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TMI Blog1991 (2) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... udication dated 14-12-1987 made by the respondent, as per Annexure-D, and the show cause notice was confirmed. Against this order, the petitioner went up in appeal before the Collector of Central Excise (Appeals), Madras, who, by his order dated 30-6-1988 (Annexure-E), dismissed the appeal and confirmed the classification under [sub-heading] 8421. Against the said order of the Appellate Collector, the petitioner has filed an appeal before the CEGAT and the appeal is pending. 5. When the matter stood at this stage, a notice of demand dated 17-8-1988 (Annexure-F) was issued by the Superintendent of Central Excise (Annexure-F) calling upon the petitioner to pay differential duty of Rs. 96,665.04 for the period November 1986 to February 1987. This demand was made pursuant to the dismissal of the appeal of the petitioner by the Collector of Appeals. This demand is challenged in this writ petition. 6. The main ground urged on behalf of the petitioner by Sri Chanderkumar is : that the demand made by Respondent-2 is unsustainable in law since the demand is not preceded by issue of a notice as contemplated under Section 11A of the Central Excise Act. He has relied upon two decisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as a fabric. The dispute between the petitioner and the Department in that case was : whether it was liable to pay excise duty as a fabric, as demanded by the Department in the show cause notice or as yarn as contended by the assessee? The writ petition was ultimately dismissed by the High Court on 16-2-1981 directing the petitioner to urge all the contentions in reply to the show cause notice, before the Department. After disposal of the writ petition, a show cause notice was issued on 20th May 1982 to the petitioner by the Asstt. Collector demanding the differential duty, which ended in an adjudication and the matter ultimately reached Supreme Court in an appeal under 35L by the assessee. The subject-matter of the appeal before the Supreme Court was the validity of the show cause notice dated 20th May 1982 issued by the Assistant Collector raising a demand for the period 20th June 1976 to 28th February 1981. This is the period during which the writ petition was pending before the High Court, which assumes importance in view of the contentions raised by the appellant before the Supreme Court about its validity with regard to limitation. The contention as already stated was tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Section 11A. 12. Dealing with the scheme of the provisions of Section 11A, the Supreme Court observed that for purposes of levy of central excise duty, whether it be for a period of six months or beyond the period of six months under the proviso, a notice on the person charged with duty, is mandatory. It was further observed that the said notice, which is required to be issued under Section 11A(1) should specify the amount payable by the assessee, whether it is short-levy or short-payment. The notice contemplated under sub section (1) is to be followed by an order of adjudication as required to be done under sub-section (2). In the adjudication, that is to follow, the amount of duty of excise due from the assessee is to be determined and the duty determined cannot exceed the amount specified in the show cause notice issued under sub-section (1). It is in the context of the scheme of Section 11A, as explained by the Supreme Court in Gokak Patel's case, the demand made by the department failed and the demand notice was quashed being contrary to the statutory provision. 13. In Madhumilan's case 1988 (35) E.L.T. 349, it was, more or less, the same situation on facts. It was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot preceded by a notice before modifying the classification list. On the basis of the ratio of these two decisions, it was argued that the impugned demand in the present case also should fall to the ground. 14. Let me now refer to the factual position in the present case. The demand notice, as per Annexure-F, is a demand made to pay the differential duty for the period November 1986 to February 1987 in a sum of Rs. 96,665.04. It is not the case of the Department that this demand was preceded by any notice demanding the differential duty on the basis of the modified classification list. The procedure which the Department should have adopted before making the demand was, either to mention in the show cause notice dated 7-5-1987 the differential duty or the demand made as per Annexure-F should have been preceded by a show cause notice proposing to modifying the approved classification. 15. The question as to the modification of the classification list is pending before the Tribunal. Whatever may be result of the appeal regarding the classification, the question that the Department has to answer is, whether they could make the demand of short-levy without issue of show cause notice? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to adjudicate after hearing the person concerned and determine the amount of duty of excise due from such person, and (iv) thereupon issue a notice of demand. 21. The power conferred under Section 11A is again hedged by several conditions, viz., the time-limit within which the notice can be issued. If the short levy or short payment is sought to be recovered by the Department, a show cause notice has to be issued within six months from the relevant date and in cases where the escapement or short-levy has occurred on account of suppression or wilful mis-statement on the part of the assessee, five years time-limit is provided. 22. Therefore, any proceeding under Section 11A involves three stages : (i) issue of a show cause notice, (ii) adjudication by competent authority, and (iii) issue of a demand to recover the duty. 23. The other important requirement of the provision is that the notice itself must specify the amount liable to be paid by the assessee and the adjudicating authority has to determine the actual amount of central excise duty that may become payable after considering the representation made by the person concerned. 24. The other ground urged in the writ pet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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