2002 (11) TMI 90 - SC - Central Excise

Revenue demand under Tariff Item 68 barred by limitation under Section 11A; no Rule 9B provisional classification found

SC held the Revenue's demand under Tariff Item 68 is barred by limitation. The Court found no Rule 9B order or evidence that clearances or duty payments ... Classification of the products under Tariff Item 68 - demand of the Revenue is barred by limitation - Held that:- It is clear that to establish that the clearances were made on a provisional basis, there should be first of all an order under Rule 9B of the Rules, and then material to show that the goods were cleared on the basis of said provisional basis, and payment of duty was also made on the basis of said provisional classification. These facts in the instant case are missing, therefore, in our opinion there is no material in the instant case to establish the fact that either there was a provisional classification or there was an order made under Rule 9B empowering the clearance on the basis of such provisional classification. In the absence of the same, we cannot accept the argument of the Revenue that in fact the order of the Assistant Collector dated 21-1-1976 is a provisional order based on which clearance was made by the appellants or that they paid duty on that basis. On the contrary, as held by the Judicial Member the said order of classification was a final order, therefore, the Revenue cannot contend the limitation prescribed under Section 11A does not apply. In the absence of a show cause notice it is not open to the Revenue to make a demand on the appellants even assuming that the contention of the Revenue in regard to classification as held by the Tribunal is correct. In view of our finding on this question of limitation which precludes the Revenue from making a demand on the appellants because of the bar of limitation, we think it unnecessary to go to the first question as to the correctness of the classification made by the Tribunal in the impugned order. In favour of assessee. Issues: Whether the Revenue's demand is barred by limitation for want of a show cause notice as required by law under Section 11A of the Central Excises & Salt Act, 1944.Analysis: The record shows no formal show cause notice issued in the manner and within the period required by Section 11A and Rule 10; mere correspondence, letters or parts of orders cannot substitute for the statutory notice. There is no material demonstrating that clearances were made under a provisional classification pursuant to an order under Rule 9B or that duty was paid provisionally on that basis. An interim order of the High Court staying operation of a revision order did not specifically restrain issuance of a show cause notice and thus does not avail the Revenue to extend the limitation period under the Explanation to Section 11A. Authorities recognizing that stay of collection does not excuse the requirement of notice have been applied.Conclusion: The demand is barred by limitation for want of a valid show cause notice; the appeals are allowed and the impugned orders are set aside in favour of the appellants (assessee).