AI Structured Summary
Not yet generated for this judgment
Judgment
A.K. Sikri, J.—The petitioners in these petitions have challenged the demand show cause notices wherein it is stated that the petitioners were erroneously levied certain duties/charges and the amount was recoverable fro the petitioners u/s 11A of the Central Excise and Salt Act, 1944. Although the demand show cause notices are of different dates, issue involved in these show cause notices is same an show cause notices are similarly worded. In these show cause notices the petitioners are asked as to why they should not be required to pay the amount mentioned therein. All these petitioners are having cotton fabrication plants/units/ By Notification dated 15th July, 1977 cotton fabrics falling under Tariff item No. 19 were exempted fro so such of the duty as was excess if the duty specified in the notification. It is the case of the petitioners that some dispute about the interpretation of this notification arose and by orders dated 23rd May, 1981 October, 1981, the Assistant Collector of Excise Duty held that the exemption from duty was available not only at the stage of processing stage but also at the stage of manufacture. In view of these orders, the petitioners were permitted to clear the goods after availing of 6 per cent of duty concession as per the notification dated 15th July, 1977. Thereafter the Government took the view as is contained in letter dated 17th July, 1984 that 6 per cent concession in duty was available only in respect of unprocessed cotton fabrics and not the processed powerloom cloth when it is processed by the independent processor and for this reason the respondents, prima facie, found that the petitioners had paid less duty and the impugned show cause notices were issued. The challenge to the aforesaid show causes notices is on the ground that exemption from duty is available not only at the processed stage but also at the stage of manufacture. This was so held by Assistant Collector of Central Excise by orders passed earlier. It was not open to the respondent No. 4 to reopen the issue which amounts to unlawful and impermissible ''review'' of earlier orders dated 23rd May, 1981 and 28th October 1981.
The show cause notices are purportedly issued under proviso to Section 11A. We have gone through the show cause notices, perusal whereof shows that it is not stated that the condition prevailing necessary for invoking the said provision has been complied with. The matter is covered by a decision of the Apex Court in the case of Kaur and Singh v. Collector of Central Excise, New Delhi reported in 1997 (94) ELT 289 wherein it has been held that the party to whom a show cause notice of this kind is issued must be made aware of the allegation against it. This is a requirement of natural justice. Unless the assessed is put to such notice, he has not opportunity to meet the case against him. This is all the more so when a larger period of limitation can be invoked on a variety of grounds. Which ground is alleged against the assessed must be made know to him, and there is no scope for assuming that the ground is implicit in the issuance of the show cause notice. (See Collector of Central Excise Vs. H.M.M. Limited, and Raj Bahadur Narain Singh Sugar M. Ltd. Vs. Union of India (UOI) and Others, .) On the contrary the earlier orders were passed by the authorities relying upon their own interpretation to the Notification dated 15th July, 1977.
In all these cases the show cause notice were issued much after one year of earlier assessment order passed. Therefore, show cause notice under Sub-section (1) of Section 11A, which has to be issued within, one year from the relevant date, has become time barred. As per first proviso to the aforesaid Section, a show cause notice can be issued within five years from the relevant date only if the duty short levied or short paid etc. is by reason of fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of the Act or of the Rules made there under with intent to evade payment of duty. This proviso is in the following terms:
"Provided that where any duty of excise has not been levied or paid or has bee short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made there under with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect. [as if , for the words {one year}, the words "five years" were substituted:"
In none of the show cause notices, which are the subject matter of the present petitions, any such allegation of fraud, collusion etc. is imputed. Rather, as mentioned above, the basis of show cause notices is alleged wrong interpretation given by the authorities to their notification dated 15th July, 1977 while passing the assessment order. This cannot be the ground covered by the proviso.
Keeping in view the aforementioned pronouncement of the Apex Court, we are of the opinion that the impugned show cause notices cannot be sustained. These writ petitions are allowed. The show cause notices dated 15th July, 1977 whereby the penalty sought to be initiated against the petitioners, is quashed._