1991 (7) TMI 113 - HC - Central Excise

Summary

Issues: Classification of cement under Central Excise Tariff; Validity of show cause notice under Section 11-A of the Central Excise Act; Allegations of suppression of facts by the petitioner.

Classification of Cement under Central Excise Tariff:
The petitioner, a cement manufacturer, challenged a show cause notice demanding payment under Section 11-A of the Central Excise Act, 1944, for allegedly selling Grey Portland High Strength Cement below production cost. The petitioner argued that the cement should be classified under sub-heading 2502.20, not 2502.90. The Assistant Collector had previously classified the cement under sub-heading 2502.20. The respondents contended that the petitioner failed to disclose separate pricing for consumers with authorization certificates, leading to duty evasion. The court held that the show cause notice was not without jurisdiction, allowing the authorities to investigate potential duty evasion. The petitioner was given the opportunity to respond to the notice and present objections, including reliance on the Assistant Collector's order and a CBEC circular.

Validity of Show Cause Notice under Section 11-A:
The show cause notice issued to the petitioner was based on allegations of selling cement below production cost, triggering demand under Section 11-A of the Central Excise Act. The respondents claimed that the petitioner suppressed relevant facts necessary for determining the correct assessable value, justifying duty demand under the Act. The court found that the notice was not invalid, as it aimed to ascertain any factual suppression by the petitioner during price list submission. The petitioner was granted the chance to address the allegations and present contentions within three weeks, with a commitment from the authorities to decide on the matter within eight weeks of receiving the response.

Allegations of Suppression of Facts:
The respondents accused the petitioner of concealing pricing details for consumers with authorization certificates, leading to duty evasion. The petitioner argued that the Department had accepted the classification of the cement under sub-heading 2502.20. The court noted that the show cause notice was not premature, allowing the authorities to investigate the alleged suppression of facts. The petitioner was directed to respond to the notice within three weeks, raising all objections and contentions, including reliance on the Assistant Collector's order and a CBEC circular. The authorities were instructed to decide on the matter within eight weeks of receiving the petitioner's response.