1987 (7) TMI 222 - AT - Central Excise

Summary

Issues:
Appeal against Collector's order for duty and penalty on imported waste paper.

Analysis:
The appeal was against an order confirming a duty demand of Rs. 9,60,950 on 246.82 M.T. of waste paper and imposing a penalty of Rs. 1,00,000 under the Customs Act. The appellant was charged with not using the waste paper for the intended purpose of manufacturing pulp and paper, leading to the loss of exemption under a specific notification. Despite producing 'end-use' certificates, an investigation revealed diversion and sale of the imported waste paper. Statements from various individuals corroborated the unauthorized use, including manipulation of records to obtain certificates. A show cause notice was issued, and the Collector upheld the duty demand and penalty.

The appellant argued that the show cause notice was void as it was issued by an Assistant Collector, not the Collector, as required by the amended Section 28 of the Customs Act. The amendment aimed to ensure that in cases invoking an extended time limit for duty demand, the Collector personally issues the notice. Delegation of this power was deemed illegal, emphasizing the necessity of the Collector's direct involvement in issuing such notices.

The department contended that the Collector had indeed considered the case and authorized the show cause notice, as evident from the records. The notice clearly indicated the Collector's involvement in invoking Section 28(1) for demanding duty. They argued that the notice's validity was not contingent on the Collector's signature but on his decision-making authority.

The Tribunal analyzed the amended Section 28(1) and the legislative intent behind it, emphasizing the requirement for the Collector to issue notices for duty recovery beyond six months. Despite the Collector's decision to issue the notice, the failure to adhere to the statutory requirement of the notice being issued by the Collector rendered the notice invalid. Consequently, the order based on such a notice was deemed legally untenable. The appeal was allowed, setting aside the impugned order. The Tribunal clarified that this decision did not prevent the department from initiating fresh proceedings with a valid show cause notice.