Jurisdictional defect in excise show cause notice justified waiver of pre-deposit and stay of recovery

A show cause notice issued by a Superintendent after the amended excise provision required issuance by the Collector was treated as a strong prima facie jurisdictional defect. Because the demand notice was issued by a lower authority contrary to the amended requirement, the appellants established a prima facie case for waiver of pre-deposit. Recovery of the duty and penalty was therefore stayed until disposal of the appeal, and the additional legal ground sought to be raised was permitted.

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Issues: Whether the appellants made out a prima facie case for waiver of pre-deposit and stay of recovery on the ground that the show cause notice under Section 11-A of the Central Excises & Salt Act, 1944 had been issued by the Superintendent of Central Excise after the amended provision required issue by the Collector of Central Excise.

Analysis: The demand related to the period 1981-82 and 1982-83, while the show cause notice was issued on 6-2-1986 by the Superintendent of Central Excise. The notice relied upon the proviso to sub-section (1) of Section 11-A, and the amended provision in force after 28-12-1985 required such notices to be issued only by the Collector of Central Excise. In view of the cited legal position that a notice issued by a lower authority was contrary to Section 11-A and liable to be quashed, a prima facie ground was made out.

Outcome: The condition of pre-deposit was waived and recovery of the duty and penalty was stayed till disposal of the appeal. The miscellaneous applications for adding the legal ground were also allowed.

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