9911796707
TMI Blog1992 (7) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... n each such sleeper manufactured and as such, those inserts were becoming integral parts thereof, but the manufacturers while clearing the sleepers so manufactured, under the Gate Passes and paying appropriate duty on the assessable value as calculated by them, were not including the value as such inserts, though the same was required to be done for arriving at the correct assessable value, as provided for in Section 4 of the Central Excises and Salt Act, 1944. It was also allegedly revealed that the manufacturers were not even declaring such free supply of the inserts and use thereof, in the final product. It was also found that classification list No. 3/85-86 filed by the assessee, effective from 28-2-1986 did not reveal the same which, according to the department, amounted to suppression and deliberate mis-statement. Differential duty was accordingly found payable and hence, in all, four Show Cause Notices dated 26-12-1986, 26-2-1987, 28-7-1987 and 22-12-1987, made answerable to Assistant Collector, were issued by the Jurisdictional Superintendent, covering the periods 1-7-1986 to 30-11-1986, 1-9-1986 to 31-1-1987, 1-2-1987 to 30-5-1987 and 1-7-1987 to 30-11-1987, respectively, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 28-2-1991/31-3-1991, emphasizing that he is adjudicating as per the order passed by the Collector (Appeals) dated 23-8-1990, he has held that vide aforesaid order of the Collector (Appeals), the matter has been referred to him for decision and in order to provide an opportunity to the notice firm, a fresh Show Cause Notice has been served. According to him, the order of the Collector (Appeals) is based on the specific request made by the Advocate for the appellants that both, the issue of notice as well as the ad judication, ought to have been done by the Collector. As regards the appellant s contention about the present notice being time barred, he has held that whenever there is a case of suppression or mis-statement etc. the provision of Section 11A(1) of the CESA, 1944 could be pressed into service and the Collector is empowered to issue a demand notice for the extended period of five years. In his view, the present case is clearly the one of suppression and provisions of Section 11A have been correctly invoked. He has referred to several decisions of the Tribunal to substantiate his view that in case of suppression etc., invocation of extended period is permissible. As rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of invalidity of the earlier notices. In his submission, the adjudicating authority has thus acted beyond the scope of the order of the Collector (Appeals). On the second point, he has pleaded that the fact of their receiving inserts free of charge from the Railways and the appellants fixing them in the sleepers manufactured by them, was a fact very much within the knowledge of the department and apart from initiation of adjudication proceedings in the years 1985 and 1986, even the present demands were duly raised by issuance of notices, which all were within the period of six months, indicating that non-inclusion of the value of inserts in the assessable value was well within the knowledge of the department as early as 16-12-1986, when the first Show Cause Notice was served and as such, allegations of suppression, now levelled, was not sustainable and the notice issued after expiry of six months, was void and not sustainable. In support of his contention the Ld. Advocate has referred to and relied upon the decisions of the Supreme Court in Collector v. Chemphar Drugs, 1989 (40) E.L.T. 276 (S.C.) = 1989 (21) ECR 182 (81), Padmini Products v. Collector, 1989 (43) E.L.T. 195 (S.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to re-adjudicate pursuant to the order of Collector (Appeals) dated 23-8-1990. In Para 13 of the said order, he has mentioned that the fresh show cause notice (dated 28-2-1991/13-3-1991) is also issued pursuant to the said order of the Collector (Appeals) and not otherwise. In Para 14.1, the Collector has emphasized about his power to issue a notice covering the demand for a period of five years, when the suppression is noticed. The Ld. SDR has, during the course of submission, in support of the reasonings adopted by the Collector, submitted that the Collector can issue show cause notice covering the period of five years backward and it is immaterial as to when he came to know of the suppression. 8. We are constrained to observe that the adjudicating Collector has acted under misconception of law as also of the facts and has thereby misdirected himself in determining the issue before him. 9. The operative portion of the order dated 23-8-1990 of the Collector (Appeals) read thus: I therefore, refer the matter to the Collector of Baroda to decide after giving the appellants an opportunity to represent their view point in writing and orally at the time of personal hearing. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing powers pursuant to such remand, to bye pass those notices and issue a fresh Show Cause Notice, and then adjudicate thereon. 10. The order of the Collector (Appeals) does mention about the contention raised on behalf of the appellants that the notices ought to have been issued by the Collector, and he has found force in the said submission. The Collector (Appeals) appears to have though it fit to refer the matter back to the Collector. That however may be a motivating factor not to confirm the order appealed against. The said observations however cannot be taken, and is also not spelt out in the order, to mean that he was quashing those notices and directing/permitting the Collector to issue a fresh Show Cause Notice, or to initiate the proceedings de novo. Even going by the ratio of the decision of the Bombay High Court in Prakash Cotton Mills v. S.M. Bharadwaj, 1987 (32) E.L.T. 534 (Bom.), for issue of a fresh notice, the earlier notice is required to be struck down on technicalities. 11. The re-adjudicating Collector has, in the impugned order, in sub-para 3 of Para 3/ observed that he has issued the notice with a view to provide an opportunity to the firm. When the Show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter ordered by the Collector (Appeals) and it is made to appear that an independent Show Cause Notice is being issued. Suppression of the said position in the Show Cause Notice, cannot be construed as just an oversight. 14. The Ld. SDR has pleaded that irrespective of the time when the suppression was noticed, it is open to the Collector to go backward upto five years from the date of issuance of the notice. Though it is not possible to immediately search out any judicial pronouncements, and when in the present proceedings the right to issue the subject Show Cause Notice, even on other grounds, is being held as not available, such an issue raised by the Ld. SDR is more of an academic interest. It is however not possible to subscribe to the view that Collector has unfettered right to issue notice whenever he chooses to do. Notice under such a circumstance, has to be issued within a reasonable time after detection of the suppression. In any case, the weapon of suppression cannot be raised for the demand for the period subsequent to the first detection. 15. In the result, we hold that the fresh Show Cause Notice dated 28-2-1991/13-3-1991 is bad in law and is quashed, and the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allegation of suppression in those notices is sustainable and decide on the question of penalty, since there is no apparent need for invoking the larger period of 5 years in those notices. There is no case for issue of another show cause notice, when there is no specific order of quashing those notices. Moreover, the Collector, Baroda has got into the proceedings only by way of order of remand passed by Collector (Appeals). It is not by way of assuming original jurisdiction. That could only be the reason why the notices issued by the Supdt. have not been superseded with the issue of fresh notice by the Collector. 22. In these peculiar circumstances created by the overzealous officials hunting for a case of suppression, the notices issued well within the normal period of limitation remain in suspended animation, without any final orders thereon. 23. While expressing no opinion on the availability of the S.C.Ns issued by the Supdt. over which an adjudication is yet to be done and only for that purpose remand order was passed by Collector (Appeals), I certainly agree that the order of the Collector is bad in law based on misconception of the terms of remand and hence is required ..... X X X X Extracts X X X X X X X X Extracts X X X X
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