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2011 Supreme(All) 3372
ALLAHABAD HIGH COURT
R.K.Agrawal, B.Amit Sthalekar, JJ.
Commisisoner of Central Excise, Allahabad -Appellant
Versus
Basti Sugar Mills Ltd.Basti U.P. -Respondent
Central Excise Appeal No. 178 of 2004
Decided On : 20-12-2011
Petitioner Counsel:- Surya Prakash Kesarwani,A K Nigam,A K Rai,K C Sinha, Respondent Counsel:- Krishna Agarwal, R R Kapoor
The mere quoting of a wrong provision in a show cause notice does not invalidate the notice if the proposed action can be justified under any statutory provision.
Headnote:
Central Excise Act - Appeal against order - Section 35G - Section 11AB - Section 11AC
Fact of the Case:
The respondent assessee filed an application for condonation of Central Excise duty, which was rejected by the Commissioner, Central Excise, Allahabad. The Revenue and the respondent assessee both appealed the decision. The Tribunal dismissed the Revenue's appeal on the ground that the provisions of Section 11AB were not invoked in the show cause notice.
Finding of the Court:
The court found that the mention of the wrong provision of law in the show cause notice did not invalidate the notice, and the factum of charging of interest was already there in the notice. The court set aside the Tribunal's order and directed it to decide the appeal of the Revenue afresh.
Issues: The issues revolved around the validity of the show cause notice, the charging of interest under Section 11AB, and the remand of the matter by the Tribunal.
Ratio Decidendi: The court held that the mere quoting of a wrong provision would not invalidate the notice if the proposed action can be justified under any statutory provision. It also emphasized that as long as the Tribunal's order stands, the Commissioner cannot adjudicate upon charging and levy of interest.
Final Decision: The court set aside the Tribunal's order and directed it to decide the appeal of the Revenue afresh.
The present appeal filed under Section 35G of the Central Excise Act, 1944 (hereinafter referred to as "the Act") against the order dated 11th February, 2004 passed by the Custom Excise and Service Tax Appellate Tribunal, New Delhi has been admitted on the following substantial questions of law:-
"(a). Whether mere mention of wrong provision of law (Section 11AC) in the show cause notice dated 23.1.2002 takes away th power to levy/realise interest when Section 11AB of the Act specifically provides for mandatory levy of interest?
(b). Whether in order to charge interest under Section 11AB of the Act it is necessary to invoke the provisions of Section 11AB in the adjudication order itself?"
2. Briefly stated, the facts giving rise to the present appeal are as follows:-
3. The respondent assessee is engaged in manufacture of sugar by vaccum pan process and molasses falling under Chapter Central Excise Tariff heading No. 1701.31/1701.39 and 1703.10 of Central Excise Tariff Act (5) of 1985. It filed an application in the prescribed form 335(U)(1) for condonation of Central Excise duty to the tune of Rs. 2,41,337/- on storage loss of 482.674 MT of molasses out of 24196.995 MT produced during Sugar Season 1999-2000 which comes 1.99%. The claim was supported by the report of the State Excise Officer. The Assistant Commissioner, Central Excise Division, Faizabad issued a demand-cum-show cause notice dated 23rd January, 2002 calling upon the respondent assessee to show cause as to why the application seeking condonation of Central Excise duty be not rejected and further Central Excise duty amounting to Rs. 2,41,337/- be not demanded/recovered under Rule 49(1) of Central Excise Rules, 1944 and penalty under Rule 173Q and Rule 210 of Central Excise Rules, 1944, now Rules 25 and 27 of Central Excise (No.2) Rules, 2001, be not imposed and why interest be not charged under Section 11AC of Central Excise Act, 1944. The respondent assessee submitted its explanation. However, the Commissioner, Central Excise, Allahabad, vide order dated 9.9.2002 rejected the remission application and confirmed the demand of Rs. 2,41,337/- and ordered for its recovery and imposed a sum of Rs. 2,41,337/- as penalty. So far as levy of interest is concerned, the Commissioner, Central Excise, Allahabad neither gave any finding nor gave any direction in the operative portion of the order. Against the order dated 9.9.2002 passed by the Commissioner, Central Excise, Allahabad the Revenue preferred an appeal before the Tribunal. The respondent assessee also feeling aggrieved preferred an appeal. It appears that the appeal preferred by the Revenue was heard and decided independently without hearing the appeal preferred by the respondent assessee. The Tribunal vide order dated 11th February, 2004 had dismissed the appeal preferred by the Revenue on the ground that the provisions of Section 11AB was not invoked in the show cause notice and, therefore the prayer for levy of interest on the duty confirmed against the assessee cannot be allowed.
4. We have heard Sri S.P.Kesarwani, learned Senior Standing Counsel for the appellant, and Sri Krishna Agarwal, learned counsel appearing for the respondent - assessee.
5. Sri S.P.Kesarwani submitted that in the show cause notice, if by mistake a wrong provision has been quoted for charging of interest that would not make any difference. According to him the Assistant Commissioner, Central Excise, Faizabad, while issuing show cause notice wrongly mentioned provisions of Section 11-AC whereas it should have been Section 11-AB. He further submitted that levy of interest under Section 11-AB of the Central Excise Act, 1944 is automatic and does not depend upon mention in the notice.
6. Sri Krishna Agarwal, learned counsel for the respondent assessee submitted that it is not a case of mere wrong quoting of section but there is no question of charging of any interest as the respondent assessee had filed an
