2012 (11) TMI 951 - HC - Central Excise

Court upholds jurisdiction of Additional Director General/Commissioner in issuing show cause notice

The court dismissed the writ petition, upholding the jurisdiction of the Additional Director General/Commissioner, Central Excise, to issue the show cause ... Jurisdiction to issue show cause notice - definition of Central Excise Officer - requirement of notification published in the Official Gazette - investing of powers by the Board - disjunctive construction of 'or' in definition clauses - scope and application of Rule 3(1) of the Central Excise Rules, 2002Jurisdiction to issue show cause notice - definition of Central Excise Officer - Additional Director General, DGCEI (Dr. Devender Singh), being specified as Commissioner of Central Excise, was a Central Excise Officer within the meaning of Section 2(b) of the Central Excise Act, 1944 and therefore competent to issue the show cause notice dated 01/10/2009 under Section 11A. - HELD THAT: - The Court construed Section 2(b) as comprising disjunctive categories: (i) specified ranks within the Central Excise Department; (ii) any other officer of the Central Excise Department; and (iii) any person invested by the Board with powers of a Central Excise Officer. The word 'or' was held to be disjunctive; the first two categories do not require prior investment by the Board. An officer holding the post/rank of Commissioner of Central Excise is by virtue of that office already empowered to exercise powers of a Central Excise Officer, and no separate Gazette notification under Rule 3(1) is necessary to enable such an officer to issue a show cause notice under Section 11A. The Court relied on statutory scheme, principles of interpretation of 'or', and precedents which recognise that persons occupying departmental ranks exercise powers qua their office without further investment.Dr. Devender Singh was a Central Excise Officer and validly issued the show cause notice.Requirement of notification published in the Official Gazette - scope and application of Rule 3(1) of the Central Excise Rules, 2002 - investing of powers by the Board - Publication of a notification in the Official Gazette under Rule 3(1) is required only when the Board invests powers in a person who is not already an officer of the Central Excise Department; it is not a precondition for officers who are already Commissioners or other departmental officers. - HELD THAT: - Rule 2(f) defines 'notification' as publication in the Official Gazette; Rule 3(1) empowers the Board to appoint, by notification, persons to be Central Excise Officers. The Court held that the Rules introduced Gazette publication for appointments where powers are being invested in persons outside the Central Excise Department (the third category in Section 2(b)). Reading Rule 3(1) to require Gazette notification for departmental officers (e.g., Commissioners) would render part of Section 2(b) redundant and produce absurd results. Accordingly, the 2002 Rules' requirement of Gazette notification supplements the Act only for appointments/investments of non-departmental persons.Gazette publication under Rule 3(1) is mandatory for Board-investments in persons not already officers of the Central Excise Department, but is not required for departmental officers exercising powers by virtue of their rank.Jurisdiction to issue show cause notice - No prior approval of the adjudicating authority was required before a Central Excise Officer (here, the Additional Director General/Commissioner) issued a show cause notice directing the assessee to appear before the designated adjudicating authority. - HELD THAT: - The impugned notice directed the assessee to show cause before the Commissioner, Central Excise, Kanpur. The Court found no statutory provision requiring prior permission of the adjudicating authority before issuance of a show cause notice by a Central Excise Officer. Once an officer is a Central Excise Officer (by office or by Board investment where applicable), Section 11A permits any Central Excise Officer to issue notices; administrative circulars do not oust the statutory competence conferred by the Act.Prior approval of the adjudicating authority was not necessary; issuance of the show cause notice without such permission did not vitiate it.Final Conclusion: The writ petition challenging the jurisdiction of the Additional Director General/Commissioner to issue the show cause notice dated 01/10/2009 is dismissed: the officer was a Central Excise Officer within Section 2(b), Gazette notification under Rule 3(1) is not required for departmental officers occupying the rank of Commissioner, and no prior approval of the adjudicating authority was necessary for issuance of the notice. Issues Involved:1. Jurisdiction of Additional Director General in issuing the show cause notice.2. Interpretation of Section 2(b) of the Central Excise Act, 1944 and Rule 3 of the Central Excise Rules, 2002.3. Requirement of notification in the Official Gazette for appointment of Central Excise Officers.4. Necessity of prior approval from the adjudicating authority before issuing the show cause notice.Issue-wise Detailed Analysis:1. Jurisdiction of Additional Director General in issuing the show cause notice:The petitioner challenged the jurisdiction of Dr. Devender Singh, Additional Director General, Directorate General of Central Excise Intelligence, in issuing the show cause notice dated 01/10/2009 under Section 11A of the Central Excise Act, 1944. The petitioner argued that Dr. Devender Singh was not a 'Central Excise Officer' as defined under Section 2(b) of the Act, 1944, and his appointment had not been notified in the Official Gazette as required by Rule 3(1) of the Central Excise Rules, 2002. The respondents contended that the Additional Director General was a Central Excise Officer and fully entitled to issue the show cause notice under Section 11A of the Act, 1944.2. Interpretation of Section 2(b) of the Central Excise Act, 1944 and Rule 3 of the Central Excise Rules, 2002:The court examined the definition of 'Central Excise Officer' under Section 2(b) of the Act, 1944, which includes three categories of officers: (i) Chief Commissioner of Central Excise, Commissioner of Central Excise, etc., (ii) any other officer of the Central Excise Department, or (iii) any person (including an officer of the State Government) invested by the Central Board of Excise and Customs with any of the powers of a Central Excise Officer under this Act. The court emphasized that the word 'or' in Section 2(b) is disjunctive, meaning that the three categories are separate and distinct. The court concluded that the appointment of officers in the first two categories does not require notification in the Official Gazette, whereas the third category does.3. Requirement of notification in the Official Gazette for appointment of Central Excise Officers:The petitioner argued that Dr. Devender Singh's appointment as a Central Excise Officer required a notification in the Official Gazette, which had not been issued. The court held that the requirement for notification in the Official Gazette applies only to the third category of officers under Section 2(b) of the Act, 1944, i.e., persons who are not already officers of the Central Excise Department. Since Dr. Devender Singh was already a Commissioner of Central Excise, his appointment did not require notification in the Official Gazette.4. Necessity of prior approval from the adjudicating authority before issuing the show cause notice:The petitioner contended that prior approval from the adjudicating authority was required before issuing the show cause notice. The court rejected this argument, stating that no provision requires such approval. The court noted that the Additional Director General, Directorate General of Central Excise Intelligence, specified as a Commissioner, Central Excise, was fully entitled to issue the show cause notice under Section 11A of the Act, 1944.Conclusion:The court dismissed the writ petition, holding that the Additional Director General/Commissioner, Central Excise had the jurisdiction to issue the show cause notice dated 01/10/2009. The court found no grounds to quash the show cause notice and upheld its validity.