1987 (12) TMI 39 - HC - Central Excise

Summary

Issues Involved:
1. Legality and Jurisdiction of the Show Cause Notice
2. Interpretation of "Sale Price" under the Notification
3. Applicability of Section 11A of the Central Excises and Salt Act, 1944
4. Validity of Notification No. 215/86
5. Allegations of Bias against the Adjudicating Authority

Summary:

1. Legality and Jurisdiction of the Show Cause Notice:
The petitioner contended that the show cause notice dated 27th March 1987 was issued illegally and without jurisdiction, arguing there was no short levy or misrepresentation in the printing of the sale price on cigarette packages. The court held that a writ petition is maintainable against a show cause notice if it is issued without jurisdiction or legal authority. The court found that the show cause notice was based on an erroneous interpretation of the notification and required adjudication.

2. Interpretation of "Sale Price" under the Notification:
The petitioner argued that the notification did not require the actual sale price or maximum retail price to be printed on the packages. The court held that the "sale price" must mean the maximum retail sale price at which the cigarettes are intended to be sold. The court found that the petitioner deliberately printed a lower price to evade excise duty, and the show cause notice was justified.

3. Applicability of Section 11A of the Central Excises and Salt Act, 1944:
The petitioner argued that Section 11A could not be invoked as it was a machinery provision and not applicable to cases where payments had already been made. The court held that Section 11A is an independent provision for the recovery of duties not levied or short paid and is not merely a machinery provision. The court found that the show cause notice was rightly issued under Section 11A.

4. Validity of Notification No. 215/86:
The petitioner contended that Notification No. 215/86, which delegated the powers of a Collector to the Director of Anti Evasion, was ultra vires. The court upheld the validity of the notification, agreeing with the Madras High Court's decision that the Central Board of Excise and Customs had the authority to issue such a notification under Rule 4 of the Central Excise Rules, 1944, read with Section 2(b) of the Act.

5. Allegations of Bias against the Adjudicating Authority:
The petitioner alleged bias against Shri N.K. Bajpai, the Director of Anti Evasion, arguing that he had a personal interest due to the reward rules and his prior involvement with the petitioner company. The court found no substantial evidence of bias or personal interest. The court held that the allegations were speculative and did not disqualify Shri Bajpai from acting as an adjudicator.

Conclusion:
All contentions raised by the petitioner were rejected, and the rule was discharged. The court upheld the legality and jurisdiction of the show cause notice, the interpretation of "sale price," the applicability of Section 11A, the validity of Notification No. 215/86, and found no merit in the allegations of bias against the adjudicating authority.