1997 (12) TMI 506 - AT - Central Excise

Summary

Issues:
- Appeal against Order-in-Appeal No. 95/88 dated 7-6-1988 by Collector of Central Excise, Guntur.
- Dispute over deduction of tariff rate of duty from cum-duty price for assessable value.
- Bank guarantees filed for the differential amount of duty.
- Ownership transfer of cigarette factory to new respondent.
- Failure to renew bank guarantees and deposit differential duty.
- Challenge of order by Department regarding demand confirmation.
- Contention of respondent regarding liability for duty payment.
- Absence of respondent during appeal hearing.

Analysis:

The case involved an appeal by the Collector of Central Excise, Guntur against Order-in-Appeal No. 95/88 dated 7-6-1988 by the Collector of Central Excise (Appeals), Madras. The dispute originated from the deduction of tariff rate of duty from the cum-duty price to determine the assessable value at a cigarette factory previously owned by M/s. Duncan Agro Industries Ltd. The manufacturer proposed this deduction, leading to the filing of a writ petition and the issuance of bank guarantees totaling Rs. 2.25 crores for the duty differentials from May 1982 to December 1982. Subsequently, the factory came under the control of a new respondent, alleged to be a subsidiary of the original owner. The respondent failed to renew most bank guarantees, citing non-subsidiary status and liability on the original owner for duty payment.

The Assistant Collector confirmed a demand of Rs. 60 lakhs as the balance due from the respondent for the differential duty on cleared cigarettes. The respondent challenged this before the Collector (Appeals), who set it aside due to lack of a show cause notice under Section 11A of the Central Excises Act, 1944. The Department contested this decision, arguing that the order was quasi-judicial and required adherence to principles of natural justice. The Tribunal agreed, stating that the order had civil consequences and should have been appealable. As the respondent failed to renew bank guarantees and deposit the amount directed by the High Court, the Tribunal found no grounds to interfere and dismissed the appeal, highlighting the absence of the respondent during the hearing.

In conclusion, the judgment addressed the procedural aspects of confirming the demand for duty payment, emphasizing the quasi-judicial nature of the order and the necessity of following principles of natural justice. The Tribunal upheld the decision to dismiss the appeal, considering the failure to renew bank guarantees and deposit the differential duty as non-significant in the absence of a specific High Court order enabling direct recovery by the Department.