2015 (7) TMI 1061 - HC - Central Excise

Classification of the switches and stator panel - invoking extended period of limitation - Held that - A perusal of the show cause notice and the adjudicating order does not reveal there has been any allegation or finding of wilful misstatement or suppression of facts by the petitioner inasmuch as it was not disputed that the detailed functioning of the switches and stator panel was obtained from the petitioner subsequently. The classification made by the petitioner not having been demonstrated to be a wilful mis-statement or there being wilful suppression of facts with regard thereto, this Court finds that the challenge of the petitioner succeeds. The show cause notice dated 9th February, 1994 and the order in original dated 30th November, 2005 are set aside. Mr. Bharadwaj had submitted that the show cause and the order in original could not be set aside since the appellate order was duly made and therefore cannot operate in a vacuum. The point thus raised has also been answered by the Supreme Court in Mohammad Nooh (1957 (9) TMI 42 - SUPREME COURT).

Summary

Issues:
Challenge to show-cause notice, adjudication order, and order in appeal based on classification of goods under Central Excise Tariff Act, 1985.

Analysis:
The writ petitioner challenged a show-cause notice dated 9th February, 1994, an adjudication order dated 30th November, 2005, and an order in appeal dated 14th February, 2007. The petitioner classified three items manufactured as Field Switch, Transwitch Unit, and Stator Rotor Panel under tariff items 85.35 and 83.37 in the Central Excise Tariff Act, 1985. The petitioner argued that subsequent queries were answered correctly, showing no wilful misstatement or suppression of facts. The petitioner's appeal was dismissed due to a delay beyond the limitation period. The petitioner relied on the case of 'U.P. State vs. Mohammad Nooh' to argue for judicial review in cases of errors by inferior courts or tribunals. The petitioner contended that the goods were correctly classified, and the show-cause notice was belated.

On the other hand, the revenue argued that suppression was established as the items were misclassified, leading to short levy of Central Excise duty. The revenue cited the case of 'Raja Mechanical Co. (P) Ltd. vs. Commissioner of Central Excise, Delhi-I' to support their stance. They also referenced cases dealing with condoning delays in appeals. The revenue maintained that the show-cause notice correctly pointed out the suppression of facts, even though the term 'wilful suppression' was not explicitly used. The adjudication order confirmed the suppression and misclassification of goods.

Regarding maintainability, the revenue argued that the writ petition was not valid, citing the case of 'S.S. Rathore vs. State of Madhya Pradesh'. However, the court found that the petitioner's description of goods was not wilfully misstated or suppressed. The court referred to the case of 'Cosmic Dye Chemical vs. Collector of Central Excise, Bombay' to interpret the proviso to Section 11A of the Act. The court concluded that since there was no wilful misstatement or suppression of facts, the challenge by the petitioner succeeded. The show-cause notice and the original order were set aside, despite the revenue's argument that the appellate order had been duly made. The court allowed the writ petition to the extent mentioned.

In conclusion, the court's decision favored the petitioner, setting aside the show-cause notice and the original order due to the lack of wilful misstatement or suppression of facts, despite the revenue's arguments. The court upheld the petitioner's classification of goods and allowed the writ petition based on the findings.