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TMI Blog1998 (9) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... ustom House Notice Board. The ld. Counsel submits that the Applicant's factory was closed for a long time and, therefore, there was none at the factory gate to receive the notices. He submits that, however, the Applicants had made a request to the Department that all communications for further proceedings of the case may be addressed to their Advocate, Shri R.A. Yadav. The ld. Counsel submits that the Department neither followed the provisions of Section 37(E) nor did they send the order to the Counsel for the Applicants. He submitted that after a lapse of time, the Applicants got the information that an order has been passed, therefore, they obtained a copy of the order from the range Superintendent; that in these circumstances, there has been a delay in filing the appeal and prayed that the delay may be condoned. 3. Opposing the request for condonation of delay, Shri Sanjeev Srivastava, the ld. JDR, appearing for the respondent Commissioner submits that it was not the absence of the people in the factory, but it was their refusal to take delivery of the order. He submits that in case the factory was closed, since proceedings against them were pending before the Excise Autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k and then cheques were issued which were encashed from the bank and cash was taken back by M/s. JI and M/s. JS. On the basis of this information, officers of Central Excise visited the factory of the Applicants on 3-12-1992. On verification of the stock of inputs and final products, discrepancies were noticed both in raw materials as well as finished products. Incriminating documents were recovered and seized. Show cause notices were issued to the Appellants and after careful consideration the ld. Commissioner confirmed the demand of Rs. 1,05,99,381.96 as duty against M/s. JI and a demand of Rs. 1,13,05,233/- against M/s. JS. A penalty of Rs. 25.00 Lakh was imposed on M/s. JI and a penalty of Rs. 25.00 Lakh imposed on M/s. JS. Further, land, buildings, plant & machinery of M/s. JI were confiscated and were allowed to be redeemed on payment of a fine of Rs. 30.00 Lakh and land, buildings, plant and machinery of M/s. JS was also confiscated and was allowed to be redeemed on payment of a fine of Rs. 30.00 Lakh. A personal penalty of Rs. 25.00 Lakh was imposed on Shri Sudarshan Kumar and a personal penalty of Rs. 5.00 Lakh was imposed on Shri Ashwini Kumar. Being aggrieved by this ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice; that all these rules can be invoked only against a manufacturer; that since as per the Show Cause Notice itself, the Noticees did not manufacture the goods in question, they are not manufacturers; that since they are not the manufacturers, none of the above provisions applied to them; that the Show Cause Notice by itself is without jurisdiction and ultra vires of Central Excises and Salt Act, 1944 and the Rules framed thereunder; that the order-in-original passed in this case has not been confined to the issues raised in the Show Cause Notice. 11. Referring to the decision of the Hon'ble Allahabad High Court in the case of M/s. Philips India Ltd. v. Union of India and Ors. [1980 (6) E.L.T. 263], the ld. Counsel submitted that the Hon'ble Allahabad High Court held that because of the words used as Production, Manufacture and on his own account in Section 2(f), a person, though not owning a factory or not himself doing the manufacturing process, can be construed to be a manufacturer if those who own a factory, dummy or camaflouged for him or he gets the goods manufactured by them under his direction and control. But if a person simply places an order with a company for g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat a decree passed by a Court without jurisdiction is a nullity and that its invalidity can be set aside whenever and wherever it is said to be invoked or relied upon even at the stage of commission and even in (collateral) proceedings. A defect of jurisdiction, whether it is pecuniary or territorial or whether it is in respect of such matter of the action targets at the very authority of the Court, but passed in decree and such a defect cannot be cured even by consent of parties. He submitted that the Order-in-Original passed by the Ld. Commissioner in de novo adjudication is without jurisdiction and is a nullity inasmuch as the Applicants according to the allegations, are not manufacturers or engaged in the production of excisable goods. 15. Referring to the judgment of the Tribunal in the case of Natwarlal Jerthalal Solanki & Ors. [1988 (34) E.L.T. 257], the ld. Counsel submitted that this Tribunal held that it was obligatory on the part of the adjudicating authority to decide its jurisdictional question before ordering confiscation under Section 113(1). Being a jurisdictional question, it can be raised at the stage of appeal. The ld. Counsel submitted that this order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals) that the relevant yarns were classifiable under Item No. 18E of the Central Excise Tariff is upheld. His finding that appropriate duty was recoverable on the constituent yarn was clearly beyond his jurisdiction since the Show Cause Notice and the Asst. Commissioner's Order did not proceed on that basis. This part of his finding cannot be supported and is set aside'. He submitted that in this view of the decision of the Tribunal, the impugned order deserved to be set aside as in their case, the ld. Commissioner has travelled much beyond the Show cause notice which was beyond his jurisdiction. 19. The ld. Counsel also referred to the judgment of the Apex Court in AIR 1980 SC 1157, in which the Apex Court ruled that an enquiry which travels beyond the bounds of Notice is impermissible and without jurisdiction to that extent. He submits that the ld. Commissioner had travelled beyond the bounds of the Show Cause Notice and, therefore, the impugned order is without jurisdiction and must be set aside. 20. The ld. Counsel submitted that he was not going to adduce any arguments on the facts of the case or on limitation of the demand. 21. In view of the above submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a part of the judgment in Jall case spoke for the Court thus : (SCC p. 648 para 5) The above statement of law in no way supports the argument that the excise duty cannot be collected from persons who are neither producers nor manufacturers. Its incidence certainly falls directly on the production or manufacturer of goods but the method of collection will not affect the essence of the duty. 29. In A.B. Abdul Kadir v. State of Kerala, this Court restated the position thus: (SCC p. 226, para 9) Excise duty, it is now well-settled, is a tax on articles speaking, the tax is on the manufacturer or the producer, yet laws are to be found which impose a duty of excise at stages subsequent to the manufacture or production. Thus, the incidence of excise duty is directly relatable to manufacture but its collection can be deferred to a later stage as a measure of convenience or expediency." 24. On quoting the wrong rule, the ld. DR submitted that if exercise of power can be traced to the person issuing the Notice, then wrong quoting of the rule or Section does not vitiate the proceedings. In the instant case, the ld. DR submitted that the Collector was fully competent to impose penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , labour register and Central Excise records showing receipt of inputs and production of goods; that there was no production. The information also revealed that the scrap was being cleared to the Ingot manufacturers on payment of duty from credit taken on the inputs. The ingot manufacturers were actually not receiving any scrap from these units but are taking Central Excise gate passes only and availing Modvat credit. In the show cause Notice in paras 21 and 22, it has been alleged that - 21. And whereas it further appears that M/s. JI have utilised the wrongly availed credit to the tune of Rs. 1,00,33,926.26 during the period July, 1988 to December, 1992. They were having a credit balance of Rs. 5,65,455.70 as on 31-12-1992. The total credit amounting to Rs. 1,05,99,381.96 is recoverable from them under proviso to Rule 57-I(1)(i) of Central Excise Rules, 1944. 29. Further in para 22 it was stated that -'22. And whereas it appears that M/s. JS during the period July, 1988 to December, 1992 have utilised the wrongly availed credit to the tune of Rs. 96,26,129.75. They were having a credit balance of Rs. 16,79,103.25 as on 31-12-1992. The credit amounting to Rs. 1,13,05,233/- i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were manufacturers could take Modvat credit deemed or otherwise. 34. Rule 57C of the Central Excise Rules says that credit of duty cannot be allowed if final products are exempt. Thus, this Rule also makes it clear that if the final product is exempt, then no credit could be taken on the inputs. This also pre-supposes that the inputs are used in or in relation to the manufacture of the final product. Thus manufacture is implied in this rule also. 35. Rule 57D stipulates that credit of duty cannot be denied or varied in certain circumstances. This Rule also specifies that credit of duty taken on inputs which are used in or in relation to the manufacture of the final product could not be denied or varied. Thus, manufacture is implied in this case also. 36. Rule 57F provides for the manner of utilisation of the inputs and credit allowed in respect of duty paid. This Rule provides that the inputs in respect of which a credit of duty has been allowed under Rule 57A will be used in or in relation to manufacture of the final products for which such inputs have been brought into the factory. It is obvious that the inputs are used in or in relation to the manufacture of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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