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of <h1>Supreme Court reinstates Appellate Collector's ruling, grants exemption to appellant emphasizing procedural fairness</h1> <h3>POULOSE AND MATHEN Versus COLLECTOR OF CENTRAL EXCISE</h3> The Supreme Court set aside the Appellate Tribunal's decision and reinstated the Appellate Collector's ruling, granting the exemption to the appellant. ... Whether there was no proper notice and opportunity to explain given to assessee? Whether the Appellate Tribunal was totally in error in discarding the Trade Notice No. 220/81 based on Tariff Advice No. 83/81, dated 24-8-1981 of the Central Board of Excise and Customs which was communicated to the appellants for information? Held that:-The show cause notice dated 20-11-1978 was issued for the period from March 1977 to September, 1978. But the order of the Assistant Collector given effect to by the proceedings of the Superintendent dated 4-5-1983 has levied the duty for a longer period, from March 1977 to February, 1982. The show cause notice served for a shorter period cannot be relied on for the purpose of levy for a much longer period. We should say that the appellant was not served with a proper notice before saddling the liability for a period beyond September, 1978. This is unfair and vitiates the proceedings. Whether the later tariff advice No. 6/85 adverted to all relevant aspects or deviated from 1981 tariff advice and if so, to what extent, are not detailedly stated in the order of the Tribunal. The Appellate Tribunal casually referred to a later tariff advice No. 6/85, without fully and effectively appreciating its contents, its scope and the impact of the earlier tariff advice No. 83/81. The above aspect is vital and fundamental to the basis of which the Appellate Collector granted relief to the appellant. We are of the view that the Appellate Tribunal has failed to consider the matter according to law and the order appealed against should be set aside and we hereby do so. Appeal allowed and restore the order of the Appellate Collector of Central Excise. Issues Involved:1. Entitlement to exemption under Notification No. 7/65-C.E.2. Validity of show cause notice period.3. Applicability of Trade Notice No. 220/81 and Tariff Advice No. 83/81.Issue-wise Detailed Analysis:1. Entitlement to exemption under Notification No. 7/65-C.E.:The appellant, a small-scale industry manufacturing liquid Carbon Dioxide (CO2), was initially granted an L 6 license under Notification No. 7/65, which exempted carbon dioxide used for any 'industrial purpose' from excise duty. The Assistant Collector later revoked this benefit, asserting that the appellant did not use the CO2 for any industrial purpose other than self-sale. The Appellate Collector of Central Excise overturned this decision, referencing Trade Notice No. 220/81, which indicated that impure CO2 not meeting ISI specifications should be classified under Item 68, not 14H, thus qualifying for the exemption. However, the Appellate Tribunal reversed this, arguing that the Trade Notice was issued three years after the relevant period.2. Validity of show cause notice period:The show cause notice dated 20-11-1978 covered the period from March 1977 to September 1978, but the duty demand extended up to February 1982. The Supreme Court found this to be a violation of natural justice, as the appellant was not given proper notice for the extended period. This discrepancy rendered the proceedings unfair and vitiated the demand for the extended period.3. Applicability of Trade Notice No. 220/81 and Tariff Advice No. 83/81:The Appellate Collector relied on Trade Notice No. 220/81, which stated that CO2 not conforming to ISI specifications should be classified under Item 68, making it eligible for the exemption. The Appellate Tribunal dismissed this, citing a later Tariff Advice No. 6/85, which purportedly classified such CO2 under Item 14H. The Supreme Court criticized the Tribunal for basing its decision on assumptions and not adequately considering the earlier Trade Notice and Tariff Advice. The Court emphasized that the earlier advice was binding and had not been rescinded, thus the appellant should benefit from the doubt.Conclusion:The Supreme Court set aside the Appellate Tribunal's order, reinstating the Appellate Collector's decision that granted the exemption to the appellant. The Court underscored the importance of adhering to procedural fairness and the binding nature of the earlier Trade Notice and Tariff Advice. The appeal was allowed, restoring the order of the Appellate Collector dated 18-6-1982, with no order as to costs.
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