Chemicals Pvt. Ltd. Vs. The Commissioner of Central Excise, New Delhi  Insc 135 (24 February 2005)
N. Variava, Dr. Ar. Lakshmanan & S. H. Kapadia
APPEAL NO. 406 OF 2004 S. N. VARIAVA, J.
Appeal No. 2350 is filed against the Judgment dated 19th July, 2001 passed by the Customs, Excise & Gold (Control)
Appellate Tribunal (for short `CEGAT') and Civil Appeal No. 406 of 2004 is
filed against the Judgment dated 25th June, 2003 passed by CEGAT. Both these Appeals can be disposed off by
this common Judgment as the parties are the same and the question involved is
stated the facts are as follows:
Appellants are engaged in manufacture of Textile Printing Adhesives falling
under Chapter Heading No. 3402 of the Central Excise Tariff Act, 1985. The
Appellants were claiming benefit of Notification No. 1 of 1993 as amended and
Notification No. 16 of 1997.
were issued to them alleging that they were not entitled to the benefit of the
Notifications as they were using the logo of "ATR" belonging to one
M/s. ATR St. Moritz A.G., Switzerland.
and penalty was demanded from them for having suppressed the facts and
non-payment of duty. The Appellants replied to the notices.
the Deputy Commissioner confirmed the demand of Rs.26,74,875.75 and imposed a
penalty of Rs. 26,00,000/-.
Appellants filed an Appeal before the Commissioner of Central Excise (Appeals).
They inter alia contended that, as suppression has been alleged, the Superintendent
who had issued the show-cause-notices was not competent to issue the
show-cause- notices and the Deputy Commissioner was not competent to
adjudicate. The Commissioner (Appeals) upheld the contention that the
show-cause-notices were wrongly issued and had been wrongly adjudicated by the
Deputy Commissioner in excess of powers vested in him by the Central Board of
Central Excise (for short `Board`). The Commissioner (Appeals) remitted the
matter back with the following directions:-
If the matter does not really merit invocation of suppression of facts, willful
misstatement, etc., the superfluous words may be got deleted from the subject
Show Cause Notices by issuing suitable corrigenda and the matter may be
re-adjudicated by the competent adjudicating authority. The SSI Notification
Nos. may also be duly amended and substituted by Notifications in force during
the periods of demand.
the charge of misstatement suppression of facts etc. is to be retained, fresh
Show Cause Notices may be issued in supersession of the impugned Show Cause
Notices in line with the instructions contained in the two circulars referred
While re-adjudicating the matter, the appellants' contention that vide their
letter dated 1.4.99, they had sent a specimen of the label to be used by them
and that this specimen shows that their own brand name was more prominently
displayed than the foreign brand name and that the price should be treated as
cum-duty price should be examined in the light of the various CEGAT decisions
available on this subject." Aggrieved by the directions given, the
Appellants filed an Appeal.
by its Order dated 19th
July, 2001 held that
the Commissioner (Appeals) should not have remitted the matter back with the
above directions and directed the Commissioner (Appeals) to decide the matter
on merits. CEGAT also held on merits that the Appellants were not entitled to
the benefits of the above mentioned Notifications as they used the brand name
of another Company on their products.
by this Order the Appellants have filed Civil Appeal No. 2350 of 2002.
stay was granted in this Appeal, therefore, the Commissioner (Appeals)
adjudicated and confirmed the demand by an Order dated 17th July, 2002. The Appellants then filed an
Appeal before CEGAT wherein the only contention taken was that the
Superintendent had no jurisdiction to issue show-cause-notices and the Deputy
Commissioner had no jurisdiction to adjudicate. CEGAT has dismissed the Appeal
by the Order dated 25th
June, 2003. The
Appellants have filed Civil Appeal No. 406 of 2004 against this Order.
must be mentioned that the only point agitated is that the Superintendent had
no jurisdiction to issue the show-cause-notices and that the Deputy
Commissioner had no jurisdiction to adjudicate.
is because in an earlier round it has already been held by CEGAT, by its order
dated 17th October, 2000 that the Appellants are not entitled to the benefit of
the Notifications. Against that Order Civil Appeal No.4050 of 2001 is pending
before this Court.
order to consider this point it is necessary to see the relevant provisions.
11A, as it stood, prior to 14th May, 1992
reads as follows:
11A. Recovery of duties not levied or not paid or short-levied or short-paid or
erroneously refunded.(1) When any duty of excise has not been levied or paid or
has been short-levied or short-paid or erroneously refunded, a Central Excise
Officer may, within six months from the relevant date, serve notice on the
person chargeable with the duty which has not been levied or paid or which has
been short-levied or short-paid or to whom the refund has erroneously been
made, requiring him to show cause why he should not pay the amount specified in
that where any duty of excise has not been levied or paid or has been
short-levied or short-paid or erroneously refunded by reason of fraud,
collusion or any willful mis-statement or suppression of facts or contravention
of any of the provisions of this Act or of the rules made thereunder with
intent to evade payment of duty, by such person or his agent, the provisions of
this sub-section shall have effect, as if, for the words "Central Excise
Officer", the words "Collector of Central Excise" and for the
words "six months" the words "five years" were substituted.
Explanation.Where the service of the notice is
stayed by an order of a court, the period of such stay shall be excluded in
computing the aforesaid period of six months or five years, as the case may be.
The Assistant Collector of Central Excise or, as the case may be, the Collector
of Central Excise shall, after considering the representation, if any, made by
the person on whom notice is served under sub-section (1), determine the amount
of duty of excise due from such person (not being in excess of the amount
specified in the notice) and thereupon such person shall pay the amount so
For the purposes of this section,--
"refund", includes rebate of duty of excise on excisable goods
exported out of India or on excisable materials used in
the manufacture of goods which are exported out of India;
"relevant date" means, --
the case of excisable goods on which duty of excise has not been levied or paid
or has been short-levied or short- paid
where under the rules made under this Act a monthly return, showing particulars
of the duty paid on the excisable goods removed during the month to which the
said return relates, is to be filed by a manufacturer or producer or a licensee
of a warehouse, as the case may be, the date on which such return is so filed;
no monthly return as aforesaid is filed, the last date on which such return is
to be filed under the said rules;
any other case, the date on which the duty is to be paid under this Act or the
rules made thereunder;
a case where duty of excise is provisionally assessed under this Act or the
rules made thereunder, the date of adjustment of duty after the final
the case of excisable goods on which duty of excise has been erroneously
refunded, the date of such refund.
under Section 11A, as it then stood, whenever it was alleged that there was
fraud, collusion, willful misstatement or suppression of facts, the show-cause-notices
could only be issued by the Collector.
Act itself laid down a requirement, it has been held, in a number of
authorities, that a show-cause notice issued and/or adjudication done by an
officer below the rank of a Collector would be invalid as such an officer had
effect from 14th May, 1992 Section 11A was amended and the word
"Collector" was deleted and the words "Central Excise
Officer" were incorporated. Thus, the Legislature purposely and knowingly
made a change whereby it was no longer required that where allegations of
fraud, collusion, willful misstatement or suppression of facts are made, a
Collector should issue a show-cause notice or adjudicate the same. Now a
Central Excise Officer also has the jurisdiction.
2(b) of the Act defines a "Central Excise Officer" as follows:
"Central Excise Officer" means the Chief Commissioner of Central
Excise, Commissioner of Central Excise, Commissioner of Central Excise
(Appeals), Additional Commissioner of Central Excise, Deputy Commissioner of
Central Excise, Assistant Commissioner of Central Excise or any other officer
of the Central Excise Department, or any person (including an officer of the
State Government) invested by the Central Board of Excise and Customs
constituted under the Central Boards of Revenue Act, 1963 (54 of 1963) with any
of the powers of a Central Excise Officer under this Act." Thus, even an
Additional Commissioner or an Assistant Collector or a Deputy Commissioner or
any other Officer of the Central Excise or any person invested by the Board
with the power of the Central Excise Officer would be a Central Excise Officer.
Even though the Legislature made this change, the Board issued a Circular dated
27th February 1997 which reads as follows:
am directed to say that the Board has decided to review the powers of
adjudication with the objective that cases are decided expeditiously, there is
even distribution of workload and various doubts in this regard are clarified.
this connection, the following facts and legal position has been taken into
virtue of Clause (a) of Section 33 of Central Excise Act, 1944, Commissioners
can adjudicate the cases of confiscation and penalty without limit. This power
has been delegated to Deputy Commissioners by CBR Notification No.12-C.Ex.,
dated 17th May, 1947, to Assistant Commissioners of
Central Excise by CBR Notification No.8-C.E., dated 2nd September, 1944 and to Superintendent of Central Excise by CBR
Notification No.93/59, dated 28th November, 1959.
So far as the confirmation of duty is concerned, it is observed that Section
11A empowers any Central Excise Officer to issue the notice and determine the
Likewise, the "proper officer" i.e. Jurisdictional Central Excise
Officer can issue notice and adjudicate the demands under Rule 9(2)/Rule
57-I/Rule 57U of Central Excise Rules, 1944.
In order to bring about uniformity and objectivity the Board issued
instructions defining powers of adjudication of specified Central Excise
Officers taking 'duty involved' as the criterion.
Those show cause notices where adjudication orders are not passed upto 28th
February, 1997, will be adjudicated as provided hereinafter :-
All cases involving fraud, collusion, any willful mis-statement, suppression of
facts, or contravention of Central Excise Act/Rules made thereunder with intent
to evade payment of duty and/or where extended period has been invoked in show
cause notices, (including Modvat cases, Rule 9(2) cases of this type) will be
adjudicated by :- (Amt. of duty involved) Commissioners - Without limit Addl.
Commissioners - Upto Rs. 10 lakhs
respect of cases which do not fall under the category (A) above, will be
adjudicated by :- (Amt. of duty involved) Commissioners - Without limit Addl.
Commissioners/ - Above Rs. 2 lakhs Dy. Commissioners and upto Rs. 10 lakhs
Assistant Commissioner - Upto Rs. 2 lakhs Notwithstanding the powers of
Assistant Commissioners to adjudicate the cases involving duty amount upto Rs.
2 lakhs only as above, all cases of determination of valuation and/or
classification other than those covered under Category (A) above, will be
adjudicated by the Assistant Commissioners without any limit as hitherto, as
also Modvat disputes, other than those at category (A) above.
Cases related to issues mentioned under first proviso to Section 35B(1) of
Central Excise Act, 1944 would be adjudicated by the Addl. Commissioners/Dy.
Commissioners without any monetary limit, as was the position under Board's
Circular No. 13/93-CX., dated 15th October, 1993.
value of goods/conveyance, plants, machinery and building etc., liable to
confiscation will not alter above powers of adjudication which will solely
depend upon the amount of duty/Modvat credit involved on the offending goods.
respect of cases covered under Category (A) of Para 3 above, the show cause notices will be issued by the same rank of
officers who will adjudicate them.
the posts of Commissioner-I and Commissioner- II (Judicial) are in existence,
the show cause notices will be issued by Commissioner-I.
respect of cases covered under Category (B) of Para 3 above, show cause notices will be issued by the Range Superintendent
where they are to be adjudicated by the Assistant Commissioner and such notices
will be issued by Assistant Commissioner when they are adjudicated by Dy.
respect of cases covered under category (C) of Para 3 above, show cause notices will be issued by Assistant Commissioner.
definition of expression "Commissioner" contained in Rule 2(ii) was
amended by Notification No. 11/92-C.E. (N.T.), dated 14-5-1992. Accordingly, an Additional Commissioner of Central
Excise is not a Commissioner for the purposes of appeal. Therefore, appeal
against the Order-in-Original passed by an Addl. Commissioner of Central Excise
shall lie to the Commissioner of Central Excise (Appeals) and not to the CEGAT.
Previous Board's Circulars relating to issue of show cause notices and their
adjudications except the Circular No. 13/93-C.X., are hereby rescinded.
immediate exercise should be undertaken thereafter to take the stock of the pendencies
as on 1st March and transfer of the relevant files and records to respective
adjudicating authorities by 15th March, 1997
under proper receipt. This re-cast figures should be reflected suitably in the
Monthly Technical Report of March, 1997 to be submitted in April, 1997.
Receipt of this Circular may please be acknowledged.
The trade and field formations may be suitably informed." By clauses 3(A)
and 5.1 of this Circular, the Board is directing that in cases of fraud,
collusion, willful misstatement or suppression of facts the notice must be
issued and adjudication must take place by the Commissioner without limit and
by the Deputy Commissioner up to a limit of Rs.10,00,000/-. Thereafter the
Board by another Circular dated 13th August, 1997 reiterated the above position.
Appellants place strong reliance upon these two Circulars and submit that by
virtue of these Circulars the Superintendent had no jurisdiction to issue the
show-cause-notices and that the Deputy Commissioner had no jurisdiction to
noted above, the Legislature has purposely omitted the word
"Collector" from the proviso to Section 11A and replaced it with the
words "Central Excise Officer". It is the Act which confers
jurisdiction on the concerned Officer/s. The Act permits any Central Excise
Officer to issue the show-cause notices even in cases where there are
allegations of fraud, collusion, willful misstatement and suppression of facts.
The question therefore is: Can the Board override the provisions of the Act by
issuing directions in the manner in which it is done and if the Board cannot do
so then what is the effect of such Circulars?
order to consider the powers of the Board one needs to see certain provisions
of the Act. Section 2(b) defines the "Central Excise Officer" and it
is mentioned therein that any Officer of the Central Excise Department or any
person who has been invested by the Board with any of the powers of the Central
Excise Officer would be a Central Excise Officer. Thus, the Board has power to
invest any Central Excise Officer or any other Officer with powers of Central
Excise Officer. By virtue of Section 37B the Board can issue orders,
instructions or directions to the Central Excise Officers and such Officers
must follow such orders, instructions or directions of the Board. However,
these directions can only be for the purpose of uniformity in the
classification of excisable goods or with respect to levy of duties of excise
on such goods. It is thus clear that the Board has no power to issue
instructions or orders contrary to the provisions of the Act or in derogation
of the provisions of the Act. The Board can only issue such direction as is
necessary for the purpose of and in furtherance of the provisions of the Act.
The instructions issued by the Board have to be within the four corners of the
Act. If, therefore, the Act vests in the Central Excise Officers jurisdiction
to issue show-cause-notices and to adjudicate, the Board has no power to cut
down that jurisdiction.
for the purposes of better administration of levy and collection of duty and
for purpose of classification of goods the Board may issue directions
allocating certain types of works to certain Officers or classes of Officers.
The Circulars relied upon are, therefore, nothing more than administrative
directions allocating various types of works to various classes of Officers.
These administrative directions cannot take away jurisdiction vested in a
Central Excise Officer under the Act. At the highest all that can be said is
Central Excise Officers, as a matter of propriety, must follow the directions
and only deal with the work which has been allotted to them by virtue of these
an Officer still issues a notice or adjudicates contrary to the Circulars it
would not be a ground for holding that he had no jurisdiction to issue the show
cause notice or to set aside the adjudication.
Tribunal has in its order dated 25th June, 2003, inter alia, held as follows:-
".....Further, at the relevant time as per the provisions of Section
11A(1) proper officer which includes Superintendent is competent to issue the
show cause notice. Board's Circular is only the administrative direction which
does not cause any prejudice to the Appellants....." In our view this is
absolutely correct. We, therefore, see no infirmity in the Judgment dated 25th June, 2003. We hold that the Superintendent
had jurisdiction to issue show-cause-notice and the Deputy Commissioner had
jurisdiction to adjudicate.
have held that the concerned Officers had jurisdiction, we see no infirmity in
the Order dated 19th
July, 2001 directing
the Commissioner (Appeals) to dispose of the Appeal.
view of the above, we see no reason to interfere. The Appeals stand dismissed.
There will be no Order as to costs.