1996 (3) TMI 276 - AT - Central Excise

Tribunal Remands Tax Appeal for Further Verification and Natural Justice Review

The Tribunal held that the departmental appeal was not barred by time as the order was deemed effective on a later date. Regarding the third show cause ... Appeal by Department Issues Involved:1. Preliminary objection regarding the maintainability of the departmental appeal.2. Bar of limitation in relation to the third show cause notice.3. Bar of limitation in relation to the first and second show cause notices.4. Allegations of violation of principles of natural justice.5. Jurisdiction of the Collector to direct officers to quantify the demand.Detailed Analysis:1. Preliminary Objection Regarding the Maintainability of the Departmental Appeal:The assessee raised a preliminary objection that the appeal was barred by time. The Board's order under Section 35E(1) of the Central Excises and Salt Act, 1944, was challenged as being passed beyond the one-year period stipulated by Section 35E(3). The Tribunal held that the effective date of the order was 18-6-1991, when the sealed envelope containing the order was opened by the High Court, and not the original date of signing. Therefore, the Board's order dated 29-5-1992 was within the one-year period from the effective date. The Tribunal also found that the departmental appeal was filed within three months from the date of communication of the Board's order to the Commissioner (L & A), thus it was not barred by time.2. Bar of Limitation in Relation to the Third Show Cause Notice:The Department contended that the third show cause notice was within the extended period of limitation under the proviso to Section 11A of the Act since the assessments were provisional. The assessee argued that the assessments were final under the physical control procedure, and hence the notice was barred by time. The Tribunal noted that the Collector did not properly address whether the assessments were provisional or final. This issue required careful verification of records, and thus, the Tribunal remanded the matter for fresh consideration.3. Bar of Limitation in Relation to the First and Second Show Cause Notices:The assessee contended that the first and second show cause notices were barred by time as the extended period of limitation under the proviso to Section 11A was inapplicable. The Tribunal observed that the Collector did not address this issue due to the lack of a reply from the assessee. The Tribunal remanded the matter for the Collector to consider whether there was fraud, wilful mis-statement, or suppression of facts to justify the extended period of limitation.4. Allegations of Violation of Principles of Natural Justice:The assessee alleged violations of natural justice due to the denial of opportunities to cross-examine witnesses, inspect documents, and adequate hearing. The Tribunal did not delve deeply into these contentions as the matter was being remanded. However, it directed that the assessee be given a last opportunity to file replies, documents, and applications for cross-examination, and that the adjudicating authority pass a speaking order on such applications.5. Jurisdiction of the Collector to Direct Officers to Quantify the Demand:The assessee argued that it was beyond the Collector's jurisdiction to delegate the quantification of the demand to officers of the two Collectorates. The Tribunal agreed, stating that the adjudicating authority must quantify the demand itself, though it could take assistance from other officers for calculations.Conclusion:The impugned order was set aside, and the proceedings arising from the three show cause notices were remanded to the adjudicating authority for fresh disposal in accordance with the law and the Tribunal's observations and directions. The appeals were allowed as indicated.