Customs, Excise and Gold Tribunal - Delhi
Ogesh Industries vs Collector Of Central Excise on 22 January, 1997
Equivalent citations: 1997(94)ELT88(TRI-DEL)
ORDER J.H. Joglekar, Member (T)
1. The facts of the case in brief are as follows:
On 8-3-1986, the Central Excise Officers visited the factory of M/s. Ogesh Industries, Aligarh for conducting survey. On examining the statistics as to the value of clearances, the officers were of the opinion that the factory should have obtained a licence. Therefore, the stock of the locks manufactured was detained by the officers. Similar goods of the value of Rs. 5,350.60 claimed by Shri Verma, partner of Ogesh Industries, to have been manufactured by M/s. Gore Auto Industries situated at a distance of about 3 furlongs which were kept for safe custody in the premises of M/s. Ogesh were also seized. After conducting the investigations, the officers were of the opinion that the production of these two units should be clubbed together. On such clubbing being made, it appeared that duty was leviable on excess combined production during the year 1985-86. After issuing the show cause notice, the Dy. Collector confirmed the demand for Rs. 15,202.00 for past clearances and duty of Rs. 692.10 on the detained goods confiscated the goods found in the premises of M/s. Ogesh Industries which were claimed to belong to M/s. Gore, but permitted the redemption on payment of a fine and also imposed a penalty of Rs. 20,000.00 on M/s. Ogesh Industries. This order having been up-held in to by the Collector (Appeals), the present appeal has been filed before us.
2. We have heard Shri B.B. Gujral, ld. Advocate for the appellants and Shri G.D. Sharma, ld. DR for the Revenue.
3. The first argument advanced by Shri Gujral, ld. Advocate, was that M/s. Gore Industries were a separate corporate entity from M/s. Ogesh Industries. He has shown that in his order, the Dy. Collector has observed that he had no reason to disbelieve that these two corporate entities were separate and distinct. It is his claim that no Panchnama was conducted in the premises of M/s. Gore Industries. In the absence of Panchnama, there was no basis to the observation of the Dy. Collector that the officers on a visit, found no machines, no raw materials or other evidence to establish that no manufacture could be undertaken therein. He submitted that the attendance records would show that there were 7 workers working in the factory of M/s. Gore Industries. He stated that the work of pressing the sheets in the form of locks was done by hand. Other operations were got done on job work basis from M/s. Ogesh as well as from other concerns, referred in the statement of Shri Raizada, partner of M/s. Gore Industries. He stated that when at all times, the existence of Gore Industries separately from Ogesh- Industries was projected, the department should have issued a show cause notice to M/s. Gore Industries. The decisions arrived at on the basis of a show cause notice sent to M/s. Ogesh Industries alone, are patently violate all the principles of natural justice. We find the various claims made by Shri Gujral to be correct. A show cause notice had to be issued to M/s. Gore Industries. Thereafter the adjudicating authority could go into the question whether the two units were really independent or whether one was a dummy unit of another. But he could not pre-determine the issue and limit the show cause notice only to that unit which he considered to be the only real unit. As per the statements of S/Shri Raizada and Verma, the partners in the two units, there was movement of goods in process from M/s. Gore Industries to M/s. Ogesh Industries for completion of certain manufacturing processes. The failure to issue the show cause notice to one of them would show non-application of mind on part of the authorities. As a consequence, the show cause notice must be held to be bad in law.
4. As has been held by the Bombay High Court in the case of Bajaj Auto Ltd. v. U.O.I, reported in 1992 (60) E.L.T. 32 (Bom.), the procedural safeguards that are the hallmark of fair regime of the rule of law - required, effective and full opportunity to a person before even a paisa is taken from his pocket. The issuance of a show cause notice is one such primary step for effectively ensuring observance of the principles of natural justice. This observation would apply to the case before us in full.
5. On this ground alone, the order would deserve to be set aside. Even then we take into account the further submissions of Shri Gujral that the demand issued under the show cause notice is barred by limitation and also that the notice having been signed by the Supdt. cannot become a legal notice. We find that the show cause notice was made for confirmation of demand for the period more than six months prior to the date of the show cause notice. Rule 9(2), at the material time, referred to the period of limitation under Section HA and as suggested by Shri Gujral, the requirements under the provision of that Section including those as to who were empowered to sign the show cause notice would apply. Since the show cause notice, which was required to be issued by the Collector, was issued by Supdt., it ceases to be a valid show cause notice.
6. Thus, on both counts, the appeal succeeds. The lower orders are set aside and consequential relief is ordered.