1991 (5) TMI 167 - AT - Central Excise

Summary

Issues Involved:
1. Jurisdiction of the Assistant Collector to issue the show cause notice.
2. Classification of Rasna Soft Drink Concentrate (RSDC) under the Central Excise Tariff.

Detailed Analysis:

1. Jurisdiction of the Assistant Collector to Issue the Show Cause Notice:

The appellants contended that the Assistant Collector lacked jurisdiction to issue the show cause notice dated 17th June, 1987, as it covered a period beyond six months, contrary to Section 11A of the Central Excise Act. They argued that the agreement before the High Court not to raise the plea of bar of limitation was unenforceable as it was contrary to law.

Conversely, the Department argued that the interim order of the Gujarat High Court dated 28th February, 1986, which directed the maintenance of the status quo, effectively restrained them from issuing the notice. Therefore, the period from 28th February, 1986, to 20th April, 1987, should be excluded from the six-month limitation period as per the explanation to Section 11A.

The Tribunal analyzed whether the interim order resulted in a 'stay of service of notice.' It concluded that the order to maintain the status quo implied that the Department could not proceed with the classification of the product or levy and collect duty, as this would violate the High Court's directive. Hence, the period of the stay (28th February, 1986, to 20th April, 1987) should be excluded in computing the six-month limitation period.

The Tribunal referred to Section 15 of the Limitation Act, which supports excluding the period during which an injunction or stay order is in force. The Tribunal concluded that the show cause notice issued on 17th June, 1987, was within the permissible period, as the stay period was to be excluded. Therefore, the Assistant Collector had jurisdiction to issue the notice.

2. Classification of Rasna Soft Drink Concentrate (RSDC):

The appellants argued that RSDC should not be classified under Tariff Item 2107.91 as 'edible preparations not elsewhere specified or included.' They contended that the product was eligible for exemption under Notification No. 17/70 dated 1st May, 1970.

The Tribunal noted that the Collector had not decided on the classification issue and had remanded the matter to the Assistant Collector for de novo consideration. The Tribunal allowed the appellants to advance arguments on classification but refrained from expressing any view since the Collector had not made a finding on the merits.

The Tribunal remanded the matter back to the Collector to consider the classification issue afresh. Both the appellants and the Department were directed to present all relevant material before the Collector for a thorough examination.

Conclusion:

The Tribunal held that the Assistant Collector had jurisdiction to issue the show cause notice, as the period of stay by the Gujarat High Court was to be excluded in computing the limitation period. The issue of classification of RSDC was remanded to the Collector for fresh consideration.