1992 (7) TMI 224 - AT - Central Excise

Summary

Issues Involved:
1. Validity of the fresh Show Cause Notice issued by the Collector.
2. Allegations of suppression and invocation of the extended period under Section 11A of the Central Excises and Salt Act, 1944.
3. Jurisdiction and scope of the Collector's adjudication following the remand order by the Collector (Appeals).
4. Limitation period for issuing the demand notice.

Detailed Analysis:

1. Validity of the Fresh Show Cause Notice Issued by the Collector:

The appeal challenges the issuance of a fresh Show Cause Notice dated 28-2-1991/13-3-1991 by the Collector of Central Excise, Vadodara. The appellants argued that the fresh notice was beyond the scope of the remand order by the Collector (Appeals). The Tribunal observed that the remand order only directed the Collector to decide the matter after giving the appellants an opportunity to represent their viewpoints in writing and orally. The Tribunal held that the Collector was not authorized to issue a fresh Show Cause Notice and should have adjudicated based on the existing notices. The issuance of a fresh notice was deemed unnecessary and legally unsustainable.

2. Allegations of Suppression and Invocation of the Extended Period Under Section 11A of the Central Excises and Salt Act, 1944:

The Collector invoked the extended period of five years under Section 11A(1) of the Central Excises and Salt Act, 1944, alleging suppression of facts by the appellants. The appellants contended that the department was aware of the free supply of inserts by the Railways and their inclusion in the manufactured sleepers, as evidenced by the earlier Show Cause Notices issued within six months. The Tribunal noted that the department's knowledge of the facts negated the allegations of suppression. Consequently, the invocation of the extended period was not justified.

3. Jurisdiction and Scope of the Collector's Adjudication Following the Remand Order by the Collector (Appeals):

The Tribunal emphasized that the remand order by the Collector (Appeals) did not authorize the initiation of de novo proceedings or the issuance of a fresh Show Cause Notice. The remand order directed the Collector to adjudicate based on the existing Show Cause Notices after providing the appellants an opportunity for personal hearing and written submissions. The Tribunal held that the Collector's actions exceeded the scope of the remand order, rendering the fresh Show Cause Notice and subsequent adjudication invalid.

4. Limitation Period for Issuing the Demand Notice:

The appellants argued that the demand was barred by limitation, as the department was aware of the facts within the six-month period. The Tribunal concurred, stating that the allegations of suppression were not sustainable given the department's prior knowledge. The Tribunal clarified that the extended period under Section 11A(1) could not be invoked indiscriminately and must be applied within a reasonable time after detecting suppression. The Tribunal concluded that the fresh Show Cause Notice was issued beyond the permissible period, making it legally unsustainable.

Conclusion:

The Tribunal quashed the fresh Show Cause Notice dated 28-2-1991/13-3-1991 and set aside the order of the Collector of Central Excise, Vadodara. The Tribunal held that the issuance of the fresh notice was beyond the scope of the remand order and legally unsustainable. The allegations of suppression were not justified, and the invocation of the extended period under Section 11A(1) was not applicable. The Tribunal directed that the matter be adjudicated based on the existing Show Cause Notices, in compliance with the remand order by the Collector (Appeals).