2004 (1) TMI 80 - SC - Central Excise

Demand vis-a-vis Appellate order - Whether after the appellate authority had decided the appeal of the appellant herein and that having obtained finality, is it permissible for the Department to issue a show cause notice on the basis of a circular issued by the Board dated 5-5-1989 subsequently revised by Board s circular dated 13-7-1989 - Held that - Board by Circular dated 5-5-1989 provided that the classification of goods in which the appellant dealt with, will be under Chapter 49 prior to 16-1-1989. Subsequently, the said circular was modified by another Circular dated 13-7-1989 holding that the classification of the goods in which the appellant dealt with, will be under Heading 39.20 as per decision of the Collectors conference. Armed with this circular, the Department sent show cause notices to the appellant herein initiating proceedings under Section 11A of the Central Excise Act alleging short levy and demanding differential duty. The appellant contested the show cause notice. However, the Assistant Collector confirmed the demands by his order dated 28-5-1992. Thereafter, the appellant filed an appeal before the Collector (Appeals) which was dismissed. An appeal filed before the Tribunal against the order of the Collector, was also dismissed. The aforesaid facts show that before the appellant could file an appeal, show cause notices on the basis of the revised classification list were issued to it. That was an independent proceeding and the appeal filed by the appellant and the orders passed thereon, have no bearing on that proceeding - Decided against assessee.

Summary

Issues:
1. Validity of the amendment to Section 11A of the Central Excise Act, 1944 by Section 110 of the Finance Act, 2000.
2. Permissibility of issuing a show cause notice after finality of appellate authority's decision based on a circular revised by the Board.

Analysis:
1. The first issue pertains to the validity of the amendment to Section 11A of the Central Excise Act, 1944 by Section 110 of the Finance Act, 2000. The Supreme Court, in a previous decision, had already settled this issue in the case of ITW Signode India Ltd. v. Collector of Central Excise, 2003. The Court referred to this precedent to conclude that the validity of the amendment in question has already been determined and stands as valid legislation.

2. The second issue involves the permissibility of issuing a show cause notice after the final decision of the appellate authority, based on a circular revised by the Board. The appellant had initially claimed NIL duty but later paid duty under a specific tariff item. The Department issued show cause notices based on circulars issued by the Board, which altered the classification of the goods. Despite the appellant's appeals and subsequent dismissals, the Court found that the show cause notices were an independent proceeding. The Court emphasized that the appeal process and its outcomes did not impact the validity of the show cause notices issued by the Department. Consequently, the Court dismissed the appeal, stating that there was no merit in challenging the issuance of the show cause notices based on the revised classification list. The appeal was dismissed, and no costs were awarded.

This comprehensive analysis of the judgment addresses the two key issues raised in the case, providing a detailed understanding of the Court's decision and its legal implications.