Rajasthan High Court - Jaipur
Commr. Of C. Ex. & Cus. vs Reliance Chemotex Industries Ltd. on 23 May, 2002
Equivalent citations: 2003(85)ECC760, 2002(146)ELT277(RAJ), RLW2003(4)RAJ2383, 2003(1)WLC605, 2003(1)WLN19
ORDER Rajesh Balia, J.
1. Heard learned counsel for the parties.
2. The Union of India-applicant requires this Court to direct the Customs, Excise & Gold (Control) Appellate Tribunal, New Delhi to refer the following question of law :-
(i) Whether the CEGAT has any authority to rule that the show cause notice could not be issued by the Superintendent of Central Excise, who was, under the law, a 'Central Excise Officer' as defined in Section 2(b) of the Central Excise and Salt Act, 1944?
(ii) Whether in view of the contents declared by assessee being found totally different on testing of the samples, it would still not amount to mis-declaration/mis-statement under Section 11A of the Central Excises and Salt Act, 1944?
3. Both the above questions are said to be arising out of the Tribunal's order dated 10-3-1997, allowing the appeal filed by the respondent-assessee.
4. The application filed by the Revenue under Section 35G(1) was rejected on the ground that as the dispute relates to the classification of the commodity, in question, no reference can be made of such question and therefore, the application was not maintainable. The same contention has been raised before us by the learned Counsel for the respondent-assessee by way of preliminary objection that application under Section 35G is not maintainable as the subject matter of the dispute is ousted from the ambit of reference.
5. He has relied upon a decision of this Court in the case of Laxmi Udyog v. Commissioner of Central Excise, reported in 2002 (142) E.L.T. 27 (Raj.), wherein the Court held that :-
"though question is a question of law but since it relates to determination of rate of Excise duty payable thereon, the reference under Section 35G is not envisaged. Such an order is directly challenged to Supreme Court under Section 35L of the Central Excise Act, 1944."
6. To understand the controversy raised by respondent and the reasoning given by the Tribunal for rejecting the application, the facts in brief may be noticed.
A show cause notice was issued to the respondent on 28-2-1985 that the commodity in question is 'non cellulosic synthetic' fibre and is not 'non cellulosic waste'. According to the Assistant Commissioner, the commodity in question is classifiable under item 18 (III) (ii) of the Central Excise Tariff and the rate of the Central Excise Duty is Rs. 9/- per Kg. + Special Duty @ 10% of Basic Excise Duty + Additional Excise Duty @ 15 % of Basic Excise Duty and is not classifiable under item 18 (III) (i) of Central Excise Tariff under which the articles have been cleared.
7. On adjudication being made in pursuance of the show cause notice, an appeal was preferred before the Collector of the Central Excise (Appeals). That appeal was dismissed on 31-10-1988. The order of the Collector, Central Excise Appeal was subjected to the further appeal before the Customs, Excise & Gold (Control) Appellate Tribunal.
8. Before the Tribunal, the appellant, apart from raising objections against the order on merits, also urged that the show cause notice dated 28-2-1985 was issued by the Superintendent, raising the demand for a period beyond the period of six months and since it was adjudicated by the Asstt. Collector, same is not sustainable in the eye of law. It was contended that according to Section 11A of the Act, the Collector, Central Excise was the only authority who was empowered to issue show cause notice for a period beyond six months prior to date of such notice and since the same has not been done in the instant case order passed by the Assistant Commissioner was not sustainable in the eye of law. It was also urged that since show cause notice does not proceed on any non-disclosure on the part of the assessee, power of issuing show cause notice beyond six months could not be exercised.
9. The Tribunal without going into the merits found force in the contention raised on behalf of the appellant-assessee that the demand covered by the show cause notice dated 28-2-1985 is hit by limitation on the ground that the Superintendent was not empowered to issue show cause notice for a period more than six months. In the instant case, demand was raised on 28-2-1985 for the period relating to 18-4-1984 to 19-8-1984. Since the demand is beyond the period of six months before the date of show cause notice, in the absence of allegation of suppression and that too it was issued by the Superintendent, the show cause notice is not valid in the eye of law.
10. The question of law which arises from the Tribunal's order is what it has decided. The Tribunal has categorically stated that it has not gone into the merits of the case and therefore, the question of classification of the articles in question and applying the rate of Excise Duty thereon has neither been decided by the Tribunal nor can be deemed to have been decided. Therefore, it cannot be said that any question of law relating to classification of articles or applicability of rate is required to be decided by this Court in reference. Nor any question relating to classification or rate has been suggested by the applicant for making reference to this Court.
11. In these circumstances, we are of the opinion that the preliminary objection raised by the respondent is not maintainable. The application under Section 35G(1) has therefore been erroneously rejected by the Tribunal solely on the ground that it is not maintainable under Section 35G because of the prohibition against making any reference relating to any question of law, relating to classification of article or determination of rate of Duty.
12. So far as the question relating to authority of the Superintendent to issue show cause notice dated 28-2-1985 in relation to period beyond six months from the date of notice is concerned, do raise a question of law which need to be referred to this Court for decision under Section 35G of the Central Excise Act, 1944.
13. The question No. 1 formulated by the applicant does not appear to be happily worded as the question of the jurisdiction of the Tribunal to decide issue about authority of Superintendent of Excise to issue the notice was neither raised nor decided by the Tribunal. Nor it can be doubted that it falls within the jurisdiction of the Tribunal to adjudicate whether the Superintendent of Excise had authority to issue show cause notice as on the date it was issued and if so whether the notice issued was within the limitation?
14. In this connection, learned Counsel stated that the Tribunal has not taken into consideration the law as on date the Superintendent had issued such notice, but it appears to have been taken into consideration amendment brought about in the statute vide C.E. (11th Amendment) Rules, 1985, dated 27-12-1985.
15. Accordingly, we direct the Customs, Excise & Gold (Control) Appellate Tribunal to refer following two questions of law for decision by this Court :-
(i) whether in the facts and circumstances of the present case, the Customs, Excise & Gold (Control) Appellate Tribunal was right in holding that the show cause notice dated 28-2-1985 was not issued by a competent authority as Superintendent, had no authority to issue such notice beyond the period of six months on the relevant date.
So far as second suggested question is concerned, it, in our opinion, also does arise out of the Tribunal's order. However, it does not give out the complete controversy.
16. The basis of issuance of show cause notice is stated to be result of samples drawn on 18-4-1984 and 19-4-1984. It was on that basis it was argued by the Revenue that in the words of Tribunal itself :-
"As regards limitation, he submitted that samples were drawn on 18-4-1984 and 19-4-1984 and on the basis of the result of samples, department was justified in raising the demand invoking larger period".
17. Apparently, whether in such circumstances, without using the term misrepresentation or misdeclaration whether an inference to that effect can be drawn so as to invite applicability of proviso to Section 11A does give use to a mixed question of law and fact. The Tribunal without deciding this contention has reached conclusion that in the absence of allegation of suppression, the show cause notice is not valid in law. Thus, the question is ancilliary to answer to first question whether Superintendent had jurisdiction to issue notice beyond period of six months.
18. We, therefore, reframe the question No. 2, as under :-
(ii) "If it is held that the Superintendent had jurisdiction to issue show cause notice for a period beyond six months, whether in view of contents declared by assessee being found different on testing, of the samples, it would amount to misdeclaration/mis-statement of particulars within the meaning of Section 11 of the Central Excises & Salt Act, 1944, so as to invoke larger period of limitation".
19. As a result, the application is allowed and direct the CEGAT to submit the statement of case and refer the following questions of law to this Court for its decision :
(i) whether in the facts and circumstances of the present case, the Customs, Excise & Gold (Control) Appellate Tribunal was right in holding that the show cause notice dated 28-2-1985 was not issued by a competent authority as Superintendent, had no authority to issue such notice beyond the period of six months on the relevant date.
So far as second suggested question is concerned, it, in our opinion, also does arise out of the Tribunal's order. However, it does not give out the complete controversy.
20. The basis of issuance of show cause notice is stated to be result of samples drawn on 18-4-1984 and 19-4-1984. It was on that basis it was argued by the Revenue that in the words of Tribunal itself :-
"As regards limitation, he submitted that samples were drawn on 18-4-1984 and 19-4-1984 and on the basis of the result of samples, department was justified in raising the demand invoking larger period".
21. Apparently, whether in such circumstances, without using the term misrepresentation or misdeclaration whether an inference to that effect can be drawn so as to invite applicability of proviso to Section 11A does give use to a mixed question of law and fact. The Tribunal without deciding this contention has reached conclusion that in the absence of allegation of suppression, the show cause notice is not valid in law. Thus, the question is ancillary to answer to first question whether Superintendent had jurisdiction to issue notice beyond period of six months.
22. We, therefore, reframe the question No. 2, as under :-
(ii) "If it is held that the Superintendent had jurisdiction to issue show cause notice for a period beyond six months, whether in view of contents declared by assessee being found different on testing, of the samples, it would amount to misdeclaration/mis-statement of particulars within the meaning of Section 11 of the Central Excises & Salt Act, 1944, so as to invoke larger period of limitation".
23. No orders as to the costs.