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2009 (10) TMI 43 - HC - Central ExciseWhen to issue SCN under section 11A in case of provisional assessment held that SCN can not be issued before finalization no assessment - the provisions of Section 11A get triggered only upon completion of the final assessment proceedings. In the instant case, at a point in time when the show cause notice dated 27.01.1988 was issued the assessment proceedings were undoubtedly incomplete. They were provisional. The final assessment proceedings got finalized only on 28.04.1988. The order of the Director General (Inspection) dated 10.04.1986, in our view, was not a final assessment order, as contended by the respondent. show cause quashed
Issues Involved:
1. The applicability of Section 11A of the Central Excise and Salt Act, 1944 before and after the final order of assessment was passed. 2. The applicability of the Supreme Court judgment in Serai Kella Glass Works Pvt. Ltd. vs. C.C.E, Patna to the instant case. Detailed Analysis: Issue 1: Applicability of Section 11A Before and After Final Order of Assessment The High Court examined whether a show cause notice under Section 11A of the Central Excise and Salt Act, 1944 could be issued during the pendency of assessment proceedings. The court referenced the Supreme Court's judgment in Commissioner of Central Excise, Mumbai vs. ITC Ltd, which clarified that a show cause notice under Section 11A cannot be issued during the pendency of assessment proceedings. The Supreme Court emphasized that the completion of assessment proceedings is a sine qua non (essential condition) for issuing a notice under Section 11A. The court reiterated this principle, noting that the show cause notice dated 27.01.1988 could not have been issued during the pendency of the assessment proceedings, which were finalized only on 28.04.1988. Issue 2: Applicability of Supreme Court Judgment in Serai Kella Glass Works Pvt. Ltd. vs. C.C.E, Patna The court examined the applicability of the Supreme Court's judgment in Serai Kella Glass Works Pvt. Ltd. The Supreme Court in ITC Ltd had already taken note of its judgment in Serai Kella and held that the principles enunciated were consistent with the ratio of Serai Kella. The Supreme Court in Serai Kella had concluded that the provisions of Section 11A come into play only after the final assessment, and the limitation period would commence from the date of final assessment. The High Court thus found that the judgment in Serai Kella was applicable to the present case, reinforcing that the show cause notice could not be issued before the final assessment. Additional Considerations: The High Court also addressed the argument by the Additional Solicitor General (ASG) that the order dated 10.04.1986 was a final assessment order. The court rejected this argument, clarifying that the order dated 10.04.1986 merely crystallized the principles for determining the assessable value and did not constitute a final assessment. The final assessment was concluded only by the order dated 28.04.1988, which determined the differential duty. The court further discussed the procedural aspects, including the issuance of multiple show cause notices and the centralization of adjudication with the Director General (Inspection). It was noted that the final assessment involved a detailed process of calculating the assessable value and determining the final duty, which was completed only by the order dated 28.04.1988. Conclusion: The High Court concluded that the show cause notice dated 27.01.1988 was issued prematurely, as the assessment proceedings were not finalized until 28.04.1988. The court quashed the show cause notice and the related letter, allowing the writ petition in favor of the petitioner. The judgment reinforced that the provisions of Section 11A are triggered only upon the completion of final assessment proceedings, consistent with the Supreme Court's judgments in ITC Ltd and Serai Kella. Order: The writ petition was allowed in terms of prayer "B", quashing the show cause notice dated 27.01.1988 and the letter dated 13.04.1988.
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