COMMISSIONER OF CEN. EXCISE Vs. RELIANCE INDUSTRIES LTD

JUDGEMENT

(1.) THE brief facts are that the proceedings were initiated against the respondents alleging that they have cleared polycondensation waste upto spinnerate stage i.e. undrawn waste in lump form during the period November, 1985 to April, 1986 without payment of duty as the said lump waste is classifiable under T. I. 15A OF THE OLD Central Excise Tariff Act. It was further alleged that they have manipulated the account of polyester waste and they have not shown the lump waste and POY waste arising from the spinnerate stage onwards separately and they have cleared the lump waste for recovering dimethyl terephthalate as per notification No. 168/76 -CE under Chapter X procedure. Since this exemption has been given for the waste of polyester fibre and yarn and as the entire quantity of waste is not covered as per the description of the said notification, the lump waste was held to be dutiable and proceedings were taken for recovery thereof. Show cause notice was issued on 21.5.1986 for recovery of an amount of Rs. 3,41,647.34. The show cause notice alleged that the; lump waste was dutiable under T. I. 15A of CETA. The jurisdictional Asstt. Commissioner of Central Excise, Panvel I Division confirmed the demand. An appeal was preferred against the Asstt. Commissioner's order. The Commissioner of Central Excise (Appeals). Mumbai passed the impugned order thereon. The Commissioner (Appeals) observed that the show cause notice has been issued by the Supdt. of Central Excise and held that where the show cause notice is issued invoking the proviso to Section 11A of the Central Excises and Salt Act, the notice has to be issued mandatorily by the Collector. It was held by the Commissioner (Appeals) that this is so even if the period of demand is within the normal period of six months and not the extended period. Therefore, the Commissioner (Appeals) held that the show cause notice issued by the Supdt. is incompetent and without jurisdiction. The appeal was allowed on this ground of jurisdiction. The present appeal by the Commissioner of Central Excise, Mumbai III has been preferred against this order.

(2.) SHRI A.R.S. Kumar the Id. DR. for the appellant Commissioner contended that the show cause notice issued by the Supdt. is well within six months period and he drew attention to the notice which is on record and pointed out that the ingredients of the proviso to Section 11A like suppression of facts, collusion, mis -statement etc. are not at all mentioned in the notice. Therefore, there is no infirmity. The Id. DR. cited and relied upon the Supreme Court judgment in the case of CCE. Baroda v. Safari Industries (India) Ltd. 1996 (84) ELT (SC), wherein the Supreme Court has held that show cause notice issued by the: Supdt. under Rule 9(2) read with Section 11A is valid for the period of six months. It was, therefore, contended by the Id. DR. that the matter should be remanded to the Commissioner (Appeals) for decision on merits.

(3.) SHRI Rohan Shah, the Id. counsel for the respondents contended that the show cause notice in this case has invoked the proviso to Section 11A of the Central Excises and Salt Act and once that is done, the notice has necessarily to be issued by the Commissioner and the Supdt. has no jurisdiction to issue such notice. The Id. counsel relied upon in this regard the judgment of the Tribunal in the case of Alcobex Metals (P) Ltd. v. Collector of Central Excise . That decision has followed an earlier decision of the Tribunal in the case of Pratap Rajasthan Copper Foils and Laminates Ltd. v. Collector , wherein it was held that where allegation of mis -statement, fraud, collusion, suppression etc. are made in the show cause notice, only Collector is empowered to issue such notice, even if the demand is limited to six months under Section 11A. The Id. counsel also urged that the Supreme Court judgment in the case of Safari Industries cannot be a precedent because it was a disposal of the ease on the basis of memo of the two parties involved.