1970 (3) TMI 56 - SC - Central Excise

Supreme Court Upholds Demand Notice Validity

The Supreme Court confirmed the legality and procedural fairness of the demand notice and subsequent orders issued by the Central Board of Revenue and the ... Whether the inspection had been done by the Deputy Superintendent during their absence and a notice under Rule 160 had been issued without any legal authority? Held that:- As already mentioned, it is not as if the Collector merely confirmed the demand under Exhibit A in toto. On the other hand he modified it in favour of the appellant to some extent. It is such an exhaustive order passed by the Collector—Exhibit Q—that was the subject of consideration in the first instance, by the Central Board of Revenue, in Exhibit T, and later, by the Central Government, in Exhibit V. Under these circumstances, we are not inclined to accept the contention of the learned Counsel for the appellant that the orders—Exhibits T and V—require to be interfered with. The appellant had made no grievance before the Collector of Central Excise that they should be allowed to examine witnesses nor did they urge that a copy of the report of the Deputy Superintendent had not been made available to them. They did not make any request for cross-examining the Deputy Superintendent of Central Excise. In view of all these circumstances, in our opinion the High Court was justified in holding that the appellants had a proper opportunity of contesting the demand made by the department and the there had been no failure of natural justice in the proceedings conducted by the respondents. What the Collector has done in this case is to give the appellants an opportunity of satisfying, if they can, the authority concerned, that there was no justification for the issue of the two notices, Exhibits K and L under R. 223-A. The order does nothing more than this. If the appellants are able to satisfy the authority properly, the result may even be that no action will be taken under Rule 223-A. No scope for any conflict between the orders of the Collector, Exhibit Q dated March 3, 1958 and Exhibit N, dated February 6, 1958 because the two orders relate to different types of proceedings initiated against the appellants. Appeal dismissed. Issues Involved:1. Legality of the demand notice under Rule 160.2. Procedural fairness and opportunity to contest the demand.3. Validity of the orders passed by the Central Board of Revenue and the Central Government.4. Legality of the remand order under Section 35 of the Central Excises and Salt Act, 1944.5. Alleged conflict between the orders of the Collector.Detailed Analysis:1. Legality of the Demand Notice under Rule 160:The appellants challenged the demand notice issued by the Superintendent of Central Excise on October 2, 1956, under Rule 160 of the Central Excise Rules, 1944. The notice demanded payment for substituted and short tobacco. The appellants argued that the inspection leading to the notice was conducted without their presence, and the notice lacked legal authority. However, the High Court and the Supreme Court found that the notice provided full particulars of the demand and was issued without prejudice to further action under the Act. The authorities justified the demand after considering the appellants' representations and appeals.2. Procedural Fairness and Opportunity to Contest the Demand:The appellants contended that they were not given a fair opportunity to contest the demand, alleging that the inspection was done without notice, and they were not allowed to cross-examine the Deputy Superintendent or access his report. The Supreme Court noted that the appellants did not raise these grievances before the Collector of Central Excise. The High Court held that the appellants had a proper opportunity to contest the demand, and there was no failure of natural justice.3. Validity of the Orders Passed by the Central Board of Revenue and the Central Government:The appellants argued that the orders of the Central Board of Revenue and the Central Government were not 'speaking orders,' indicating a lack of application of mind. The Supreme Court rejected this contention, noting that the initial demand notice and the Collector's order were exhaustive and detailed. The subsequent orders of the Central Board of Revenue and the Central Government were based on these comprehensive documents, and there was no need for further detailed reasoning.4. Legality of the Remand Order under Section 35 of the Central Excises and Salt Act, 1944:The appellants challenged the remand order passed by the Collector of Central Excise, arguing it was illegal under the proviso to Section 35(1) of the Act, which prohibits orders in appeal from subjecting a person to greater penalties than originally adjudged. The Supreme Court found this contention baseless, clarifying that the remand order provided the appellants an opportunity to contest the notices under Rule 223-A afresh and did not inherently increase their liability.5. Alleged Conflict Between the Orders of the Collector:The appellants claimed a conflict between the Collector's orders dated March 3, 1958, and February 6, 1958. The Supreme Court dismissed this argument, stating that the orders pertained to different proceedings and there was no inconsistency between them.Conclusion:The Supreme Court dismissed the appeal, confirming the legality and procedural fairness of the demand notice and subsequent orders. The Court found no merit in the appellants' contentions regarding procedural irregularities, lack of opportunity to contest the demand, or alleged conflicts between the orders. The appeal was dismissed with costs.