2017 (6) TMI 573 - HC - Central Excise

High Court dismisses Revenue's appeal on jurisdictional grounds, upholds Tribunal decision.

The Commissioner of Central Excise Versus M/s Indian Oil Corporation, Customs, Excise and Service Tax Appellate Tribunal

The High Court dismissed the Revenue's appeal, affirming that no substantial question of law arose for consideration. The Tribunal's decision to not ... Benefit of N/N. 287/1986, as amended by N/N. 8/1992 dated 01.03.1992, N/N. 120/1984, and N/N. 94/1989-CE dated 01.03.1989 - It appears that the Department, upon verification, came to a prima facie conclusion that IOCL had misclassified certain products and consequently, wrongly, availed the benefit of the 1989 Notification - whether the subject products fell in the category of 'lubricating oil/grease' or 'lubricating preparations'. Held that: - It is well settled that the issues pertaining to jurisdiction can be raised at any stage and even in collateral proceedings. The instant proceedings are the proceedings, which, in fact, emanate from the SCN issued in December 1992 - there was no reason for the Tribunal not to entertain the objection and decide the matter, accordingly, since, the very basis and the foundation of the entire proceedings initiated by the Revenue was in jeopardy. It is, in these circumstances, that the Tribunal did not proceed to adjudicate upon the merits of the matter and, in our opinion, quite correctly so, as on jurisdiction, it came to a conclusion that the SCN, based on which proceeding against IOCL had been triggered, was not viable in law. There could be no acquiescence, where, the issue involved pertains to jurisdiction. Appeal dismissed - decided against appellant. Issues Involved:1. Classification of products under the Central Excise Tax Act.2. Validity and sufficiency of the Show Cause Notice (SCN).3. Jurisdiction of the Revenue to impose duty and penalties based on the SCN.Detailed Analysis:1. Classification of Products:The first respondent, Indian Oil Corporation Limited (IOCL), is engaged in manufacturing lubricating oils. IOCL filed a classification list in 1992, claiming exemption under various notifications, including Notification No.287/1986, as amended by Notification No.8/1992, Notification No.120/1984, and Notification No.94/1989-CE dated 01.03.1989 (the 1989 Notification). The Department concluded that IOCL had misclassified certain products and wrongly availed the benefit of the 1989 Notification, leading to the issuance of a Show Cause Notice (SCN) in December 1992.Upon multiple rounds of adjudication and appeals, the Adjudicating Authority and the Commissioner had differing views on the classification of the products. Initially, the Adjudicating Authority held that the products were 'lubricating preparations' and not eligible for exemption under the 1989 Notification. However, after remands and further analysis, the Adjudicating Authority classified the products under various sub-headings and extended exemption only to the product RP 150, while denying it for the others. This classification and the associated duty demands were contested by IOCL.2. Validity and Sufficiency of the Show Cause Notice (SCN):The Tribunal found the SCN to be vague and deficient in material particulars. The SCN did not indicate the sub-headings under which the products should be classified, the period for which duty was demanded, or the amount of duty sought to be levied. These deficiencies were critical as they went to the root of the jurisdiction of the Revenue to impose any liability on IOCL. The Tribunal relied on the Supreme Court judgment in Metal Forgings V. Union of India, 2002 (146) ELT 241 (SC), which emphasized the necessity of a clear and specific SCN.3. Jurisdiction of the Revenue:The Tribunal's decision to allow IOCL's appeal was based on the jurisdictional defects in the SCN. The Tribunal concluded that the SCN's deficiencies rendered it legally untenable, thus invalidating the entire proceedings initiated by the Revenue. This conclusion was supported by the fact that IOCL had consistently raised objections to the SCN's validity from the outset, including in its reply dated 25.08.1993 and during subsequent proceedings.The High Court upheld the Tribunal's decision, agreeing that the SCN's deficiencies were fundamental and could not be overlooked. The Court emphasized that jurisdictional issues can be raised at any stage and even in collateral proceedings. The Court also rejected the Revenue's argument of acquiescence by IOCL, stating that jurisdictional defects cannot be waived or conceded.Conclusion:The High Court dismissed the Revenue's appeal, affirming that no substantial question of law arose for consideration. The Tribunal's decision to not adjudicate on the merits of the matter was deemed appropriate, given the jurisdictional invalidity of the SCN. Consequently, the appeal was dismissed with no costs.