2003 (1) TMI 504 - Commissioner - Central Excise

Summary

Issues Involved:
1. Jurisdiction of the Deputy Commissioner to review his own order.
2. Inclusion of profit margin on free supply materials in the assessable value.
3. Applicability of the principles of natural justice.
4. Eligibility for credit by the recipient unit.
5. Finality of provisional assessment.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Deputy Commissioner to Review His Own Order:
The appellant argued that the lower authority lacked jurisdiction to review its own order dated 30-1-2001, which finalized the provisional assessment. The principle of "functus officio" was emphasized, meaning once an authority has rendered a decision, it cannot review or alter it. The judgment cited the Supreme Court's decision in the case of Collector of Central Excise, Bombay-II v. Western India Wire Industries, which held that an Assistant Collector cannot review his own order and that the proper course would be a revision by a higher authority. The CBEC Circular No. 502/68/99-CX., dated 16-12-1999, reinforced this by stating that substantive changes to an order after its issuance are not legally sustainable. Consequently, the Deputy Commissioner overstepped his jurisdiction by issuing a Show Cause Notice nearly a year after finalizing the provisional assessment.

2. Inclusion of Profit Margin on Free Supply Materials in the Assessable Value:
The lower authority contended that the appellant omitted to include the profit margin on free supply materials in the assessable value, resulting in a short payment of duty amounting to Rs. 17,21,787/-. The appellant argued that receiving materials free of cost from unrelated persons or sister units does not alter the fixation of assessable value. They relied on the Supreme Court's decision in Ujagar Prints v. Union of India, which supported their stance. The judgment did not delve deeply into this issue due to the primary focus on jurisdiction.

3. Applicability of the Principles of Natural Justice:
The judgment highlighted that any quasi-judicial decision must adhere to the principles of natural justice. The Law Ministry's opinion, referenced in the CBEC Circular, emphasized that changes to an adjudication order without hearing the affected parties violate natural justice principles. The Deputy Commissioner's action of issuing a Show Cause Notice to rectify the final assessment without a proper hearing was deemed contrary to these principles.

4. Eligibility for Credit by the Recipient Unit:
The appellant contended that even if the differential duty was payable, the recipient unit would be eligible for credit, resulting in no loss to the government. This argument was not extensively addressed in the judgment due to the primary focus on the jurisdictional issue.

5. Finality of Provisional Assessment:
The provisional assessment for the year 1999-2000 was finalized on 30-1-2001, and the appellant paid the differential duty of Rs. 52,36,787/-. The issuance of a Show Cause Notice on 28-1-2002 to demand additional duty was considered a breach of the finality of the provisional assessment. The judgment reinforced that once an assessment is finalized, the authority becomes "functus officio" and cannot revise the order.

Conclusion:
The judgment concluded that the Deputy Commissioner lacked jurisdiction to issue the Show Cause Notice and demand additional duty after finalizing the provisional assessment. The impugned order was set aside solely on the point of jurisdiction, without delving into the merits of the case. The appeal was allowed, and the order of the lower authority was annulled.