Statutory jurisdiction prevails over circulars, and mandatory penalty under Rule 96ZP leaves no equitable discretion.

Administrative circulars cannot override statutory jurisdiction conferred on a Central Excise Officer to issue show cause notices; therefore, notices issued by the Superintendent remained valid despite a circular referring such power to the Assistant Commissioner. The later Supreme Court exposition in Pahwa Chemicals was treated as controlling, and the contrary departmental view was not accepted to defeat the statutory power. On penalty, Rule 96ZP was treated as mandatory under the controlling precedents, leaving no discretion to reduce the prescribed penalty on equitable grounds such as absence of mens rea. The Tribunal's contrary approach was set aside, and the matter was remitted for fresh consideration on the remaining issues.

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Issues: (i) whether show cause notices issued by the Superintendent of Central Excise were invalid because a Board circular authorised the Assistant Commissioner to issue such notices; (ii) whether the penalty provisions under Rule 96ZP were mandatory and required reconsideration of the Tribunal's decision.

Issue (i): whether show cause notices issued by the Superintendent of Central Excise were invalid because a Board circular authorised the Assistant Commissioner to issue such notices.

Analysis: The statutory scheme vested power in a Central Excise Officer to issue notices, and Board circulars could operate only as administrative directions for uniformity and work allocation. Such circulars could not curtail jurisdiction conferred by the Act. The Supreme Court's later exposition in Pahwa Chemicals was treated as controlling, and the earlier view that departmental circulars are binding on officers could not be applied to oust statutory power.

Conclusion: The show cause notices issued by the Superintendent were valid, and the Tribunal's contrary view was reversed.

Issue (ii): whether the penalty provisions under Rule 96ZP were mandatory and required reconsideration of the Tribunal's decision.

Analysis: The assessee had admittedly short-paid duty, and the question was whether the Tribunal had properly applied the later Supreme Court authorities on mandatory penalty under the compound levy scheme. The Court relied on the principle that the penalty provision under Rule 96ZP, as interpreted in the controlling precedents, did not confer discretion to reduce the penalty on grounds such as absence of mens rea. Since the Tribunal had not examined the controversy in the correct perspective, the matter required reconsideration.

Conclusion: The penalty provision was treated as mandatory, and the matter was remitted to the Tribunal for fresh decision in the light of the controlling authorities.

Final Conclusion: The revenue's appeal succeeded on the jurisdictional issue and the Tribunal's order was set aside, but the dispute was sent back for fresh adjudication on the remaining aspects.

Ratio Decidendi: Administrative circulars cannot override statutory jurisdiction conferred on a Central Excise Officer, and a penalty provision framed as mandatory leaves no discretion to reduce the prescribed penalty on equitable considerations.

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