Tribunal Invalidates Show Cause Notice, Upholds Sec. 11A Interpretation, Dismisses Penalty Appeal

COLLECTOR OF C. EX. Versus HINDUSTAN TYRES (P) LTD.

COLLECTOR OF C. EX. Versus HINDUSTAN TYRES (P) LTD. - 1990 (49) E.L.T. 604 (Tribunal) Issues:
1. Validity of the show cause notice issued by the Supdt.
2. Interpretation of Sec. 11A of the Central Excises & Salt Act.
3. Application of Rule 173Q for imposition of penalty.
4. Allegation of contravention with intent to evade payment of duty.

Analysis:

1. The appeal was against the order of the Collector (Appeals) regarding a show cause notice issued to the respondents for goods cleared without payment of appropriate duty. The Collector (Appeals) allowed the appeal, stating that the demand exceeded the six-month limit and the show cause notice should have been issued by the Collector. The appellant argued that the show cause notice was valid and the respondents did not appeal the assessment made by the proper officer, making it final. The appellant relied on a High Court judgment to support their argument.

2. The Tribunal observed that the show cause notice did not propose to demand or confirm the duty but only directed the respondents regarding a penalty under Rule 173Q. Referring to Supreme Court judgments, the Tribunal held that short endorsements on RT-12 returns do not save limitation for Sec. 11A. It was concluded that no notice demanding duty had been issued by the department, as the notice did not seek to demand or confirm the duty within the specified time limit.

3. Regarding the imposition of penalty under Rule 173Q, the department argued that there was no time limit for penalty imposition, as Sec. 11A limitation only applies to demands. However, the Tribunal disagreed, stating that there was no contravention of rules with intent to evade duty. The respondents contested the short levy and no malafides were alleged. The Tribunal emphasized that malafides could only be attributed if a demand was confirmed and not paid, which was not the case here. The department's appeal was dismissed.

In conclusion, the Tribunal found the show cause notice invalid for demanding duty, upheld the interpretation of Sec. 11A, and dismissed the appeal regarding the imposition of penalty under Rule 173Q due to lack of evidence of intent to evade payment of duty by the respondents.