S JAIN Vs. A K JAIN

JUDGEMENT

(1.) The petitioners in these petitions have challenged the demand show cause notices wherein it is stated that petitioners were erroneously levied certain 'duties/charges and the amount was recoverable from the petitioners under Section 11-A 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 and 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 15/07/1977 cotton fabrics falling under Tariff item No.19 were exempted from so much 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 23/05/1981 and 28/10/1981, 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 15/07/1977. Thereafter the Government took the view as is contained in letter dated 17/07/1984 that 6 per cent concession in duty was available only in respect of unprocessed cotton fabrics and not the processed power loom 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 2 3/05/1981 and 28/10/1981.

(2.) 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 & Singh Vs. 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 assessee is put to such notice, he.has no 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 assessee must be made known 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, 1995(76) ELT 497 and Raja Bahadur Narayan Singh Sugar Mills Limited Vs. Union of India, 1996 (88) ELT 24). On the contrary the earlier orders were passed by the authorities relying upon their own interpretation to the Notification dated 15/07/1977.

(3.) In all these cases the show cause notices 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 wilful mis-statement or suppression' of facts, or contravention of any of the provisions of the Act or of the Rules made thereunder with intent to evade payment of duty. This proviso is in the following terms :