1999 (5) TMI 132 - AT - Central Excise

Tribunal Rules in Favor of Appellant, Quashes Show Cause Notice

The Tribunal quashed the show cause notice and set aside the impugned order, ruling in favor of the appellant. The decision was based on jurisdictional ... Demand and penalty - Show cause notice - Jurisdiction Issues:1. Jurisdiction of issuing show cause notice by the Superintendent instead of the Additional Commissioner.2. Interpretation of the show cause notice mentioning 'clandestine removal' and invoking Section 11A.3. Competence of the Superintendent to issue the show cause notice under Rule 9(2).4. Applicability of circular No. 8/87-CX.I and its binding nature on the authorities.5. Comparison of judgments in the cases of Pratap Rajasthan Copper Foils, Sarveshwari Gases (P) Ltd., Safari Industries, and ONGC.6. Decision on quashing the show cause notice and setting aside the impugned order.Analysis:1. The main issue in this case revolves around the jurisdiction of the Superintendent to issue a show cause notice instead of the Additional Commissioner. The appellant argued that the show cause notice alleging clandestine removal should have been issued by the Commissioner, as per Section 11A, and not by the Superintendent. The appellant relied on previous Tribunal judgments to support this argument.2. The interpretation of the show cause notice mentioning 'clandestine removal' and invoking Section 11A was also a significant point of contention. The appellant argued that the use of the term 'clandestine removal' implies intent to evade payment of duty, requiring the notice to be issued by the Commissioner. The appellant further referenced a circular stating that such notices alleging fraud or collusion should be issued by the Commissioner.3. Another issue raised was the competence of the Superintendent to issue the show cause notice under Rule 9(2). The respondent contended that the notice was valid under Rule 9(2) and could be issued by any Central Excise officer. However, the appellant argued that Section 11A was invoked in the notice, indicating the need for Commissioner-level authority.4. The appellant also cited circular No. 8/87-CX.I, arguing its binding nature on the authorities and supporting the argument that the notice should have been issued by the Commissioner. The appellant relied on a Supreme Court judgment to emphasize the importance of following such circulars as contemporaneous explanations of the law.5. Comparisons were drawn between various judgments, including those in the cases of Pratap Rajasthan Copper Foils, Sarveshwari Gases (P) Ltd., Safari Industries, and ONGC. These comparisons aimed to establish precedents regarding the issuance of show cause notices and the authority responsible for such actions.6. Ultimately, the Tribunal decided to quash the show cause notice and set aside the impugned order. The decision was based on the interpretation of the show cause notice, the jurisdictional issues, and the precedents cited during the arguments. The appellant's request for a refund of the deposited amount was also addressed in the final decision.