Per Justice U.L. Bhat :

Collector of Central Excise, Guntur has filed this appeal against the order-in-appeal No. 95/88 dated 7.6.1988 passed by the Collector of Central Excise (Appeals), Madras.

2. The cigarette factory concerned in this case was originally owned by M/s Duncan Agro Industries Ltd. It appears dispute arose on price list No. 2/82 in which the manufacturer proposed deduction of tariff rate of duty from the cum-duty price to arrive at the assessable value, though paying only the lesser effective rate of duty. Before the finalisation of the price list, the assessee filed writ petition No. 3474/82 in the High Court of Andhra Pradesh and obtained an interim order directing payment of duty on future clearances on assessable value arrived at after deducting effective rate of duty from the cum-duty price on the condition that the manufacturer shall furnish bank guarantee for the differential duty. Fifteen bank guarantees were so filed in respect of the differential amount of duty. The total value of the bank guarantees was Rs. 2.25 crores in respect of the clearances during the period May, 1982 to December, 1982.

It is stated that subsequently the factory came under the control of the present respondent, M/s New Tobacco Company Ltd., alleged to be a subsidiary of the original owner. The bank guarantees, except four furnished by United Bank of India, Calcutta for Rs. 60 lakhs, were being renewed from time to time by the original owner of the factory and later by the respondent. The writ petition was dismissed on merits by the High Court on 24.11.1986. The excise authority filed an application before the High Court to direct the present respondent to deposit Rs. 60 lakhs covered by the bank guarantees which had not been renewed. On 19.2.1988, the High Court directed the present respondent to make the deposit within six weeks. This order was challenged in SLP Nos. 4441 and 4442 of 1988 before the Supreme Court and the proceedings in the High Court were stayed. It was the contention of the respondent that they were not a subsidiary of the original owner and the duty amount related to cigarettes with two brand names which were the trade marks retained by the original owner of the factory and if any duty amount was to be paid, it was the liability of the original owner. It was on this ground, it was stated, that the respondent did not renew the four bank guarantees. After the failure of the respondent to deposit Rs. 60 lakhs as directed by the High Court, the Assistant Collector, Rajahmundry sent a letter to the respondent on 7.12.1987 referring to the above facts and stating that the balance amount of Rs. 60 lakhs due from the respondent being differential duty on the cigarettes cleared from the factory "is hereby confirmed". Treating this as an appealable order, the present respondent filed an appeal before the Collector (Appeals) who set aside the same on the ground that it should have been preceded by show cause notice under Section 11A of the Central Excises Act, 1944 and since no show cause notice was issued, the order was illegal. The correctness of this order is challenged by the Department. We have heard Shri K. Srivastava, SDR for the appellant. The respondent is absent and is unrepresented in spite of notice of hearing and there is no request for adjournment.

3. Shri Srivastava, SDR referred to the grounds of appeal seen in the memorandum of appeal and contended that the respondent violated the direction of the High Court to renew the bank guarantees and to make the cash deposit, that the respondent is a wholly owned subsidiary of the original owner of the factory, that the dispute is not with regard to liability for payment of duty but only as to who should pay the amount, whether it is the respondent or the original owner, that the contempt proceedings were pending and, therefore, the Collector (Appeals) should not have entertained the appeal and there was no need to invoke Section 11A of the Act to confirm the