1997 (12) TMI 220 - AT - Central Excise

Summary

Issues:
Department's appeal against the order of Collector (Appeals) regarding classification of 'Liquid Paraffin I.P.' under new tariff and exemption claim under Notification No. 234/86; Interpretation of High Court's directions on reclassification and time limitation defense; Consideration of show cause notice as a continuation of remand proceedings; Observance of principles of natural justice and opportunity for defense in the case.

Analysis:
The case involved the Department's appeal against the Collector (Appeals) order concerning the classification of 'Liquid Paraffin I.P.' under a new tariff and the claim for exemption under Notification No. 234/86. The respondents initially classified the product under Chapter Heading 2901.90 but were later directed by the Department to classify it under 2710.99. A writ petition was filed, resulting in the High Court's order, which included directions for the Department to withdraw the show cause notice and issue a fresh one for reclassification, with a provision for personal hearing.

The Collector (Appeals) remanded the matter with suitable directions, leading to the issuance of an impugned show cause notice. The Collector (Appeals) held that the High Court's direction was a one-time exception and not applicable to subsequent notices. The Department contended that the impugned notice was a continuation of the remand proceedings and the defense of limitation was not valid. The Collector (Appeals) decided solely on the time bar issue without considering other aspects, prompting the Department's appeal.

During the proceedings, it was argued that the impugned notice was fresh, not a continuation, and that principles of natural justice were not fully observed. The Tribunal considered the submissions and observed that the Department's contentions were valid, emphasizing that the show cause notice was part of the remand proceedings. The Tribunal highlighted the need for the Department to provide necessary documents and the respondents to have a fair opportunity to defend themselves.

Ultimately, the Tribunal set aside the impugned order and remanded the case to the Collector (Appeals) for a fresh consideration in compliance with the law and principles of natural justice. This decision aimed to ensure a fair hearing for the respondents and a thorough examination of the case on merits, emphasizing the importance of following due process in such matters.