1983 (8) TMI 173 - AT - Central Excise

Question whether show cause notice was rendered illegal only in respect of confiscation, referrable

Issues Involved:
Jurisdiction of the Collector of Central Excise, legality of the show cause notice, validity of the penalty imposed, and the effect of various notifications on jurisdiction.

Detailed Analysis:

Issue 1: Jurisdiction of the Collector of Central Excise
Question: Whether the Collector of Central Excise had jurisdiction to pass the Adjudication Order?

Analysis: The Tribunal examined whether the Collector of Central Excise, Allahabad, had jurisdiction to issue the show cause notice and pass the adjudication order. The Appellant argued that the Collector lacked jurisdiction due to the illegal extension of the period for issuing the show cause notice without giving the Appellant an opportunity to contest the extension. Additionally, the Appellant contended that the jurisdiction had been divested in favor of the Collector of Customs, Indo-Nepal Border, Patna, and the Deputy Collector of Customs, Muzaffarpur, as per Notifications No. 35-Cus., dated 4-3-1972, and No. 33B-Cus., dated 24-2-1978, respectively. The majority held that the Collector of Central Excise, Allahabad, retained jurisdiction as the lower authorities continued to have jurisdiction to adjudicate cases falling within their respective powers. However, the dissenting opinion argued that the jurisdiction had indeed been divested, making the adjudication order a nullity in law.

Issue 2: Legality of the Show Cause Notice
Question: Whether the show cause notice was illegal and without jurisdiction?

Analysis: The Appellant contended that the show cause notice issued on 27-1-1970 was illegal due to the failure to extend the period of six months for issuing the notice after giving notice to the Appellant. The Tribunal, relying on the Supreme Court decision in A.I.R. 1972 S.C. 689 and other High Court rulings, held that the confiscation of the goods could not be sustained, and the goods were to be returned to the Appellant. However, the corrigendum issued to the show cause notice was deemed to be within jurisdiction as it merely directed the Appellant to show cause to the Deputy Collector instead of the Collector.

Issue 3: Validity of the Penalty Imposed
Question: Whether the penalty of Rs. 20,000/- imposed was legal and valid?

Analysis: The Appellant argued that once the goods were not liable to confiscation due to the illegal notice, the penalty under Section 112 of the Act could not be imposed. The majority held that the penalty could still be imposed as the power of confiscation and levy of penalty in adjudication is not lost when the goods are liable to confiscation under Section 112, even if they are not physically available for confiscation. The dissenting opinion did not express a view on this issue.

Issue 4: Effect of Various Notifications on Jurisdiction
Question: Whether the jurisdiction of the Deputy Collector of Central Excise, Allahabad, was divested in favor of other authorities?

Analysis: The Appellant argued that Notifications No. 35-Cus., dated 4-3-1972, and No. 33B-Cus., dated 24-2-1978, divested the jurisdiction of the Deputy Collector of Central Excise, Allahabad, in favor of the Collector of Customs, Indo-Nepal Border, Patna, and the Deputy Collector of Customs, Muzaffarpur. The majority held that the lower authorities retained jurisdiction to adjudicate cases within their powers and that Notification No. 35/72 did not supersede or modify Notification No. 37/63. The dissenting opinion, however, held that the later notifications abrogated the earlier ones, making the adjudication by the Deputy Collector of Central Excise, Allahabad, without jurisdiction and a nullity in law.

Conclusion:
The Tribunal allowed the application and referred the recast questions of law to the High Court at Allahabad for its considered opinion. The questions include the legality of the show cause notice, the liability of the goods for confiscation, the validity of the adjudication and penalty, and the jurisdictional issues arising from the various notifications.

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