I T C LIMITED Vs. U O I

JUDGEMENT

(1.) A Division Bench of this Court vide its order dated 12. 05. 2000 referred the captioned case to a 'larger Bench' for adjudication of two issues:-

(2.) THE occasion for reference to a larger bench arose in view of the judgments of two separate Division Benches of this court taking diametrically opposite views with respect to the issue as to whether a show cause notice, under the provisions of Section HA of the Act could be issued, pending final assessment of a show cause notice, issued prior in point of time. 2. 1 In the case of International Computers Indian Manufacturers ltd. v. Union of India, 1981 ELT 632 (Del); the Division Bench held that a show cause notice under Section 28 of the Customs Act, 1962, (which is analogous to Section HA of the Act), could not be issued, while a provisional assessment was pending finalisation. However, in Duncans Agro industries v. Union of India, 1989 (39) ELT 511, another Division Bench held to the contrary. Fortuitously, the evidently disparate views stand reconciled by virtue of a judgment of the Supreme Court in the writ petitioner's own case, i. e. , Commissioner of Central Excise, Mumbai v. ITC Ltd. , 2006 (203) ELT 532.

(3.) THE issue in principle is no longer res integra. A show cause notice under Section HA of the Act cannot be issued during the pendency of assessment proceedings. This is quite clear from the poser of the Supreme court in the very opening paragraph of its judgment in the case of ITC Ltd (supra), and the observations made in paragraph 17 thereof. Being relevant, the same are extracted hereinbelow: "completion of an assessment proceedings whether is a sine qua non for issuance of notice under Section HA of the Central Excise Act, 1944 (for short 'the Act') is the question involved in this appeal which arises of a judgment and order dated 18. 06. 2004 as modified by an order dated 02. 07. 2004. . . . . . . 17. Section HA of the Act provides for a penal provision. Before a penalty can be levied, the procedures laid down therein must be complied with. For construction of a penal provision, it is trite, the golden rule of literal interpretation should be applied. The difficulty which may be faced by the Revenue is of no consequence. The power under Section HA of the Act can be invoked only when a duty has not been levied or paid or has been short-levied or short-paid. Such a proceeding can be initiated within six months from the relevant date which in terms of sub-section (3) (ii) (b) of Section 11a of the Act (which is applicable in the instant case)in a case where duty of excise is provisionally assessed under the Act or the Rules made thereunder, the date of adjustment of duty after the final assessment thereof. A proceeding under Section 11a of the Act cannot, therefore, be initiated without completing the assessment proceedings. " 3. 1 Therefore, the first issue raised in the order of reference need not be answered by us except to reiterate the applicability of the principle enunciated in the case of ITC Ltd (supra) to the facts of the present case. 3. 2 In so far as the second issue is concerned, it is pertinent to note that the Supreme Court in ITC Ltd (supra) has taken a note of its own judgment in the case of Serai Kella (supra), and held that the principle enunciated by them is in consonance with the ratio of Serai Kella (supra ). We have dealt with this aspect, in greater detail, in the latter part of our judgment.