1988 (2) TMI 67 - HC - Central Excise

Summary

Issues Involved:
1. Validity of the show cause notice issued by the Department.
2. Jurisdiction of the Department to issue the notice.
3. Alleged discrimination against the petitioner.
4. Applicability of Notification No. 68/76 dated 16-3-1976.
5. Compliance with Section 11A of the Central Excises and Salt Act, 1944.
6. Timeliness and prejudice due to the delay in proceedings.

Detailed Analysis:

1. Validity of the Show Cause Notice:
The petitioner argued that the show cause notice issued by the Department contained errors on the face of the record and should be quashed. The notice was alleged to be discriminatory as it was issued only to the petitioner while other manufacturers of the same kind of paper were not assessed. The petitioner also contended that the notice lacked jurisdiction, especially when it mentioned that the paper manufactured was only white tissue paper.

2. Jurisdiction of the Department to Issue the Notice:
The Department asserted that it had the legal authority to issue the notice under Section 11A of the Central Excises and Salt Act, 1944. This section empowers a Central Excise Officer to serve a notice within six months from the relevant date for recovery of duties not levied or paid, short-levied, short-paid, or erroneously refunded. The Department argued that there was no lack of jurisdiction in issuing the notice.

3. Alleged Discrimination Against the Petitioner:
The petitioner claimed that the issuance of the show cause notice was discriminatory as other manufacturers of similar paper were not assessed. The petitioner relied on Notification No. 68/76, which exempts certain types of paper from excise duty. The petitioner contended that the paper produced fell under the exempted category described in the notification.

4. Applicability of Notification No. 68/76:
The petitioner argued that the paper manufactured was exempt from excise duty under Notification No. 68/76, which exempts converted types of paper subjected to printing of color with or without design. The petitioner maintained that the paper was treated with chemicals on one side and fell under Serial No. 3A(ii) of the notification, thus qualifying for exemption with a 'nil' rate of duty.

5. Compliance with Section 11A of the Central Excises and Salt Act, 1944:
The Department emphasized that Section 11A provided sufficient power to issue the notice and that the provisions of Rule 9 and Section 11A allowed for recovery of duties not levied or paid. The petitioner contended that the notice did not disclose sufficient reasons for its issuance, which should be grounds for quashing it. The petitioner also argued that the delay of seven years from the date of admission of the writ petition caused prejudice.

6. Timeliness and Prejudice Due to the Delay in Proceedings:
The petitioner argued that the seven-year delay in calling for an explanation to the notice caused prejudice and referred to previous decisions supporting this contention. The Court, however, noted that the law is common to all and the petitioner is not prevented from pointing out errors in the show cause notice in their reply. The Court allowed the petitioner to file a reply to the show cause notice within two months, despite the lapse of seven years.

Conclusion:
The Court dismissed the writ petition, granting the petitioner the liberty to file a reply to the show cause notice within two months and raise any points they wished to include. The Court directed the authorities to dispose of the proceedings as early as possible and noted that the seven-year delay did not prevent the Department from considering the contentions afresh. There was no order as to costs.