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CUSTOMS, EXCISE AND GOLD (CONTROL) APPELLATE TRIBUNAL, NEW DELHI
U.L. BHAT, K. SANKARARAMAN, JJ.
Express Rubber Products -Appellant
Versus
Collector of Central Excise, Baroda -Respondent
Final Order No. 2189/97-A Appeal No. E/961/90-A, 2189 of 1997, 961 of 1990
Decided On : 22-12-1997
R. Pal Singh,M. Ali
Per Justice U.L. Bhat :
This appeal is directed against order-in-Original No. 60/89 dated 8.11.89 passed by the Additional Collector of Central Excise, Vadodara confiscating 600 Kgs. tread rubber though allowing redemption on payment of fine of Rs. 4000, confirming demand of Rs. 5,88,962 and imposing penalty of Rs. 25,000 on the appellant.
2. Appellant, engaged in the manufacture of 'Tread Rubber' commenced production in March 1986 without taking out central excise licence and without conforming to central excise procedures and cleared the goods during the period 22.4.86 to 6.8.86 without payment of central excise duty. Central Excise Officers visited the premises on 13.8.86, discovered the above irregularities, seized 600 Kgs. of the finished product available in the factory and started investigation. Deputy Collector, Central Excise, issued show cause notice dated 21.10.86 recording the above facts and alleging contravention of various rules by reason of fraud, wilful mis-statement of facts, suppression of facts with intent to evade duty, proposing demand of duty not paid under Rule 9 (2) of the Central Excise Rules read with Section 11A of the Central Excise Act, 1944, proposing confiscation and imposition of penalty. Though the appellant resisted the notice contending that he was under the honest belief that where the value of clearances during the year in question would not exceed Rs. 15 lacs, Central Excise procedures were not to be followed and central excise duty was not to be paid on account of small scale exemption as he was informed so by the Chartered Accountant and there was no intention to evade duty nor deliberate misstatement or suppression of facts. Alternatively he contended that in case duty is payable, deductions on account of central excise duty, sales tax and certain other elements were to be given. He also pleaded for grant of Modvat credit in respect of the duty paid on the inputs.
3. This notice was followed by another show cause notice dated 28.7.88 issued by the Additional Collector specifically invoking the larger period of limitation under the proviso to Section 11A of the Act. This notice was also resisted by the appellant.
4. Overruling the above contentions, the Additional Collector confirmed the various proposals in the show cause notices as indicated above.
5. The following contentions were raised on behalf of the appellant :
(1) the first show cause notice issued was a nullity;
(2) the second show cause notice issued was barred by time;
(3) price realised by the appellant has to be regarded as cum-duty price and assessable value determined;
(4) amounts payable as central excise duty and sales tax should be deducted while arriving at the assessable value;
(5) Modvat credit should be available to the appellant; and
(6) amount of penalty imposed is excessive.
6. The period covered by the show cause notice is from 22.4.86 to 6.8.86. The first show cause notice was issued by the Deputy Collector on 21.10.86. This notice was within the period of six months prescribed in section 11A (1) of the Act and did not refer to the proviso thereto. Deputy Collector of Central Excise, being a Central Excise Officer, was fully competent to issue such a notice. At the relevant time, only officers of the grade of Collector or Additional Collector, Central Excise could have invoked the larger period of limitation of five years under the proviso to section 11A (1) of the Act. According to the appellant, the first show cause notice though within the period of six months, should on account of allegation of mis-statement and suppression be treated as notice issued under the proviso to section 11A (1) of the Act by an officer who had no jurisdiction to issue such notice and must be treated as nullity. He placed reliance on the decision of Jayant Vitamins Ltd. 1996 (12) RLT 296 =1996 (81) ELT 421 (T). This decision no doubt supports the contention of the appellant. In that case also show cause notice was issued within a period
