1988 (8) TMI 111 - HC - Central Excise

Summary

Issues involved:
The judgment addresses the challenge raised by the petitioner against show cause notices alleging contravention of Central Excise Rules and evasion of excise duty, particularly in the context of provisional assessments and finalization of assessable value.

Details of the Judgment:

1. The petitioner contended that Section 11A of the Central Excises and Salt Act cannot be invoked when duties are paid under provisional assessment without finalizing the assessment. Provisional assessment is not a final determination of assessable value, and Section 11A applies to recovery of duty only after completion of assessment. Legal precedents were cited to support this argument.

2. The assessment process and the lack of provision for partial provisional assessment were highlighted, emphasizing that the assessable value cannot be fully computed until post-manufacturing expenses are finalized. The petitioner argued that the cause of action under Section 11A should only arise after the adjustment of duty following final assessment under Rule 9B.

3. The court noted ongoing adjudication proceedings and the department's allegations of fraudulent activities by the petitioner to evade excise duty. The show cause notices detailed how the petitioner allegedly misdeclared assessable values and engaged in activities to evade payment of correct excise duty.

4. The court examined the jurisdictional aspect, citing Section 11A which allows for the issuance of show cause notices in cases of non-payment or short-levy due to fraud or contravention of laws. The legislative intent behind Section 11A was discussed, focusing on combating fraudulent evasion of excise duty.

5. The judgment emphasized that the provisional assessments made by the petitioner were based on provisional price lists submitted, but the show cause notices were related to alleged fraudulent activities and evasion of excise duty, not covered by the provisional assessments.

6. The court rejected the petitioner's argument that the cause of action under Section 11A should only accrue after the adjustment of duty post final assessment, citing the legislative history and amendments related to the recovery of duties in cases of fraud or evasion.

7. Ultimately, the writ petitions challenging the show cause notices were dismissed, with no order as to costs, based on the court's analysis of the legal provisions and the specific circumstances of the case.