2002 (2) TMI 157 - AT - Central Excise

Summary

Issues Involved:
1. Whether the show cause notice was time-barred.
2. Whether the Additional Collector had jurisdiction to issue the show cause notice invoking the extended period under Section 11A of the Central Excise Act.

Issue-wise Detailed Analysis:

1. Whether the show cause notice was time-barred:

The appellants contended that the demand was barred by time as the show cause notice was issued on 8-1-92, more than nine months after the search and seizure of documents on 27-3-91. They argued that the notice should have been issued within six months from the relevant date as required under Section 11A of the Central Excise Act. They supported their argument with decisions from the M.P. High Court and the Tribunal in various cases.

The Department countered this by stating that according to Section 110 of the Customs Act, the limitation period for issuing a show cause notice does not apply to documents, only to goods. They cited the Supreme Court's judgment in CC v. Charan Das Malhotra and the Larger Bench decision in Nizam Sugar, which held that the date of knowledge of the Department is not the relevant date for computing the limitation period under Section 11A.

The Tribunal, after considering the arguments, concluded that the decision in Nizam Sugar Mills, which has not been reversed by the Apex Court, rules the field. They found no merit in the appellants' contention that the show cause notice was time-barred and thus, the appellants failed on this issue.

2. Whether the Additional Collector had jurisdiction to issue the show cause notice invoking the extended period under Section 11A of the Central Excise Act:

The appellants argued that the Additional Collector was not competent to issue the show cause notice invoking the extended period under Section 11A, as only the Collector was authorized to do so during the relevant period. They cited various legal precedents and a CBEC Circular to support their claim.

The Department contended that the definition of 'Collector' in the Central Excise Rules includes 'Additional Collector' and there was no contrary definition in the Act. They referred to multiple Tribunal decisions which consistently held that 'Collector' includes 'Additional Collector' and that the Additional Collector was competent to issue the show cause notice under Section 11A.

The Tribunal noted that statutory rules are considered part of the enactment and have the status of law. They referenced several judgments, including those from the Supreme Court and High Courts, which affirmed that rules made under a statute must be treated as part of the Act. The Tribunal found no inconsistency between the Act and the Rules and concluded that the definition of 'Collector' in the Rules, which includes 'Additional Collector', is valid and applicable.

Therefore, the Tribunal rejected the appellants' plea that the Additional Collector had no jurisdiction to issue the show cause notice, and the appellants failed on this issue as well.

Conclusion:

The appeal was disposed of with the Tribunal upholding the Department's position on both issues. The show cause notice was not time-barred, and the Additional Collector had the jurisdiction to issue the notice under Section 11A of the Central Excise Act.