TMI Blog1986 (12) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... been removed in contravention of the Central Excise Rules and by evading duty amounting to Rs. 10,90,67,625.00. Charge (ii) in the show cause notice relates to the allegation that M/s. Reliance Industries Ltd. have manipulated the account of Polyester waste during the period October 1982 to December 1983 to the tune of 1630 Metric Tonnes instead of showing Polyester Yarn of the same weight and it has been alleged that the aforesaid quantity of yarn has been removed without payment of duty amounting to Rs. 13,65,12,500.00 in contravention of the Central Excise Rules. M/s. Reliance Industries Ltd. in the letter dated, 11-2-1986 addressed to the Collector contended that these two charges could not be framed without invoking Rule 173E and determining the normal production of their factory. In this letter they further submitted that the quantum of duty demanded was enormously large and since the basis of the charge was not maintainable under the Act or the Rules, paragraphs 1 and 2 the show cause notice be first determined on the basis of preliminary submission raised by them. The Collector held a personal hearing on 11-2-1986 with reference to the request of M/s. Reliance Industries L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se notice demands for payment of Central Excise duty had been raised and penal action against M/s. Reliance Industries Ltd. had been proposed. The Collector had not adjudged any of these demands or the penal action in his aforesaid order dated, 3-3-1986 and therefore there could not be any appeal against that order. The contention of M/s. Reliance Industries Ltd. appear to be that without invoking Rule 173E of the Central Excise Rules, 1944, the Collector could not invoke the penal provisions of Rule 173Q. This aspect of the matter had not been decided by the Collector as an adjudicating authority and hence there could not be an appeal to the Tribunal against such an order of the Collector. The powers of the Collector as an adjudicating authority were different from his powers as administrative authority. Even in respect of Collector s powers as an adjudicating authority there were two views. One was that the Collector s decisions as an adjudicating authority were with reference to Section 33 of the Act and the other view was that it could cover other decisions also in the nature of adjudication orders. Shri Senthivel submitted that he would prefer the second view as such a decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd. vide Order No. 583/86/WRB, dated 15-5-1986. In the case of M/s. Natver Textile Processors Pvt. Ltd., the Gujarat High Court refused to interfere in the proceedings as the Collector had not passed a final order and M/s. Natver Textile Processors Pvt. Ltd. had rushed to the High Court before the Collector could pass an order. Similarly, in the present case, the Collector in his order, dated 3-3-1986, decided to proceed further with the hearing of the case with reference to the show cause notice and it was open to M/s. Reliance Industries Ltd. to urge whatever arguments they wanted to advance before the Collector passed the adjudication order. In the case of M/s. Natver Textile Processors Pvt. Ltd., Shri Senthivel added that the decision of the Gujarat High Court was further upheld by the Supreme Court. Shri Senthivel therefore urged that the present appeal was not maintainable and that it should be dismissed. 3. In reply to the preliminary objection of Shri Senthivel, Shri Nariman contended that the S.D.R. was a representative of the Collector. The Collector himself had informed M/s. Reliance Industries Ltd. that they could file an appeal against his order if they so desire. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, the S.D.R. could not now argue that no appeal would lie. Shri Nariman therefore requested that the S.D.R. should not be permitted to raise the preliminary objection. 4. Shri Nariman observed that the impugned order of the Collector was dated, 3-3-1986. In the concluding portion he had fixed the further hearing on 20-3-1986 at 2 p.m. However, he had reserved the right to M/s. Reliance Industries Ltd. to appeal against his order, dated 3-3-1986 and to ask for an adjournment. Accordingly in their letter, dated 14-3-1986 addressed to the Collector the solicitors of the Company requested him to postpone further hearing of the proceedings arising out of the show cause notice, dated 28-10-1985. Accordingly no action was taken by the Collector for proceeding with the hearing. The Collector had himself held that Paras (i) and (ii) of the show cause notice were maintainable and accordingly he had fixed the personal hearing in the matter. As regards the learned S.D.R. s objection that the appeal was not maintainable, Shri Nariman contended that all matters pertaining to adjudication were within the competence of the Tribunal and hence any person aggrieved by such a decision could a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llants had approached the Tribunal against this decision. Therefore, the appeal was fully maintainable. Shri Nariman added that it was not necessary for the Collector to decide the issue raised by M/s. Reliance Industries Ltd. in their letter., dated 11-2-1986 addressed to the Collector and that he could have decided the same issues later at the time of deciding the entire liability of the appellants. As regards the S.D.R. s reliance on the Tribunal s decision in the case of M/s. Motilal Co., Shri Nariman argued that this Tribunal s decision was that no appeal could lie to the Tribunal against the order of the Collector (Appeals) in terms of Section 35F rejecting the request of the appellants before him. Similarly, the Tribunal s decision in Natver Textiles and Coats (India) cases were also on different grounds and these would not help the S.D.R. in urging the preliminary contention that the present appeal cannot subsist and was not maintainable. 5. We reserved our order on the preliminary objection raised by Shri Senthivel and advised Shri Nariman to proceed with the arguments on merits of the appeal. Shri Nariman referred to the show cause notice and to allegations (i) and (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se notice is concerned, it was unsigned and it did not also explain as to who determined the norms mentioned therein. The Company started production of yarn in October, 1982 and this had been shown in para 4 of annexure I to the show cause notice. Therefore, earlier to this date no norm could be fixed under Rule 173E. However, this was necessary for preferring charge (i) in the show cause notice. As regards charge (ii) regarding the wastage in 1982 and 1983 the show cause notice alleged that the Company manufactured and removed the yarn during the period October 1982 to December 1983 on the basis of wastage accruing in 1984. In 1982 the Company was using DMT as raw material while in 1984 it was using TPA. Referring to Section 3 of Central Excises and Salt Act, 1944 Shri Nariman argued that under Section 3 a duty of excise was leviable on goods which are manufactured by an assessee. In case these have escaped assessment through suppression of production, the proper officer of Central Excise could make a best judgment assessment under Rule 173E. In the present case no evidence had been adduced in the show cause notice that M/s. Reliance Industries Ltd. produced the goods and removed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laid down that sustainability of the show cause notice was quite different from jurisdiction. He, therefore, reiterated his argument that the present appeal of M/s. Reliance Industries Ltd. was not competent as the Collector had not given any decision with reference to the show cause notice. 7. With regard to the merits of the appellant s contention Shri Senthivel argued that it was for the Collector to decide whether he should invoke Rule 173E or not. Possibly the Collector did not feel the need for invoking this rule and he had not done so. So far as the allegations were concerned, the grounds had been fully disclosed in the show cause notice. Charge (i) to the show cause notice related to production of Polyester Filament Yarn which could be produced on the formula for such production out of the quantities of raw materials used. Charge (ii) to the show cause notice related to the reported production of abnormal quantity of waste as recorded in the RG1 account of the appellants. Both these allegations had been made along with others in the show cause notice and M/s. Reliance Industries Ltd. had answered the charges in the show cause to the Collector, but the Collector had yet t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reliminary submissions taken up by the appellants at pages 2 to 5, of the Company s letter. Shri Nariman concluded that the Collector s decision was with reference to these points and hence the appeal was maintainable. 11. We have examined the submissions made on both the sides. A preliminary contention has been raised by the learned S.D.R. to the effect that the appeal of M/s Reliance Industries Ltd. is not maintainable. This has been opposed by the learned advocate of the appellants on the ground that the S.D.R. is the representative of the Collector and when the Collector in his own order granted the right of appeal to M/s Reliance Industries Ltd., it would not lie in the mouth of the S.D.R. now to say that the appeal is not maintainable. However, Shri Nariman conceded that this is an aspect which lies within the jurisdiction and discretion of the Tribunal and the Tribunal can decide this aspect on its own. We find that there is a lot of weight in the contention of Shri Nariman. When the Collector on his own has allowed the appellants to file an appeal to the Tribunal, the Collector s representative cannot say that the appeal is not maintainable and that it should be dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an adjudicating authority. 12. During the course of the hearing of the appeal, the learned advocate of the appellants accepted the fact that the Collector had not passed any order of confirming the demand of duty or ordering fine or penalty. But he contended that this was a final order of the Collector which was appealable to the Tribunal under Section 35B. This aspect of the argument has been very seriously opposed by the learned Senior Departmental Representative. He has contended that there is a great deal of difference between an appeal to the Tribunal under the Central Excises and Salt Act, and one under the common law. In the case of the former, the appeal is restricted to the four categories of cases under the provisions of Section 35B of the Central Excises and Salt Act, 1944. The learned S.D.R. has therefore contrasted the appeals under the Central Excises and Salt Act, with those under the common law. He has argued that the so-call order of the Collector is merely a record of the personal hearing granted to M/s Reliance Industries Ltd. present to the show cause notice issued to them and that too only on a limited aspect. The Collector had yet to pass an order as enjo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance Industries Ltd. The show cause notice had been issued and the merits of the explanation offered by .M/s Reliance Industries Ltd. were yet to be decided by the Collector. Therefore, the Collector s order, dated 3-3-1986 does not affect the vital right of M/s Reliance Industries Ltd. except to the extent of showing that the allegations (i) and (ii) in the show cause notice are maintainable. M/s Reliance Industries Ltd. have been left free to dispute these allegations and the dispute is yet to be decided by the Collector. Therefore, it cannot be said that the Collector s order, dated 3-3-1986 is final in the sense that it fastens any liability regarding payment of duty or fine or penalty on the appellants. Even otherwise, the concept of common law appeals cannot be imported into the Central Excises and Salt Act, 1944. As observed by the Tribunal in the case of M/s Bhushan Industrial Co. Pvt. Ltd., the right of appeal under the Central Excises and Salt Act, 1944 is very much limited. Therefore, there cannot be any appeal to the Tribunal apart from the provisions contained in Section 35B. The purported appeal of M/s Reliance Industries Ltd. cannot therefore be termed as the one e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, this order cannot be called a part adjudication order. Were it so, there would have been no doubt that such a decision would have been appealable to the Tribunal under Section 35B. We note that the learned advocate of the appellants and the S.D.R. conceded that there was no compulsion on the part of the Collector to pass the order, dated 3-3-1986. We fail to notice any provisions of the Central Excises and Salt Act, and the Central Excise Rules, 1944 which would justify such an order of the Collector. By informing M/s Reliance Industries Ltd. that they could file an appeal to the Tribunal, the Collector cannot give a right of appeal to M/s Reliance Industries Ltd. where none exists under the law. To apply the Supreme Court s observations in the case of Shah Babulal Khimji, such decisions will flood the Appellate Tribunal with appeals against all kinds of orders passed by the Collector and the Tribunal would not be able to carry out its functions properly and effectively. The questions of controversy have not been decided by the Collector and there was no reason for him to pass such an order. 15. After the hearing of the appeal was over, the advocate, of the appellants brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directed to be closed. In this view, we find that the appeal of M/s Reliance Industries Ltd. is incompetent, and we reject the same. 17. [Contra per : K. Gopal Hegde, Member (J)]. - I have carefully gone through the order proposed by brother, Shri Dilipsinhji, dated 19-11-1986. With great respect I am unable to agree with his conclusion that the appeal is not maintainable. 18. The question of maintainability was raised by Shri Senthivel, Senior Departmental Representative at the time of hearing of the stay petition ESP(BOM)332/86, filed by M/s Reliance Industries Ltd. The following observations were made by us in the order on the stay petition : We have examined the submissions made on both the sides. While urging or opposing the request both the sides have touched on the maintainability of the appeal. It is not possible for us to deal with this aspect at the present stage as an expression of any view one way or the other is liable to cause prejudice to the parties. We, therefore, scrupulously refrain from dealing with the arguments about the maintainability of the appeal. Suffice it to say that the Collector thought that the aspect of jurisdiction raised by M/s Reliance In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n order in an adjudication as it is ordinarily understood. Secondly, that the Collector s order, dated 3-3-1986 dealt with only two out of six allegations contained in the show cause notice and the Collector s order was also not final even with regard to those two allegations. Thirdly, since the Collector had posted the case to a further date with regard to the allegations contained in the show cause notice, the order, dated 3-3-1986 is an interlocutory or an interim order against which no appeal lies. Fourthly, that the order, dated 3-3-1986 was not passed by the Collector as an adjudicating authority, no appeal lies to the Tribunal under Section 35B of the Central Excises and Salt Act, 1944 (for short the Act ). 22. Shri Nariman appearing for the appellants on the other hand, also urged several arguments as to the maintainability of the appeal. He firstly contended that the impugned order, dated 3-3-1986 was passed by the Collector during the course of the adjudication. Secondly, the absence of the preamble does not alter the character or nature of order passed by the Collector. Thirdly, order passed by the Collector is not an interlocutory or an interim order, but is a final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and without payment of duty as required under Rules 173F and 173G(1) read with Rule 9(1) resulting in short payment of duty to the tune of Rs. 13,65,12,500.00." The rest of the show cause notice is not relevant for our purpose. M/s Reliance Industries Ltd. sent a reply, dated 31st December, 1985. Inter alia they contended - PRELIMINARY SUBMISSIONS : (1) It is submitted that the very basis of the main charges in the show cause notice, particularly Items (i) and (ii) therein, proceed on the assumption that there are norms of production for the unit and that these norms of production have been breached and there has been a shortfall in respect thereof. In the first place this is totally untenable in fact and in law. Rule 173E has been on the statute book for a number of years." (This rule has been extracted, but omitted by me). The norms of production have never been prescribed and at no time has any officer or official of the Excise Department even purporting to act under Rule 173E has ever purported to fix the normal quantum of production". In the absence of any fixation of the normal quantum of production, there is no warrant for the issuance of the show cause notice, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of the charge is not at all maintainable under the Act and the Rules, it is submitted that paragraphs 1 and 2 of the show cause notice be first determined on the basis of the preliminary submissions raised by us in our reply, dated 31st December, 1985. It is submitted that a great part of the hearing depending on the factual data etc. would be obviated since the factual assumptions and data will have to be established by the Department by evidence. It is submitted that the submissions made in the pages 2 to 4 of the reply, dated 31st December, 1985 being in the nature of jurisdictional points, it is not only in the interest of justice but also of convenience that these questions should be first determined." Affidavit of Shri Samir Chakravarty and Mr. v. Ananthakrishnan, both affirmed on the 10th day of February, 1986, are annexed to this Application. 25. Subsequent to this letter, on the same day, the Collector seems to have given a personal hearing to M/s Reliance Industries Ltd. and they were represented among others by Shri F.S. Nariman, Senior Advocate.Thereafter on 3-3-1986, the learned Collector passed the impugned order. In this impugned order, the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim has been made that unless in the case of a factory the normal quantum of production has been determined under Rule 173E of the Central Excise Rules, 1944, an allegation cannot be levelled that in the given period of manufacturing activity of a particular unit, any production when studied in consonance with the amount of raw materials etc. fell short of the optimum production . Thereafter the Collector referred to Rule 173E and observed now coming to the language of Rule 173E it is clear that the determination of normal production envisaged thereunder is not a mandatory provisions as far as the department is concerned. This rule follows Rule 173D under which it is incumbent upon an assessee to furnish information regarding the principle raw material and the ratio of such raw material to the finished products, when so asked for by the Department. Rule 173E does not have such a provision. It bestows upon the concerned officer the unilateral discretion to fix a normal quantum of production without holding a dialogue with the assessee. If the assessee is required to furnish such information under Rule 173D then that would form the basis of such determination under Rule 173E This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) A preliminary judgment - This kind of a judgment may take two forms - (a) where the trial Judge by an order dismisses the suit without going into the merits of the suit but only on a preliminary objection raised by the defendant or the party opposing on the ground that the suit is not maintainable. (b) Another shape which a preliminary judgment may take is that where the trial Judge passes an order after hearing the preliminary objections raised by the defendant relating to maintainability of the suit e.g. bar of jurisdiction, res-judicata, a manifest defect in the suit, absence of notice under Section 80 and the like, and these objections are decided by the trial Judge against the defendant, the suit is not terminated but continues and has to be tried on merits but the order of the trial Judge rejecting the objections doubtless adversely affects a valuable right of the defendant who, if his objections are valid, is entitled to get the suit dismissed on preliminary grounds. Thus, such an order even though it keeps the suit alive, undoubtedly decides an important aspect of the trial which affects a vital right of the defendant and must, therefore, be construed to be a judgment s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E is not mandatory before any charges such as raised in the show cause notice are made. The ruling of the Collector finally determines the preliminary issue as to the maintainability of the charges (I) and (ii) in the show cause notice. The decision of the Collector had adversely affected a valuable right of M/s Reliance Industries Ltd. If the preliminary issue raised by M/s Reliance Industries Ltd. were to be upheld, M/s Reliance Industries Ltd. would not be required to pay the Central Excise duty of over Rs. 25 crores, which according to the Department were short payment of duty. Even if the order of the Collector is characterised as interlocutory, but that interlocutory order has finally determined the issue regarding the jurisdiction or maintainability of the charges. 1, therefore, hold that the Collector s order is a preliminary judgment passed after hearing the preliminary objection raised by M/s Reliance Industries Ltd. relating to the maintainability of the charges (i) and (ii) in the show cause notice. As a matter of fact, brother Dilipsinhji who passed the stay order with whom I concurred had observed in the order suffice to say that the Collector thought that the aspect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Collector had recorded his findings on merits, then this argument is not at all available to Shri Senthivel. It is not disputed that the Collector has the power and jurisdiction to make a part adjudication If for reasons the Collector had decided on merits only two out of the six charges, it cannot be contended that that order of the Collector is not an appealable order. Question is whether the impugned order which did not finally determine the merits of the charges is not an appealable order. The request of M/s Reliance Industries Ltd. was to consider the question of maintainability of the two charges and there had been no request to consider the merits of those charges. Therefore, the argument that the order was not final because the merit of the charges have not been decided, in my view, is not a sound one. I have, in detail, discussed as to the nature and character of the order. I have already recorded a finding that the impugned order finally determined the preliminary issue raised by M/s Reliance Industries Ltd. as to the maintainability of the first two charges in the show cause notice. The fourth contention of Shri Senthivel that since the Collector had posted the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of law. They have been asked to show cause to the Collector who has to decide the allegations raised in the show cause notice and this decision has to be taken in terms of Rule 9(2) read with Section 11 A as alleged in the show cause notice so far as the demand of duty is concerned, and under Section 33 so far as the proposed action for confiscation and levy of penalty is concerned. Therefore, the salient point which calls for determination is whether the Collector has done so in his order, dated 3-3-1986 The obvious answer to this question is in the negative. Therefore, in the circumstances of the case, the Collector s order, dated 3-3-1986 is not the one passed by him as an adjudicating authority". In para 13 of his order brother Dilipsinhji has observed it is further seen that under Section 35B(a) the scope of appeal is restricted as compared to Section 35 which prescribed filing of appeal s to Collector (Appeals). Under Section 35, a person aggrieved by any decision or order passed under the Central Excises and Salt Act can appeal to the Collector. This section is wider in scope than Section 35B. The Collector s order, dated 3-3-1986 is not in terms of any of the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Board or the Collector of Central Excise, either before or after the appointed day, under Section 35A, as it stood immediately before that day. 36. It may be stated here that the appeal provisions in the Central Excises Act, Customs Act and Gold (Control) Act are identically worded. The corresponding sections of the Customs Act are Sections 128 and 129A Under the Gold (Control) Act, they are Sections 80 and 81. In the Gold (Control) Act, the words the Administrator appears in Clauses (c) and (d) of Section 81, whereas in Section 35B of the Central Excises Act and 129A of the Customs Act in Clauses (c) and (d) the words the Central Board of Excise and Customs appear. Otherwise, there is no other change in the provisions of the three Acts Excepting the above said sections, there are no other sections in all the three Acts providing for appeal. 37. Under all the three Acts appeals to the Collector (Appeals) is only from one source, namely, against the orders passed by an officer lower in rank than a Collector of Central Excise or of Customs, whereas appeals to the Appellate Tribunal are from four sources. Under all the Acts any person aggrieved by any decision or order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision . This judgment or decision must be under the Act. The judgment or decision implies adjudication of dispute by a judicial process. In the matter of adjudication the Collector exercises the power of a quasi-judicial authority and, therefore, he is required to have acted judicially and not arbitrarily or capriciously. The Bench further observed the Collector of Customs is vested with not only quasi but also administrative or executive power. Under Section 129(1)(a) appeal has been provided against the decision or order of the Collector passed in exercise of his quasi-judicial powers. Under the above provisions no appeal is provided against the order of the Collector which are passed in his administrative capacity. In other words, no appeal lies to the Tribunal against the administrative of executive action of the Collector. The administrative or executive action can in no sense be said to be judicial in nature. The judicial act must be distinct from ministerial and administrative or executive acts. If the above distinction is borne in mind it would be clear that what the Parliament intended under Section 129A(1) is to provide an appeal against the decision or order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Tribunal, brother Dilipsinhji s order gives an impression that appeal to the Tribunal lies only against the orders which are passed under Section 33 or 11A of the Act. This very question came up before this Bench in T.G. Merchant s case. Shri Jain, then S.D.R., had contended that appeal to the Appellate Tribunal lies only against the order by which the Collector adjudges confiscation or penalty. The Bench, however, rejected this contention. It is true that brother Dilipsinhji did take a view similar to the one he had taken in the case of Coats India Ltd. It has to be pointed out that the decision of the Bench in Coats India Ltd. had not been brought to the notice of the Bench in T.G. Merchant s case, even though the decision in Coats India Ltd. was earlier to T.G. Merchant s case. Since then brother Dilipsinhji had taken a view that appeal to the Tribunal would also lie against the order of the Collector passed under Section 11A also, thereby diluting his earlier decision in Coats India Ltd. I shall now consider whether the appeals against the order of the Collector are restricted only to the orders made in terms of Sections 11A and 33 of the Act. 41. The language employed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section the Collector and others who have been authorised under that section would not have the power to adjudge confiscations and penalties. Under the Act the adjudication is not limited to confiscation and penalties. We have seen the definition of adjudicating authority. We have also considered the meaning of adjudication. It means judgment or decision . A judgment or decision implies adjudication of disputes by a judicial process. The language employed in Clause (a) of Section 35A is also a decision or order passed by the Collector as an adjudicating authority. Section 33 appears in Chapter VI. The chapter heading is not adjudication. But adjudication of confiscations and penalties. Section 33 provides for one type of adjudication. Chapter VI-A deals with appeals. It is not confined to appeals against the order of confiscation and penalties. It provides appeals against any decision or order . 44. For the reasons set out above, I disagree with the view of brother Dilipsinhji that the Tribunal can entertain appeals under Section 35B only against the order made under Sections 11A and 35B of the Central Excises Act by the Central Excise Collector. 45. Shri Senthivel ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the two aspects, namely, as to the final nature of the order passed by the Collector as well as the common law concept. If the Collector had decided the merits of the allegations (i) and (ii) in the show cause notice, it would not have been open to Shri Senthivel to contend that no appeal lies against such an order because both Shri Senthivel as well as brother Dilipsinhji have expressed the view that there could be adjudication in part and if the part adjudication fastens any liability regarding the payment of duty or penalty or fine, there could be an appeal. Therefore, in my order, I have observed that the contention of Shri Senthivel amounts to begging the question. 47. The next question is whether an appeal would lie against the order passed by the Collector as an adjudicating authority, even though his order does not finally determined the merits of all or any of the allegations contained in the show cause notice. This very question was dealt with by His Lordship Mr. Justice Fazal Ali in the case of Shah Babulal Khimji I have earlier referred to that part of the judgment. His Lordship has observed that a judgment can be of three kinds : (1) a final judgment; (2) a prelimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valuable right, namely, as to the maintainability of the two allegations contained in the show cause notice has affected. The impugned order has all the trappings and characteristics of finality insofar as it relates to the maintainability of the two charges in the show cause notice. The contention raised by M/s Reliance Industries Ltd. is not a routine nature such as non-supply of relevant documents, or statement of witnesses, or not making avail of the witnesses for cross-examination or not permitting to adduce additional evidence, not summoning additional witnesses; or documents or seeking adjournment of the personal hearing, but the objection raised is of a fundamental nature which, if upheld, debars the Collector from going into the merits of the allegations. 49. It cannot be contended that an adjudicating authority has no power to decide preliminary questions. If that be so can it be contended that no appeal would lie against a decision on the preliminary issue on the ground that the Collector s order did not finally determined on merits one or all the allegations contained in the show cause notice? The above aspect can be brought home by the following illustrations : Tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f excise duty on the goods in question and then proceed to decide the rest of the issues. This appeal is disposed of accordingly. There will be no order as to costs. 51. In this appeal, it is not necessary for us to consider whether the Collector was justified or not justified in proceeding to hear the issue as a preliminary issue. What we are concerned is whether the Collector passed an order or decision on the preliminary issue which finally determined the preliminary issue. As stated earlier, the Collector accepted the contention as to the jurisdictional issues raised by M/s Reliance Industries Ltd. and he heard Shri Nariman on behalf of M/s Reliance Industries Ltd. He recorded his findings and also his ruling and in the said circumstances, the contention of Shri Senthivel that the impugned order is not appealable because the Collector had not decided the merits of the allegations contained in the show cause notice, is untenable in law. 52. I will be failing in my duty if I do not refer to the decisions cited by Shri Senthivel in support of his contention. The first decision referred to by him is the order made by this Bench in Stay Petition No. 172 of 1986 in appeal ED(BOM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enthivel is the one reported in 1984 (18) E.L.T. 538. The facts as revealed by the decision are : the appellants before the Tribunal filed an application before the Collector (Appeals) for dispensation with the requirements of pre-deposit. His request was, however, rejected by the Collector (Appeals), against which, the party preferred an appeal. The Special Bench D held that appeal was not maintainable on two grounds. Firstly, that the appeal was filed not against the order passed by the Collector (Appeals) but against a communication communicating the decision of the Collector by the Superintendent. Secondly, that the Act did not provide for an appeal against an order passed by the Collector (Appeals) under Section 35F. This decision also has no bearing on the issue involved. As has been seen earlier, under Section 35B(2) appeal is provided against the order of the Collector (Appeals) made under Section 35(a) and not orders made under any other section. It is not contended that the impugned order falls under Section 35(a). Such a contention is also not permissible because the impugned order is the one passed by the Collector and not by the Collector (Appeals). 56. The fifth d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Shri Senthivel was that the power of appeal conferred under Section 35 is wider than the power of appeal conferred under Section 35B. He had laid stress on the words any decision or order appearing in Section 35 and contrasted that with the words a decision or order appearing in Clause (a) of Section 35B(1). I have already dealt with this aspect. I have observed that there is no difference with regard to scope and ambit of the appeals provided under Sections 35 and 35B, excepting that in the case of Collector (Appeals), appeal lies from only one source, whereas in the case of Appellate Tribunal, appeal is provided against the orders of four authorities. I have further pointed out that under Section 35B an aggrieved person is entitled to file an appeal against any decision or order passed by the Collector of Central Excise as an adjudicating authority, though his power to appeal is restricted in regard to the orders passed by the authorities specified in Clauses (b) to (d) of Section 35B(1). Shri Senthivel had relied on the above decision in support of his contention that the scope and ambit of Section 35B is wider than the scope and ambit of Section 35. I have carefully gone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e two requests before the adjudicating authority, firstly, that a certified copy of the forensic laboratory regarding the key may be granted to him; secondly, that summons may be issued on M/s Godrej Boyce Manufacturing Company Private Limited, Calcutta, to send their agent to give evidence about the seized Godrej lock and its key. Both his requests were turned down by the adjudicating authority. Aggrieved by this interlocutory decision of the adjudicating authority, the petitioner preferred an appeal under Section 128 of the Customs Act as it then stood to the Central Board of Excise and Customs. But the Board returned the memo of appeal with an order, dated September 17, 1969, to the effect that no appeal lies against an interlocutory order under Section 128 of the Customs Act, 1962. Shri Naina challenged the interlocutory orders passed by the adjudicating authority as well as by the Board. Section 128 which was the subject matter of the Calcutta High Court at the relevant time, read 128. Appeals. - (1) Any person aggrieved by any decision or order passed under this Act (not being an order passed under Section 130) may, within three months from the date of the communication to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that he has no jurisdiction to proceed with the charges (i) and (ii) in the show cause notice. The request made was that he should pronounce that the said two charges are not maintainable and they are ultra vires of the Acts and the Rules. Having regard to the contentions raised before the Collector, the declaration as to jurisdiction stated in the third prayer is of the jurisdiction of the authority, which issued the show cause notice and not the Collector to enquire into the allegations contained in the show cause notice. The request made to the Collector was not to embark on an enquiry into the allegations contained in the charges (i) and (ii) of the show cause notice and not to consider their sustainability on merit. Therefore, the scope of this appeal is also limited, namely, whether the Collector was unjustified in holding that the two charges in the show cause notice are maintainable. The arguments advanced by Shri Nariman regarding the competence or maintainability of the two charges in the show cause notice and the reply of Shri Senthivel have been elaborately set out in paragraphs 5 to 10 at pages 6 to 10 of the order of brother Dilipsinhji and therefore, I do not prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce Industries Ltd. from disputing the allegations and disproving them on the basis of material in defence placed by them on record is contrary to principles of natural justice and fairplay. The onus to establish the charges is on the Department. By throwing the said onus on the appellants, the Collector had clearly disregarded the judicial pronouncements including that of the Supreme Court. 64. Shri Senthivel had urged that there is a clear distinction between the maintainability of show cause notice and the Collector s jurisdiction to hold an enquiry on the allegations in the show cause notice under Section 33 of the Act. Shri Senthivel contended that show cause notice was for suppression of production. There is no vagueness in the charges. The basis for the charges are also given in the Annexures. Shri Senthivel had further submitted that in the show cause notice, Rule 173Q was also invoked. In support of his contention that the maintainability of the show cause notice is not the same as jurisdiction of the Collector to adjudicate upon, Shri Senthivel relied on a decision of the Calcutta High Court reported in AIR 1971 Calcutta 112. 65. Let me now proceed to consider the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d may revise the norm as determined by him at any time, if after such further inquiry as he may consider necessary, he has reason to believe that any factory affecting the production of the factory, has undergone a material change; Provided that the norm as determined by the officer empowered as aforesaid shall not be revised to the disadvantage of the assessee unless such assessee has been given a reasonable opportunity of being heard." 66. Rule 173E envisages determination of normal production of the assessee s factory. In determining the normal production the authorised officer shall have to take into consideration the installed capacity of the factory, raw material utilisation, labour employed, power consumed and such other factors as he may deem appropriate. This Rule further contemplates of requiring the assessee to explain any shortfall in production during any time as compared to the norm. It empowers the officer to assess the duty to the best of his judgment, if the shortfall is not accounted to his satisfaction. But then before proceeding to pass best judgment, the officer is required to give the assessee a reasonable opportunity of being heard. Admittedly, no normal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was not contended before the Collector that he cannot enquire into the allegations contained in the charges (i) and (ii). The contention urged was that he should pronounce that those charges themselves are not maintainable. The Calcutta High Court in the above said decision has held In deciding the question of jurisdiction, the question of truth or validity of the charges and the show cause notices and the question whether the charges can be sustained are not matters relevant for consideration. The only question is whether the statute has conferred upon the Respondent No. 1 the jurisdiction to adjudicate upon the matter set out in the show cause notice. 68. As has been contended by Shri Senthivel, the appellants could dispute the allegations in the show cause notice and as a matter of fact, the appellants have vehemently denied the allegations in the show cause notice in their reply. 69. The contention of Shri Nariman that the Collector had placed the burden of disproving the allegations on the appellants does not appear to be correct. The Collector s order is not susceptible to such a construction. When the Collector has not gone into the merits of the allegation the que ..... X X X X Extracts X X X X X X X X Extracts X X X X
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