1994 (12) TMI 80 - HC - Central Excise

Issues Involved: Jurisdiction of respondents to issue show cause notices, applicability of Circular No. 3/92, classification disputes, rate of duty, wrong availment of MODVAT credit, and brand name issue.

Detailed Analysis:

1. Jurisdiction of Respondents to Issue Show Cause Notices:
The petitioners sought writs of prohibition to restrain the respondents from proceeding with adjudication based on show cause notices, arguing that the respondents lacked jurisdiction as per the Central Board of Excise and Custom (C.B.E.C) Circular No. 3 of 1992, which set pecuniary limits for different officers. The petitioner contended that the second and third respondents had no jurisdiction to proceed with the case involving duty more than Rs. 50,000. The respondents countered that the circular applied only to offence cases under Section 33 of the Central Excises and Salt Act, 1944, and not to demands arising from classification and valuation matters.

2. Applicability of Circular No. 3/92:
The petitioners argued that the circular is binding on all Central Excise Officers and applies to all cases of duty recovery under Section 11A, except those relating to the approval of classification or price lists. The respondents contended that the circular pertains only to offence cases and does not limit the authority of the respondents to issue show cause notices for classification and valuation disputes.

3. Classification Disputes:
The petitioners claimed that no manufacturing activity took place at their premises as the diesel generator set was fully assembled in Germany and only some accessories were added locally. The respondents argued that the classification of the diesel generator set under sub-heading 8502 of the Central Excise Tariff Act, 1985, was correct and the show cause notices were valid.

4. Rate of Duty:
The dispute included the correct rate of duty applicable to the imported diesel generator set. The respondents maintained that the duty amount of Rs. 14,66,250/- was correctly demanded under Rule 9 (1) of the Central Excise Rules read with Section 11A of the Central Excise Act, 1944.

5. Wrong Availment of MODVAT Credit:
The respondents also raised issues regarding the wrong availment of MODVAT credit by the petitioners, which was one of the grounds for issuing the show cause notices.

6. Brand Name Issue:
The respondents mentioned brand name issues as part of the disputes in the writ petitions, which were also addressed in the show cause notices.

Judgment Analysis:
The court concluded that it was appropriate for the adjudicating authorities to examine the facts and contentions raised by the parties, including the applicability of the circular in question. The court cited two decisions, "Loharu Steel Industries Ltd. v. Collector of Central Excise" and "Asia Tobacco Co. Ltd. v. Union of India and Another," to support the view that writ petitions against show cause notices are not appropriate, especially when the petitioners have already responded to the notices.

Order:
i. The writ petitions were dismissed.
ii. The petitioners were allowed to raise all their contentions before the adjudicating authorities.
iii. Petitioners were given two weeks to file any additional replies.
iv. The adjudicating authorities were directed to consider the replies and contentions, including jurisdiction based on the circular, and pass orders on merits and in accordance with law.
v. No order as to costs.

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