1990 (8) TMI 171 - HC - Central Excise

Issues Involved:
1. Competence of the respondent to issue the show cause notice.
2. Constitutionality of the proviso to Section 33 of the Central Excises and Salt Act, 1944.
3. Adequacy of the opportunity given to the petitioner to present its case.
4. Validity of the combined notice under Sections 33 and 11A of the Act.
5. Jurisdiction of the notice for the period anterior to the date of sample testing.

Issue-wise Detailed Analysis:

1. Competence of the respondent to issue the show cause notice:
The petitioner challenged the competence of the respondent to issue the show cause notice dated 26-12-1984 and the correctness and legality of the order passed thereon dated 25-2-1986. The court found that the Assistant Collector of Central Excise had the authority to issue the show cause notice and that the tests conducted on the yarn samples indicated counts over 100, justifying the notice for recovery of short levy and initiation of penalty proceedings.

2. Constitutionality of the proviso to Section 33 of the Central Excises and Salt Act, 1944:
The petitioner contended that the proviso to Section 33 was void and unenforceable, arguing it provided unguided and arbitrary power to the Central Board of Revenue. The court applied the golden rule of construction and found no arbitrariness in the conferment of power. The court held that the proviso enabled the Central Board of Revenue to delegate adjudication powers to high authority officers, ensuring judiciousness and responsibility. Therefore, the proviso was not unconstitutional and did not violate Article 14 of the Constitution.

3. Adequacy of the opportunity given to the petitioner to present its case:
The petitioner argued that it was not given adequate opportunity to present its case. The court noted that sufficient opportunity was provided, including adjournments, and the petitioner failed to utilize it properly. The court rejected the contention that a fresh notice should have been sent, emphasizing that the petitioner was aware of the case against it and had ample opportunity to present its defense.

4. Validity of the combined notice under Sections 33 and 11A of the Act:
The petitioner argued that the show cause notice was defective as it combined actions under Sections 33 and 11A of the Act. The court found no substance in this argument, stating that there is no law prohibiting a notice proposing more than one action against the same person. The court held that combining the actions in a single notice did not affect its validity.

5. Jurisdiction of the notice for the period anterior to the date of sample testing:
The petitioner contended that the notice under Section 11A was without jurisdiction for the period before the sample testing dates (14-11-1984 and 6-12-1984). The court agreed, stating that short levy must be demonstrable based on material evidence. Since no samples were taken or tests conducted for the period before 14-11-1984, there was no basis for the short levy assessment for that period. The court quashed the impugned notice of demand for the period from 15-6-1984 to 13-11-1984 but allowed the respondent to issue a fresh demand notice for the period from 14-11-1984 to 5-12-1984.

Conclusion:
The petition was allowed to the extent that the impugned notice of demand was quashed for the period before 14-11-1984. In other respects, the petition was dismissed. The court reserved liberty for the respondent to issue a fresh demand notice for the period from 14-11-1984 to 5-12-1984. There was no order as to costs.

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