1993 (11) TMI 130 - AT - Central Excise

Issues Involved:
1. Classification of printed self-adhesive paper labels and plastic labels.
2. Eligibility for small scale exemption under Notification No. 175/86.
3. Demand for Central Excise duty and imposition of penalty.
4. Jurisdiction of the Assistant Collector to issue the show cause notice.

Detailed Analysis:

1. Classification of Printed Self-Adhesive Paper Labels and Plastic Labels:
The appellants claimed that their products were classifiable under sub-heading No. 4821.00 and 3926.93, respectively, and were exempted unconditionally under Notification No. 228/86. However, the Supdt. of Central Excise classified the products under Chapter sub-heading No. 3910.00 and denied the small scale exemption. The adjudicating authority held that the products, viz. printed self-adhesive paper labels, printed self-adhesive tapes, and self-adhesive printed paper laminated with plastics, could not be called products of the "printing industry" and were not covered by the exemption notification. The authority found that the appellants were aware of the correct classification and resorted to mis-declaration to evade payment of Central Excise duty, thereby proving charges of wilful mis-statement and mis-declaration.

2. Eligibility for Small Scale Exemption under Notification No. 175/86:
The appellants claimed exemption under Notification No. 175/86, but the adjudicating authority found that the S.S.I. Unit certificate was not valid for the new factory premises. The appellants had shifted their factory without updating their registration, and thus, the small scale exemption could not be extended. The authority noted that the appellants had not applied afresh for registration or sought correction in the certificate, and their claim for exemption was not sustainable.

3. Demand for Central Excise Duty and Imposition of Penalty:
The adjudicating authority confirmed the demand raised in the show cause notice for Central Excise duty amounting to Rs. 3,54,343.75 and imposed a penalty of Rs. 20,000 on the appellants. The authority found that the appellants had mis-declared their products with an intent to evade payment of duty and were not eligible for the claimed exemptions.

4. Jurisdiction of the Assistant Collector to Issue the Show Cause Notice:
The Tribunal found that the show cause notice alleging suppression and intent to evade payment of duty was issued by the Assistant Collector, which was beyond his jurisdiction. It was held that only the Collector of Central Excise could issue such a notice under the proviso to sub-section (1) of Section 11A of the Central Excises and Salt Act, 1944. Following the Gujarat High Court's decision in Gujarat State Fertilizer Co. Ltd. v. Union of India and the Tribunal's decisions in Partap Rajasthan Copper Foils and Laminates Ltd. v. Collector of Central Excise and Alcobex Metals, the Tribunal held that the show cause notice was without jurisdiction. Consequently, the appeal was allowed on this ground alone without examining the merits of the case.

Separate Judgments:

Order by Jyoti Balasundaram:
The appeal was allowed solely on the preliminary point of jurisdiction, without delving into the merits of the case.

Order by S.K. Bhatnagar:
S.K. Bhatnagar provided a detailed analysis, noting that the case involved three items: gummed printed paper labels, gummed printed paper labels laminated on one side with plastic, and printed self-adhesive P.V.C. tapes. He observed that the appellants had sought and were granted exemption from Licensing Control and that procedural infractions should not deny substantial benefits. He also noted that there was scope for bona fide differences of opinion on classification, and the charge of deliberate mis-declaration was unsubstantiated. Ultimately, he concluded that the Department's case was unsubstantiated on all counts, and the impugned order was set aside. The appeal was accepted, as announced in open court.

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