1986 (12) TMI 242 - AT - Central Excise

Summary

Issues Involved:

1. Maintainability of the appeal.
2. Jurisdiction of the Collector to proceed with the allegations in the show cause notice.
3. Validity of the show cause notice without invoking Rule 173E of the Central Excise Rules, 1944.
4. Burden of proof regarding the allegations in the show cause notice.
5. Competence of the Tribunal to hear the appeal.

Issue-wise Detailed Analysis:

1. Maintainability of the Appeal:

The primary issue was whether the appeal filed by M/s. Reliance Industries Ltd. against the order of the Collector dated 3-3-1986 was maintainable. The respondent's representative, Shri Senthivel, contended that the order was not final and was merely a record of a personal hearing, thus not appealable. He argued that the order dealt only with two out of six allegations and was interlocutory in nature. However, the appellants argued that the order was a final decision on the preliminary objections regarding the maintainability of the charges (i) and (ii) in the show cause notice, and hence appealable. The Tribunal concluded that the order was indeed a preliminary judgment that finally determined the preliminary issue, thereby affecting the rights of the appellants and making it appealable under Section 35B of the Central Excises and Salt Act, 1944.

2. Jurisdiction of the Collector:

The appellants contended that the Collector did not have the jurisdiction to proceed with the allegations in the show cause notice without first determining the norms of production under Rule 173E. They argued that the charges were based on assumptions and theoretical calculations rather than actual production data, which was unlawful. The Collector, however, ruled that the determination of normal production under Rule 173E was not mandatory before making such allegations. The Tribunal upheld this view, stating that the show cause notice was within the jurisdiction of the Collector and that the allegations needed to be established through an adjudication process.

3. Validity of the Show Cause Notice Without Invoking Rule 173E:

The appellants argued that the show cause notice was invalid as it did not invoke Rule 173E, which mandates the determination of normal production before assessing duty on notional production. The Tribunal noted that Rule 173E provides for best judgment assessment, which includes determining normal production. However, the Tribunal found that the show cause notice did not demand duty but merely required the appellants to show cause why duty should not be demanded, making the allegations competent and maintainable.

4. Burden of Proof Regarding the Allegations in the Show Cause Notice:

The appellants contended that the Collector improperly placed the burden of disproving the allegations on them, contrary to the principles of natural justice. The Tribunal clarified that the Collector's order did not place the burden on the appellants but stated that the allegations needed to be established by the Department, and the appellants had the opportunity to rebut them.

5. Competence of the Tribunal to Hear the Appeal:

The Tribunal examined whether it had the jurisdiction to hear the appeal against the Collector's order. It was argued that the appeal provisions under Section 35B were limited compared to Section 35. However, the Tribunal found that appeals against any decision or order passed by the Collector as an adjudicating authority were maintainable under Section 35B(1)(a). The Tribunal emphasized that the scope of appeal under Section 35B was not restricted to orders under Sections 11A and 33 but included any decision or order passed by the Collector in his quasi-judicial capacity.

Conclusion:

The Tribunal concluded that the appeal filed by M/s. Reliance Industries Ltd. was maintainable and within its jurisdiction to hear. However, on the merits, the Tribunal found no grounds to set aside the Collector's order or the show cause notice. The allegations in the show cause notice were deemed competent, and the Collector had the jurisdiction to proceed with the adjudication. The appeal was ultimately rejected.