1998 (1) TMI 82 - SC - Central Excise

Summary

Issues involved: Whether High Court was justified in quashing the show cause notice; Interpretation of Tariff Item 33B(ii) of the Tariff Act versus Section 26AA(ia); Appellate options available to the respondent.

The Supreme Court, in a judgment delivered by S.B. Majmudar and S.P. Kurdukar, JJ., granted leave and heard the appeal with the consent of learned Counsel for the parties. The main issue was whether the High Court was correct in quashing a show cause notice that required the respondent to file a counter and reply for adjudication. The Court held that the High Court should not have taken on the task of adjudicating the matter, as the investigation of facts regarding the applicable Tariff Item or Section was necessary. The orders of the Single Judge and Division Bench were vacated, and the show cause notice was directed to be adjudicated on its merits. The respondent was given eight weeks to file a written reply, and the adjudicating authority was instructed to decide based on evidence without being influenced by prior communications or orders.

The Court emphasized that the decision should be based solely on the evidence presented, without being swayed by previous High Court observations. It was clarified that if the adjudication went against the respondent, they could appeal to CEGAT, and no recovery would take place until CEGAT's decision. The Court noted that in this specific case, recovery would remain stayed until the appeal process, and CEGAT could require the respondent to provide security if needed. The judgment highlighted that an appeal to CEGAT would be maintainable following any adjudication pursuant to the show cause notice, but this direction was specific to the unique circumstances of this case and not to be considered a precedent.

Ultimately, the appeal was allowed, and no costs were imposed. The Court's decision provided clarity on the proper adjudication process, the role of the High Court, and the appellate options available to the respondent, ensuring a fair and just resolution of the matter.