1993 (6) TMI 87 - HC - Central Excise

Issues Involved:
1. Validity of the show cause notice issued by the Assistant Collector, Central Excise.
2. Alleged bias and pre-judgment by the Assistant Collector.
3. Adequacy of the opportunity to respond to the show cause notice.
4. Jurisdiction of the court to interfere at the show cause notice stage.
5. Whether demand and change of classification list can proceed together.
6. Validity of the existing classification list.

Issue-wise Detailed Analysis:

1. Validity of the show cause notice issued by the Assistant Collector, Central Excise:
The petitioners challenged the show cause notice dated 1-5-1992, arguing that it was essentially a final order masquerading as a show cause notice. They contended that the Assistant Collector had already concluded that the modification of the classification list was necessary and had proceeded to recover the duty, as evident from the annexed final demand. The respondents refuted these allegations, stating that the notice was in compliance with the court's order in Misc. Petition No. 512/90. The court found that the show cause notice was issued based on agreed terms from the previous order and did not constitute a final order. Therefore, the notice was deemed valid.

2. Alleged bias and pre-judgment by the Assistant Collector:
The petitioners alleged that the Assistant Collector was biased and had pre-judged the issue, as indicated by the language used in the show cause notice. They cited previous judgments, including Victory Glass Industries v. Collector of Central Excise and Raghunandan Jalan v. Collector of Central Excise, to support their claim. However, the court observed that the language of the notice, which stated that the yarn "does not appear to be correct" and "it appears that the yarn manufactured by the noticee contains synthetic textile material," did not indicate bias or pre-judgment. The court concluded that the show cause notice did not demonstrate bias or prejudice from the Assistant Collector.

3. Adequacy of the opportunity to respond to the show cause notice:
The petitioners argued that they were not given adequate time to respond to the show cause notice, as only 15 days were provided instead of the one month stipulated by the Government of India instructions. They also contended that there was no provision for recording relevant evidence in the schedule of hearing. The court did not specifically address this issue in detail but implied that the procedural aspects would be handled by the Excise Authorities during the adjudication process.

4. Jurisdiction of the court to interfere at the show cause notice stage:
The court discussed the principles of interference at the show cause notice stage, citing various judgments, including Hindustan Electro Graphites Ltd. v. Union of India and Universal Cables Ltd. v. Union of India. It reiterated that interference is warranted only if the notice is without jurisdiction or demonstrates clear bias or prejudice. In this case, the court found no such grounds for interference and dismissed the petition as premature.

5. Whether demand and change of classification list can proceed together:
The petitioners contended that the demand and change of classification list should be independent actions, citing Hindustan Electro Graphites Ltd. and Asia Tea Enterprises v. Asstt. Collector of Central Excise. The court chose not to address this issue directly, leaving it to the Excise Authorities to decide in the normal course of adjudication. The court emphasized that the show cause notice was issued based on agreed terms from the previous order, and the petitioners could raise their contentions before the Excise Authorities.

6. Validity of the existing classification list:
The petitioners argued that the existing classification list should remain intact. The court refrained from making any observations on this point, noting that the previous order in Misc. Petition No. 512/90 had already addressed the validity of the classification list up to a certain date. The petitioners were advised to make their submissions before the Central Excise Authorities.

Conclusion:
The petition was dismissed with costs, and the court directed the petitioners to pay Rs. 5000/- to the respondents. The court expressed hope that the adjudication proceedings would be completed within a reasonable time, as the previous time limit had become infructuous due to the stay order issued during the vacation.

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