Customs, Excise and Gold Tribunal - Delhi
M/S. Telc0 vs Cce, Patna on 14 May, 2001
Equivalent citations: 2001(76)ECC579, 2001(132)ELT112(TRI-DEL)
ORDER
V.K. Agrawal
1. In this appeal filed by M/s Tata Engg. & Locomotive Co. Ltd., the issue involved is whether the Collector was competent to adjudicate the matter without issuing the shown cause notices and whether the benefit of exemption under Notification No. 217/86 dt. 2-4-86 and 281/86 dt. 22-4-86 was available to material handling equipments and measuring and checking instruments manufacture by them.
2. Shri R. Swaminathan, 1d. Consultant, submitted, that the Appellants manufacture Motor Vehicle and parts thereof; that they also manufacture material handling equipments like lifting tackes, trolleys, conveyors, carriers, loading-unloading equipments etc., and measuring and checking equipments for captive use; that before the introduction of the Central Excise Tariff Act 1985, all these items were exempt under Notification 118/75-CE; that after introduction of new Tariff these were exempt under notification no. 217/86 as these were captively used in or in relation to the manufacture of the finished goods; that in view of the decision of Larger Bench of the Tribunal in the case of CCE Indore Vs. Surya Roshni Ltd. 2001(128) ELT 293, the matter may be required to be remanded to the Adjudicating Authority for examining whether the impugned equipments are used for producing or processing any goods or for bringing about any change in any substance for the manufacture of the final products; that in terms of Larger Bench decision in the case of Tata Iron & Steel Co. Ltd Vs. CCE, Calcutta, 2000(38) R.L.T. 139(CEGAT-LB) they will not be eligible for the benefit of Notification 281/86-CE. The 1d. consultant, further, submitted that the Collector of Central Excise was not competent to adjudicate the present matter. He mentioned that the show cause notices dt. 20-7-1988 was issued by the Superintendent to the Appellants for demanding Central Excise duty for the period from 20-10-87 to 30-6-88; that the Assistant Collector confirmed the demand relying on the Adjudication Order dt. 24-5-1988 passed by the Collector Central Excise Pune, on the similar grounds; that however, on appeal filed by them, the Commissioner (Appeals) under Order No. R-322/PN/89 dt. 19-2-90 set aside the impugned Order holding that after the amendments of Section 11A w.e.f 27-12-85, only the Jurisdictional Collector was competent to issue and adjudicate a show cause notice invoking the extended period of time invoking the extended period of time limit; that Collector (Appeal) however, directed the Assistant Collector to put up the case papers to the Jurisdictional Collector for such action as deemed fit by him; that in the meantime Superintendent of Central Excise issued straight way at a lader dt. 29-3-1989 for demanding duty for the period from 1-7-88 to 30-12-88 without issuing any show cause notices and without any allegation of suppression, mis-statement etc.; that on appeal, this demand was also set aside by Collector (Appeal)_under Order NO. R- 153/PN/89 dt. 19-2-90 holding that it was issued in violation of the Principles of natural justice and demand being beyond 6 months period had to be issued by the Collector. In this case also Collector (Appeals) directed the lower authority to put up the papers to the Jurisdictional Collector for such action as deemed fit by him; that the Collector under letters dt. 9-4-90 and 10-4-90 made references to the show cause notice dt. 20-7-88 and demand letter dt. 23-9-89 and asked them to make further submissions if any; that the Collector there after passed the impugned Order denying the benefit of Notification No. 217/86 confirmed the duty only for a period of six months in respect of show cause notices dt. 20-7-88. The Collector also confirmed the entire demand issued by the Superintendent under letter dt. 29-3-89.
3. The 1d. Consultant submitted that the show cause notices dt. 20-7-88 has already been set aside as being without jurisdiction and as such no notice was pending before the Collector to adjudicate upon; that the Collector cannot cure the defect in jurisdiction in the show cause notice with retrospective effect; that similarly letter dt. 29-3-89 was categorically set aside by the Collector (Appeals)_and accordingly the Collector had nothing before him to adjudicate, that as no appeals were preferred against the Order-in-Appeal, they had become final, that para 4 in both the Orders in appeal passed by the Collector (Appeals) did not confirm any Jurisdiction on the Collector for adjudicating the matters without issuing fresh show cause notices; that Para 4 of both the Orders only directed the lower authority to put up the case papers to the Collector for such action as deemed fit by him; that such direction cannot be treated as the direction of placing the show cause notice itself for adjudication by the Collector; that the contention of the Collector that both the cases were remanded to him by the Collector (Appeals) is erreneous. The 1d. consultant. further submitted that even if the letters dt. 9-4-90 and 10-4-90 are considered to be show cause notices, issued by the Collector for demanding the duty on the impugned goods the time limit has to be computed form the dates of these two letters and the entire demands would be hit by time limit of six months specified in Section 11 A(1) of the Central Excise Act; the Collector himself in the impugned Order had held that the Departments being apprised of all the facts of the case, demand in excess of six moths, was not legally sustainable and neither any appeal nor any cross objection has been preferred by the Department against this finding of the Collector in the impugned Order. The 1d. Consultant relied upon the decision in the case of Jai Hind Oil Mills And Co. Vs. U.O.I 1994 (71) ELT 902 (Bom) wherein it was held that once the appeal is not preferred by the Department, the order becomes final and binding and further, show cause notices could not be issued in law. Reliance was also placed on the decision of the Tribunal in the case of Frick Indid Ltd. Vs. CCE New Delhi, Final Order No. 522/99-A dt. 18-2-99, which wherein it was held that the Assistant Collector is not competent to issue show cause notice alleging suppression following the decision of the Supreme Court in the case of CCE Vs. ONGC 1998(103) ELT 3(SC) and Jayant Vitamins Ltd. Vs. CCE 1996(86) ELT 421; the Rom Application filed by the Department was also rejected by the Tribunal vide Misc Order No. 213/99-A dt. 26-11-99 and the appeal filed by the Department has been dismissed by the Supreme Court in Civil appeal No. 4421-4422/2000 on 14-12-2000.
4. Finally the 1d. Consultant submitted that no penalty is imposable in the present matter as the Tribunal in their own case had allowed the benefit of Notification No. 217/86 in respect of material handling equipments and measuring checking equipments. (TELCO LTD VS CCE, PUNE 1994 (7) ELT 75(T).
5. Countering the arguments, Shri Prabhat Kumar, 1d SDR, submitted that para-4 of both the Orders in Appeal was in view of the conclusion reached by the Collector (Appeals) that there was a lacuna in issuing the show cause notice dt. 20-7-88 and letter dt. 29-3-89 and as the same were not issued by the Collector, the defect could be corrected by placing those papers before the Jurisdictional Collector; that, therefore, the Collector (Appeals) directed in both the Orders to put up the papers to the Collector for such action as deemed fit by him; that accordingly Collector directed the Appellants under letters dt. 9-4-90 and 10-4-90 to file any additional submissions; that Collector also intimated under these two letters that the show cause notice and letter in question had been taken on record by him; that in view of this it cannot be said that Collector should have issued fresh show cause notices; that the Collector has also given his findings in the Impugned Order by observing that "it is not material if word 'remand' is not user there in "; that the Collector after relying upon the decision in the case of Supdt Central Excise Vs.Pratap Rai 1978 ELT J 613 (SC) and Mahavir Products Vs. CCE 1989 (41) ELT 491 came to the conclusion that there was no reason to issue fresh show cause notices. The 1d.SDR, further, submitted that it has been held by the Karnataka High Court in the case of Reletronics Ltd. Vs. Assistant Collector Central Excise 1992 (60) ELT 388 (Kar) that the show cause notice issued by the Supdt within six months is valid although it alleges suppression of facts etc. and contended that the demand for the period six months will, therefore, be valid.
6. Finally the 1d. SDR mentioned that the Superintendent has issued the demand dt 29-3-89 after carrying out the assessment of RT 12 in pursuance of Order-in-Original No. 152/88 passed by the Collector of Central Excise Pune, under Rule 173 (I) of the Central Excise Rules and as such no show cause notice was required to be issued for demanding the duty.
7. In reply the 1d. Consultant relied upon the decision in the case of CCE Baroda Vs. Kosan Metal Products Ltd. 1988 (38) ELT 573, wherein it was held that demand for short payment has to be issued under Section 11A of the Central Excise Act. He also relied upon the decision in the case of Gokak Patel VOLKart Ltd. Vs. CCE 1997 (28) ELT 53 and in the case of U.O.I. Vs. Madlumilan Syntex Pvt. Ltd 1998(35) ELT 349 (SC). Finally he relied upon the decision in the case of Alcobex Metal Pvt. Ltd Vs. CCE 1992 (38) ELT 108 (T) wherein it was held that once the show cause notice is found to be without jurisdiction the entire proceedings would also be without jurisdiction.
8. We have considered the submissions of both the sides. We find substantial force in the submissions of the 1d. Consultant that once the Collector (Appeal) has found show cause notice and letter of demand without jurisdiction and set aside the both, nothing survives for the Collector to adjudicate the matter on the basis of a such show cause notice and letter of demand. As rightly emphasised by the 1d. Consultant, no appeal having been filed by the Department against both the orders in Appeal, the same have become final and it cannot be argued by the Department the in respect of letter dt. 29-3-89 no show cause notice was required to be issued as the demand was issued in pursuance of adjudication Order passed by the Collector denying the benefit of Notification No. 217/86. The direction by the Collector (Appeals) in both the Orders to place the case papers before the Jurisdiction Authorities for such action as deemed fit by him was only with a view, in our opinion, to examine the possibility of invoking the larger period of limitation and to issue the show cause notice for demanding duty accordingly. The directions for placing the papers before the Collector cannot be regarded as the remand for de-novo adjudication. We, therefore, agree with the preliminary objection raised by the 1d. consultant about the competence of the Collector to decide the matters on the basis of earlier show cause notice dt. 20-7-88 and lader of demand dt. 29-3-89. The ratio in the case of Pratap Rai case is not applicable as in that case the Adjudication Order was set aside as it was issued inviolation of principle of natural justice. It is not so in the present matter. The ratio of the decision in the case of Mahavir Products is also not applicable to the present personal matter as in that case the proceedings were transferred from Additional Collector to the Collector at the adjudication stage itself on account on amendment of Section 11 a of the Central Excise Act. w.e.f. 27-12-85. The facts are therefore entirely different. In view of these facts and circumstances we set aside the impugned Order and allow the appeal, on preliminary issue jurisdiction itself.