1987 (5) TMI 136 - AT - Central Excise

Show Cause Notice can be issued having recourse to the provisions prevailing at the time of its issue

Summary

Issues:
1. Duty liability on manufacturers of vegetable products for Soap Stock and Spent Earth.
2. Requirement of Central Excise License for manufacturing Soap Stock and Spent Earth.
3. Applicability of Rule 10-A for recovery of unpaid duty.
4. Validity of Show Cause Notice under new rules for past period.

Analysis:
1. The case involved manufacturers of vegetable products who obtained Soap Stock and Spent Earth during the manufacturing process, classified under T.I. No. 68. The manufacturers cleared these products without paying duty and did not hold a Central Excise License for their manufacture. Two show cause notices were issued demanding duty totaling Rs. 5,360.75 for the period from 12-3-1976 to 31-7-1977. The Assistant Collector confirmed the duty demand.

2. The Collector of Central Excise (Appeals) upheld the duty demand, emphasizing that Soap Stock and Spent Earth are distinct products with commercial use different from raw materials. The manufacturers were required to obtain a Central Excise License for manufacturing these products and follow the necessary procedures. The duty liability was under Item 68 of the Tariff. Regarding the limitation of the demand notice, the Collector held that duty unpaid by the manufacturers was recoverable under Rule 10-A without a prescribed time limit. The Collector also noted that the demand notice's validity was not affected by invoking the wrong rule.

3. During the hearing, the appellants did not appear, although they had submitted written arguments. They contended that the demand notice issued under the new rules was not valid for the period when the old rules were in effect. However, the Tribunal, citing a previous decision, held that the provisions prevailing at the initiation of proceedings determined the validity of the show cause notice. Upholding the impugned order, the Tribunal dismissed the appeal based on precedent and the larger Bench's decision.

4. The Tribunal's decision was based on the principle that the rules in effect at the initiation of proceedings determined the validity of the demand notice. The appellants' argument that duty could not be demanded under new rules for a past period was rejected, citing a previous Tribunal decision. The Tribunal upheld the duty demand and dismissed the appeal, following the precedent set by the larger Bench.