1991 (2) TMI 241 - AT - Central Excise

Summary

Issues Involved:

1. Jurisdiction of the Collector to adjudicate the case.
2. Limitation period for issuing the show cause notice.
3. Alleged suppression of facts by the appellants.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Collector to Adjudicate the Case:

The appellants argued that the show cause notice was issued by the Additional Collector, who lacked jurisdiction to issue such a notice invoking the longer period under Section 11A of the Central Excises & Salt Act, 1944. They contended that only the Collector could sign the show cause notice and adjudicate upon the short levy after the amendment to the Section in 1985. The appellants relied on the Tribunal's decision in the case of Meghmani Dyes and Intermediates v. Collector of Central Excise, Vadodara, which held that a particular officer must exercise powers vested in him and cannot exercise powers vested in another officer unless explicitly provided by the Act.

The Department countered that the term 'Collector of Central Excise' includes the Additional Collector of Central Excise, as established by the Larger Bench decision in the case of S. Kumar v. Collector of Central Excise. The Tribunal clarified that the term 'Collector' includes 'Additional Collector' under the Central Excise Rules. The Tribunal noted, "We have thus no hesitation in holding that by virtue of inclusive definition in rule 2(ii), the term 'Collector' would mean 'Additional Collector' also, for all purposes."

The Tribunal upheld that the show cause notice issued by the Additional Collector and adjudicated by the Collector was valid, as both officers are considered 'Collectors' for all purposes.

2. Limitation Period for Issuing the Show Cause Notice:

The appellants argued that the show cause notice issued on 22-1-1986 for the period from August 1983 to July 1985 was beyond the six-month limitation period. They contended that there was no evidence of misrepresentation of facts and relied on previous Tribunal decisions, which held that once a classification list claiming exemption is approved, the Department cannot later allege suppression.

The Department argued that the appellants had suppressed the fact that the strips containing the tablets bore a monogram or symbol linking the product to the appellants and their agents, which was a vital factor for classification under T.I. 14E. This fact was not disclosed in the classification list and was discovered only during a visit to the appellants' factory. The Department maintained that the longer period for demanding duty could be invoked due to this suppression of facts.

The Tribunal held that there had been suppression of facts by the appellants in failing to disclose the monogram or symbol on the strips, which was crucial for classification. The Tribunal cited the Supreme Court decision in Jai Engineering Co. v. C.C.E., which stated that suppression is established when an appellant withholds vital information that affects classification.

3. Alleged Suppression of Facts by the Appellants:

The appellants argued that there was no suppression of facts and that the Department should have satisfied itself by calling for the required particulars if anything was missing in the classification list. They contended that the classification list was approved based on the carton, and there was no requirement to produce the sample of the product with the classification list.

The Department argued that the appellants had suppressed the fact that the strips bore a monogram or symbol linking the product to the appellants and their agents. This was a vital aspect for classification under T.I. 14E, and the appellants had not disclosed it in the classification list. The Department discovered this fact during a visit to the appellants' factory.

The Tribunal held that the appellants had suppressed facts by failing to disclose the monogram or symbol on the strips, which was crucial for classification. The Tribunal cited the Supreme Court decision in Jai Engineering Co. v. C.C.E., which established that suppression is established when an appellant withholds vital information that affects classification.

Conclusion:

The Tribunal dismissed the cross-objection filed in support of the Collector's order as misconceived. However, in the interest of justice, the Tribunal decided to provide the appellants an opportunity to make submissions on the merits of the case and directed the Registry to fix a suitable date for the purpose and issue notice to the parties.