1999 (2) TMI 339 - AT - Central Excise

Issues Involved:
1. Jurisdiction of the Assistant Collector to issue and adjudicate the show cause notice.
2. Applicability of Section 11A versus Rule 9(2) of the Central Excise Rules, 1944.
3. Validity of the show cause notice alleging fraud and wilful suppression of facts.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Assistant Collector to Issue and Adjudicate the Show Cause Notice:
The central issue revolves around whether the Assistant Collector had the authority to issue and adjudicate a show cause notice that alleged fraud and wilful suppression of facts. The Collector (Appeals) had set aside the Assistant Collector's order, holding that the Assistant Collector acted in excess of his jurisdiction. According to the amendment to Section 11A of the Central Excise And Salt Act, 1944, the jurisdictional Collector is the proper authority to adjudicate such cases, irrespective of whether the notice is issued within six months or thereafter. The Tribunal upheld this view, stating that if a notice was issued alleging fraud, collusion, or suppression, it must be issued and adjudicated by the Collector, not the Assistant Collector.

2. Applicability of Section 11A Versus Rule 9(2) of the Central Excise Rules, 1944:
The Department argued that the show cause notice was issued under Rule 9(2) and not Section 11A, asserting that the Assistant Collector was competent to adjudicate the proceedings as the demand was raised for a period of six months only. However, the Tribunal found that levy under Rule 9(2) is subject to the provisions of Section 11A. It is a settled position that demands can be raised only under Section 11A of the Central Excise Act. The Tribunal referred to the case of Pratap Rajasthan Copper Foils and Laminates Ltd. v. Collector of Central Excise, which held that notices alleging fraud must be issued and adjudicated by the Collector.

3. Validity of the Show Cause Notice Alleging Fraud and Wilful Suppression of Facts:
The show cause notice issued on 3-3-1987 alleged wilful suppression with an intent to evade duty, which falls under the purview of Section 11A. The Tribunal emphasized that a show cause notice for recovery of duty and for confiscation and levy of penalty is a composite one. If the notice is issued without jurisdiction, the entire proceedings are invalid. The Tribunal cited the case of Alcobex Metals Pvt. Ltd. v. Collector of Central Excise, which held that a notice issued without jurisdiction renders the entire proceedings invalid.

Separate Judgments Delivered by the Judges:

Majority Opinion:
The majority opinion, including the views of Member (J) and Member (T), concluded that the Assistant Collector was not empowered either to issue the notice or to adjudicate the matter, even for six months, since the show cause notice issued alleged fraud and wilful suppression of facts as envisaged under Section 11A of the Act. The order passed by the Collector (Appeals) was upheld, and the appeal filed by the department was dismissed.

Dissenting Opinion:
Member (T) dissented, arguing that Rule 9(2) and Section 11A are independent provisions. The Assistant Collector, being the proper officer under Rule 9(2), had the jurisdiction to adjudicate the case. The dissenting opinion emphasized that the provisions of Section 11A should not overshadow Rule 9(2) entirely and that the Assistant Collector's action was within legal bounds.

Final Order:
In view of the majority opinion, the Assistant Collector was not empowered to issue or adjudicate the matter. The order passed by the Collector (Appeals) was upheld, and the department's appeal was dismissed.

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