1992 (11) TMI 208 - AT - Central Excise

Summary

Issues Involved:

1. Legality and competency of the show cause notice issued by the Assistant Collector of Central Excise.
2. Jurisdiction of the adjudicating authority in passing the impugned order.

Issue-wise Detailed Analysis:

1. Legality and Competency of the Show Cause Notice:

The appellants were issued a show cause notice on 2-6-1991 by the Assistant Collector of Central Excise, Preventive, Headquarters, Bombay-1, alleging contravention of Section 6 of the Central Excises and Salt Act (C.E.S.A.), 1944, read with Rule 174 of the Central Excise Rules, 1944, and Rule 9(1). The notice proposed the recovery of duty amounting to Rs. 6,79,864 under Rule 10A and/or provisions (a) and (b) of sub-rule (1) of Rule 10 read with Rule 9(2) of the Central Excise Rules, 1944, and/or Section 11A of the CESA, 1944. It also proposed the confiscation of seized goods under Rule 173Q and other Rules, imposition of penalty under Rule 173Q and Rule 52A, and confiscation of land, building, plant, machinery, materials, etc., used in connection with the manufacture, production, storage, removal, or disposal of such goods.

2. Jurisdiction of the Adjudicating Authority:

The appellants sought permission to raise additional grounds that the Collector of Central Excise was not competent to adjudicate the case as per Section 11A of the Act, which came into effect from 17-11-1980, and that adjudication by the Collector deprived them of a valuable right of appeal to the Collector (Appeals). The learned consultant argued that this was a question of law that could be raised at any stage and that the entire order was vitiated as it was passed without jurisdiction. The consultant relied on Supreme Court judgments in the cases of Hossein Kasam Dado (India) Ltd. and Collector of Customs, Cochin v. A.S. Bawa to support this proposition.

In rebuttal, the learned JDR argued that Rule 6 should be treated as applicable because there was no conflict between Section 11A and Rule 6, and that rules are part of the Act. He cited the Supreme Court judgment in Collector of Central Excise v. Parle Exports, which stated that notifications issued under statutory power have statutory force and validity. The JDR also contended that the right of appeal to the CEGAT was still available, and the appellants could not insist on appealing before a particular forum.

The Tribunal noted conflicting judgments on the issue of jurisdiction. The Meghmani Dyes Intermediates case held that the Collector could not exercise the powers vested in the Assistant Collector under Section 11A(ii), relying on the Supreme Court judgment in S. Kannan's case. However, there were four other Tribunal judgments that supported the view that the Collector was competent to adjudicate under Section 11A.

The Tribunal found the reasons given in the Meghmani Dyes Intermediates case for not referring the matter to a larger Bench unsound, as there was no conflict between Section 11A and Rule 6, and Rule 6 was part of the Act. The Tribunal also noted that the Meghmani Dyes Intermediates case did not properly consider the Supreme Court judgment in S. Kannan's case, which was specific to the Motor Vehicles Act and not applicable to the Central Excises and Salt Act and its rules.

The Tribunal concluded that the conflict on the preliminary issue of jurisdiction persisted and referred the matter to the Hon'ble President for the constitution of a Larger Bench to resolve the conflict. The Tribunal also allowed the miscellaneous application, permitting the appellants to raise the two additional grounds set out in the application.