 i.e. the date when Central Board of Excise & Customs has issued its Circular No. 328/44/97-CX dated 13-8-1997 whereby Additional Commissioner was granted the power to adjudicate the cases involving fraud, mis-statement, suppression of facts etc. upto the limit of duty of Rs. 20 lakhs?
3. Pursuant to notice issued on this application, respondent No. l has appeared through his counsel Mr. D.K. Subedar and has raised some preliminary objection with regard to maintainability of the application. Mr. Subedar submitted that the order of the Appellate Tribunal dated 11-11-2002 is an order relating, among other things, to the determination of a question having relation to rate of duty of excise or to the value of goods for the purpose of assessment and therefore an appeal would lie under Section 35L of the Act to the Supreme Court and this reference application under Section 35H is misconceived. Mr. Vinay Zelawat, on the other hand, submitted that the impugned order of the Appellate Tribunal is not an order relating to determination of a question having relation to rate of excise duty or to the value of goods.
4. The order dated 11-11-2002 of the appellate Tribunal is extracted in extenso hereunder:
(1) The above appeal arises out of the order of the Commissioner of Central Excise (Appeals) who has confirmed total demand of Rs. 4,09,625/- confiscated excess stock with option to redeem the same on payment of fine and imposed penalties of Rs. 2 lakhs under Rule 9(2), 173Q and 226 and a mandatory penalty of Rs. 4,09,625/- under Section 11AC of the Central Excise Act.
(2) The challenge is to the jurisdiction of the Addl. Commissioner who has issued the show cause notice and adjudicated the same, on the ground that even after the amendment to Section 11A of the Central Excise Act, by which the words "Collector of Central Excise" shows as the Commissioner having jurisdiction for issuing notice invoking the proviso to Section 11A(1) with "proper officer", it was the Collector alone who could issue and adjudicate the notice invoking the proviso to Section 11A(1). In this connection, reliance is placed upon CBEC circular No. 3/92-CX.6 dated 14-5-92 and upon the decision in the case of Indexpo International (p) Ltd. v. CCE, Delhi 1994 (74) E.L.T. 1959 and the Apex Court decision in the case of Collector of Central Excise, Indore v. Oil & Natural Gas Commission .
(3) On hearing both sides and perusing the circular and case laws cited before us, we accept the appellants' contention that the notice issued and adjudicated upon by the Addl. Commissioner suffers from want of jurisdiction and is bad in law. Accordingly we set aside the impugned order upholding the Addl. Commissioner's order and allow the appeal with consequential relief in accordance with law.
5. It will be clear from the aforesaid order dated 11-11-2002 of the Tribunal that the only question that the Appellate Tribunal has decided is whether the Additional Commissioner has jurisdiction to issue notice and adjudicate the matter under Section 11A of the Act. The Tribunal has come to the conclusion that in view of the CBEC circular No. 3/92-CX.6 dated 14-5-92; the decision of the Tribunal in lndexpo International (P) Ltd. v. CCE, Delhi and the decision of the Supreme Court in Collector of Central Excise, Indore v. Oil & Natural Gas Commission , the contention that the notice issued and adjudicated by The Additional Commissioner suffers from want of jurisdiction and was bad in law has to be accepted. In the aforesaid order dated 11-11-2002, therefore, the Appellate Tribunal has not determined any question having relation to rate of duty of excise or to the value of goods. Since the appellate Tribunal, among other things has not determined any question having relation to rate of duty of excise or to the value of goods, the contention of Mr. Subedar that the remedy of the applicant was to file an appeal before the Supreme Court under Section 35L of the Act and not to file an application for reference under Section 35H of the Act has no substance.
6. Mr. Subedar next submitted that in any case the Supreme Court has decided in the matter of Collector of Central Excise, Indore v. Oil & Natural Gas Commission (supra) and in the matter of Collector of Central Excise, Jaipur v. Alcobex Metals that in cases where duty of excise is not levied or not paid or short levied or short paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Act or of the rules made thereunder with intent to evade payment of duty, it is the Commissioner of Central Excise who can issue a notice and adjudicate the matter and that the Additional Commissioner of Central Excise not being the Commissioner cannot issue a notice and adjudicate the matter under Section 11A of the Act. He submitted that since the Supreme Court has already decided the question of law, this reference application should be dismissed.
7. Mr. Vinay Zelawat, learned Assistant Solicitor General appearing for the applicant on the other hand submitted that the aforesaid decisions of the Supreme Court in the case of Collector of Central Excise, Indore v. Oil & Natural Gas Commission and in the case of Collector of Central Excise, Jaipur v. Alcobex Metals (supra) are based on the provisions of Section 11A(1) of the Act as it stood before it was amended by Act No. 18 of 1992 and that the said decisions of the Supreme Court would not apply for the period in respect of which notice under Section 11A of the Act has been issued and adjudicated in the present case. He submitted that the provisions of Section 11A as amended by Act No. 18 of 1992 would apply to the facts of the present case and the Court will have to decide the question of law as to whether after the amendment of 1992, the Additional Commissioner had the jurisdiction to issue the notice and adjudicate the matter in the present case.
8. We find full force in the submission of Mr. Zelawat. In the case of Collector of Central Excise, Indore v. Oil & Natural Gas Commission (supra), the notice under Section 11A and the adjudication under Section 11A were of prior to the amendment of Section 11A(1) by Act No. 18 of 1992 and before the said amendment there was a clear provision in the proviso to Section 11A(1) of the Act that where any duty of excise has not been levied or not paid or short-levied or short paid or erroneously refunded by reason of fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of the Act or of the rules made thereunder with intent to evade payment of duty, the provisions of sub-section shall have effect as if for the words "Central Excise Officer", the Collector of Central Excise" were substituted. The language of Section 11A (1) of the Act after the Amendment Act No. 18 of 1992 is different and hence the Court will now have to decide as to whether after the Amendment Act of 1992, it is only the Collector of Central Excise/Commissioner of Central Excise, who will have the power to issue notice and adjudicate the matter under Section 11A of the Act in cases where duty of excise has not been levied or not paid or short-levied or short paid or erroneously refunded by reason of fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of the Act or of the rules made thereunder with intent to evade payment of duty or the Additional Commissioner will also have such power.
9. It appears that by the CBEC circular No. 3/92-CX.6 dated 14-5-1992 instructions have been issued to the Central Excise authorities that notwithstanding the amendment to Section 11A by the Finance Act of 1992, it has been decided that the Collector of Central Excise will issue and decide demands in cases where allegation of fraud, suppression of fact etc. are involved and the appellate Tribunal North Regional Bench, New Delhi in Indexpo International (P) Ltd. v. Collector of Central Excise, Delhi has held that in terms of the aforesaid Board Circular No. 3/92-CX.6, cases under Section 11A of the Act where allegation of fraud were involved could be adjudicated by the Collector. In the present reference application, the Court will have to answer the question of law as to whether even after the amendment to Section 11A of the Act by the Amendment Act of 1992, in cases involving fraud, suppression of fact etc. only the Commissioner of Central Excise will have the power to issue notice and adjudicate the matter under Section 11A of the Act in view of the said Circular of the Board or whether the Additional Commissioner will also have such power. This question of law does not appear to have been answered by the Supreme Court in any case. Hence, a question of law arises in this case and it is fit case in which we should direct the Appellate Tribunal to refer the aforesaid question of law to this Court under Section 35H of the Act and we accordingly direct.
10. After the reference is made by the Appellate Tribunal, counsel for the parties may make their submissions on the aforesaid question of law. This application stands disposed of.