Department not entitled to collect differential duty unless show cause notice is issued under section 11 A and formalities pursuant to the issue of notice followed - Central Excise - 67/17/88-CX.2

Department not entitled to collect differential duty unless show cause notice is issued under section 11 A and formalities pursuant to the issue of notice followed F. No. 67/17/88-CX.2 Dated 18-8-1988 Government of India Ministry of Finance (Department of Revenue) New Delhi Subject: Department not entitled to collect differential duty unless show cause notice is issued under section 11 A and formalities pursuant to the issue of notice followed. In a recent judgment of the Supreme Court, Union of India Ors. v. Madhumilan Syntex Pvt. Ltd. Anr., 1988(35) ELT 349 (SC), the Supreme Court has held that unless the show cause notice was issued u/s 11 A of the Central Excises Salt Act, 1944 and the formalities pursuant to the issue of notice followed by the Department, the Department was not entitled to collect the differential duty (short levy or non-levy) due from the assessee. In that particular case, a demand notice was first issued by the Superintendent of Central Excise even when the classification which was already approved by the Assistant Collector was not changed or modified. Subsequently, the classification list was modified by the Assistant Collector and a show cause notice for the same amount as involved in the demand notice was also issued u/s 11A of the Central Excise Act. In these circumstances, the Supreme Court has held that the requirements of law have not been complied with. For details, the judgment referred to above may kindly be referred to. Accordingly, without going into the merits of the case, the Supreme Court has held that non-compliance with the provision of Section 11A would not entitle the Department for the recovery of any dues. 2. It would thus be observed that it is merely on the ground of formalities of Section 11A that the Supreme Court has held the judgment against the Department. It is possible that if the proper procedure would have been followed by the Department, the amount of revenue lost in this case could have been saved and realised. In this connection, the Board has observed that the Field Officers must taken due care of the legal formalities in the process of realisation of the dues and revenue should not suffer simply for want of fulfilment of the compliance with the law. The Board has observed that if cases are lost by the Department and the Government revenue suffers because of non-compliance of law, the concerned Collectors would be held responsible for such lapse and such cases would be dealt with seriously. 3. The above instructions may kindly be brought to the notice to all concerned under your charge for compliance and necessary action.