2002 (9) TMI 118 - HC - Central Excise

Summary

Issues involved:
Challenge to validity of Show Cause Notice under Rule 209A of Central Excise Rules.

Summary:

Issue 1:
The petitioners challenged the validity of a Show Cause Notice dated 29th September, 1988, seeking to levy penalty under Rule 209A of the Central Excise Rules.

Details:
The petitioners held high-ranking positions in a company manufacturing Programmable Controllers. The company had obtained necessary approvals for the classification of the goods under the Central Excise Tariff. Subsequent to changes in the Tariff Act, the company sought reclassification which was duly approved by the Excise authorities. However, a show cause notice was issued in 1988, calling for reclassification of the goods and demanding differential duty, along with imposing penalties under Rule 209A.

Issue 2:
Jurisdictional aspect of invoking Rule 209A for penal action.

Details:
The petitioners argued that the conditions for invoking Rule 209A were not met as the goods were cleared as per approved classifications, and no confiscation was involved. The Excise authorities had consistently approved the classification lists submitted by the company. The show cause notice did not provide any basis for believing the goods were liable for confiscation, as required under Rule 209A.

Judgment:
The High Court found that the show cause notice lacked merit in penalizing the petitioners under Rule 209A. The Court held that since the goods were cleared based on approved classifications and no clandestine activities were involved, invoking penal action was unjustified. Consequently, the Court quashed the show cause notice pertaining to penal action under Rule 209A.

Conclusion:
The petition succeeded, and the impugned show cause notice was quashed in relation to penal action under Rule 209A. No costs were awarded in the case.