1990 (11) TMI 282 - AT - Central Excise

Issues Involved:
1. Validity of the show cause notice issued by the Deputy Collector.
2. Time-barred nature of the demand for duty.
3. Jurisdiction for issuing the show cause notice.
4. Legality of the proceedings for confiscation and penalty.

Detailed Analysis:

1. Validity of the Show Cause Notice Issued by the Deputy Collector:
The appellants contested the show cause notice on the grounds that it was issued by the Deputy Collector after the amendment to Section 11A of the Central Excises and Salt Act, which required such notices to be issued by the Collector. The Tribunal found that the show cause notice issued on 6-3-1986 was without jurisdiction since the amendment effective from 27-12-1985 mandated that only the Collector could issue notices invoking the extended period of five years. The Tribunal referred to the Gujarat High Court's judgment in Gujarat State Fertilizer Co. Ltd. v. Union of India and its own decision in M/s. Partap Rajasthan Copper Foils & Laminates Ltd. v. Collector of Central Excise, Jaipur, supporting the view that the notice issued by the Deputy Collector was invalid.

2. Time-Barred Nature of the Demand for Duty:
The appellants argued that the demand for duty was time-barred as it covered the period from 1-3-1981 to 5-12-1985, and the show cause notice was issued beyond the permissible period of six months. The Tribunal upheld this argument, stating that the demand for duty exceeding six months was invalid since it was not issued by the Collector as required under the amended Section 11A. Consequently, the demand for duty was time-barred.

3. Jurisdiction for Issuing the Show Cause Notice:
The Tribunal emphasized that the jurisdiction to issue a show cause notice invoking the extended period of five years rested solely with the Collector post-amendment. The Deputy Collector's issuance of the notice was deemed to lack inherent jurisdiction, rendering the proceedings void ab initio. The Tribunal rejected the Collector's reasoning that the draft approval before the amendment sufficed, as further investigations and grounds for evasion were added post-amendment.

4. Legality of the Proceedings for Confiscation and Penalty:
The Tribunal was divided on whether the notice was valid for confiscation and penalty purposes. The majority view, including the opinion of the Third Member, held that the show cause notice, being without jurisdiction for the demand of duty, also rendered the entire proceedings for confiscation and penalty without jurisdiction. The dissenting view argued that the notice could be valid for six months and for confiscation and penalty, but this was not upheld by the majority.

Conclusion:
The appeal was allowed on the grounds that the show cause notice was without jurisdiction, and the entire proceedings, including the demand for duty, confiscation, and penalty, were set aside with consequential relief to the appellants. The Tribunal's decision was based on the lack of jurisdiction of the Deputy Collector to issue the notice post-amendment and the time-barred nature of the demand.

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