PRECISION STEEL FASTENERS Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners are the manufacturers of nuts and bolts which are covered by item 52 of the first schedule to the Central Excises and Salt Act, 1944. An exemption from payment of duty was granted in respect of such goods if they did not exceed the value of Rs. 5,00,000. This was done by a Notification dated 26th July, 1971. It would appear that the petitioners, cleared goods in excess of Rs. 5,00,000 but did not pay the requisite duty at the time of clearance. With the result of a notice of demand dated 29th March 1975 was issued demanding a sum of Rs. 49,852.92. This notice on the face of it is a clear notice of demand and does not even purport, either expressly or impliedly, to call upon the petitioners to show cause as to why the duty should not be recovered on one or the other grounds mentioned under Rule 10.

(2.) The petitioners made a representation dated 1st June, 1975 to the Assistant Collector of Central Excise. One of the grounds taken in the said reply is that the the said demand notice was issued without a prior show cause notice and was therefore in violation of Rule 10(1). By his letter dated 1st July 1975 the Superintendent Central Excise also treated the said notice as notice of demand and threatened recovery proceedings against the petitioners to which the petitioners replied by their letter dated 1st July 1975. The Assistant Collector by a letter dated 31st December 1975, fixed a date ands time for personal hearing. After the personal hearing he passed an order dated 23rd April 1976 rejecting the contentions of the petitioners and upholding the demand notice. The petitioners filed an appeal against the said order.

(3.) Before the appeal was heard a judgement dated 22nd June 1976 was delivered by Rege J. in Miscellaneous Petition No. 723 of 1974, New Prahlad Mills Ltd. V/s. Union of India, which concluded the contention of the petitioners, that the said demand notice cannot be treated as a show cause notice and that the demand made without issuing a show cause notice was invalid as being in violation of Rule 10, in favour of the petitioner. Before the Appellate Collector, this judgement was cited and based on that it was contended that the demand made being without a show cause notice was illegal and void. The Appellate Collector of Customs summarily rejected the contention of the petitioners as per paragraphs 4 and 5 of the said order, which read as follows :