ORDER
N.K. Bajpai, Member (T)
1. This is an application for stay of operation of the order dated 30-3-1990 passed by the Collector of Central Excise, New Delhi, by which he had asked the Assistant Collector of Central Excise, Division III to work out the demand of duty on a certain basis and to intimate the amount to the applicants within a fortnight and which should be paid forthwith by them. Besides, the Collector had also imposed a penalty of Rs. 50,000/- on the applicants for various contraventions alleged in the show cause notice. Among the grounds on which stay is sought are the following :-
(a) The Collector has treated the relationship between the applicants and certain independent manufacturers as of one unit employing another unit on hired labour basis; (b) The Collector has held independent manufacturers as dummies and facade to benefit the applicants to get his value of their clearances within the exemption limits available to small scale units; (c) the proceedings have been initiated as well as concluded by persons who were not entitled to do so, a show cause notice was issued by the Principal Collector who is yet to be declared as a Collector under the Central Excise law and was decided by the Collector (Judicial) who is yet to be declared as a Central Excise Officer; (d) the demand is clearly time-barred.
2. During the hearing, Shri A.K. Jain, the learned Counsel for the applicants, stated that the Principal Collector who issued the show cause notice has not been notified as Collector of Central Excise under the Central Excise Act and Rules and Collector (Judicial) who passed the adjudication order has also similarly not been authorised. He submitted a photocopy of Office Order No. 2/1990 dated 2nd January, 1990 issued by the Government of India, Ministry of Finance, (Department of Revenue) from their file No. A-22012/Collr./13/89-Ad.II. By this order of posting, Shri K.L. Verma was posted as Collector (Judicial) and is as under :-
“Consequent on his reversion from deputation as Director (Enforcement), Shri K.L. Verma, an Officer of the grade of Collector of Customs & Central Excise, is posted as Collector (Judicial) in the Delhi Central Excise Collectorate with immediate effect.”
3. Shri Jain also handed over a copy of the Corrigendum issued by the Ministry of Finance (Department of Revenue) on 23rd April, 1990 from the same file by which the words “is posted as Collector (Judicial) in the Delhi Central Excise Collectorate with immediate effect” have been replaced by the following words :-
“is posted as Collector of Central Excise against the newly created post in the Central Excise Collectorate, Delhi. He will look after the item of work as indicated in Annexure II of the Ministry of Finance (Department of Revenue) Letter F. No. A-11013/4/89-Ad. IV dated 29-9-1989.”
4. Shri Jain’s point was that the initial appointment of Shri K.L. Verma was as Collector (Judicial). But Collector (Judicial) had not been vested with the powers of Collector of Central Excise under the Central Excise Act and Rules, and this error was sought to be rectified by a subsequent corrigendum issued on 23rd April, 1990. The impugned adjudication order was passed on 30th March, 1990 at a time when Shri K.L. Verma was not vested with the powers of a Collector of Central Excise. Therefore, argued Shri Jain, the order itself was ab initio without jurisdiction and the proceedings were void.
5. The second ground on which he assailed the order was that the Collector had himself not quantified the demand in his adjudication order but had given certain directions to the Assistant Collector in the order for working out the demand. He contested the quantification of the demand by the Assistant Collector as communicated in his letter dated 21-8-1990. He explained that the specific wordings of Sub-section (2) of Section 11A make it clear that in a case covered by the proviso the Collector alone is competent to determine the amount of demand and this is not a function which he can delegate to a subordinate officer.
6. Shri Jain also pleaded financial hardship in making pre-deposit of a large sum of Rs. 12,84,437.44 as duty and Rs. 50,000/- as penalty and submitted a Balance Sheet of the appellant company indicating the position as on 31st March, 1990. Shri Jain explained that the company had shown loss of Rs. 4,68,284.00 during the year and pleaded for waiver of pre-deposit during the pendency of the appeal.
7. Shri M.S. Arora, the learned Departmental Representative, handed over copies of the following Office Orders issued by the Government of India, Ministry of Finance (Department of Revenue), about the appointment of Shri Tarun Roy as Collector of Central Excise, Delhi and Principal Collector North Zone :-
(a) Office Order No. 8/88 dated 29th April, 1988 about the posting of Shri Tarun Roy as Collector of Central Excise, Delhi in the grade of Collector of Customs & Central Excise. (b) Office Order No. 128/88 dated 14th September, 1988 about the promotion, posting and transfer of Shri Tarun Roy as Collector of Central Excise, Delhi and Principal Collector, North Zone.
8. Shri Arora explained that by the Order dated 29th April, 1988, Shri Tarun Roy was posted as Collector of Central Excise, Delhi and, in that capacity, he was vested with the jurisdiction and powers of Collector, Central Excise, Delhi. Shri Arora stated that as is notified in the second Office Order, even after his promotion in the grade of Principal Collector on 14th September, 1988, Shri Tarun Roy continued to function as Collector of Central Excise, Delhi besides being Principal Collector, North Zone. Shri Arora, therefore, thought that the appointment of, and vesting of powers in, Shri Tarun Roy as Collector, Central Excise, Delhi was done correctly and his promotion as Principal Collector on 14th September, 1988 did not have the effect of disinvesting him from the powers of Collector, Central Excise, Delhi.
9. As regards the appointment of Shri K.L. Verma, the learned Departmental Representative, read out Ministry’s Office Order No. 2/1990 dated 2nd January, 1990 and stated that in the office order itself it was mentioned that Shri K.L. Verma was an officer of the grade of Collector of Customs and Central Excise and was posted in the Delhi Central Excise Collectorate. It is a different matter that initially his posting was shown as Collector (Judicial) but, by a corrigendum dated 23rd April, 1990, the position had been clarified. He, therefore, thought that posting of Shri K.L. Verma in the Delhi Central Excise Collectorate as an officer in the grade of Collector of Customs and Central Excise left no doubt that he had been posted as Collector of Central Excise Delhi. He stated that even if one objected to the addition of the appellation (Judicial) it is quite common in official designations to use the words “Assistant Collector (Preventive) or Assistant Collector (Legal)” etc. and this could not mean that such officers ceased to be Assistant Collectors or that they were not lawfully vested with the powers under the Act and the Rules. He stated that the words in the brackets were meant to differentiate one Assistant Collector from the other to avoid any confusion and this is the method which is commonly adopted for that purpose.
10. As regards the question of quantification of the demand by the Assistant Collector in pursuance of an order of the Collector, Shri Arora stated that if the appellants were aggrieved the only forum before whom they could agitate the matter was the Collector of Central Excise (Appeals) and not the Tribunal.
11. We have carefully considered the matter and the submissions made by both sides during the hearing of the stay application. It appears to us that the correct course of action would have been for the Collector himself to do the quantification of the demand. If the Collector had to get certain calculations to be worked out and required the assistance of the subordinate officers for that purpose, he could have, before passing the final order of adjudication, given a direction to the Assistant Collector to undertake the calculations etc., and place the figures before him during one of the hearings. While, therefore, there could be no difficulty in taking the assistance of such officers as was necessary, the communication of the amount of demand should have been done by the Collector himself after he had satisfied himself about the basis of the calculations.
12. On the basis of the documents placed before us by the learned Departmental Representative we are, at this stage, prima facie of the view that the appointment of both Shri Tarun Roy and Shri K.L. Verma as Collector of Central Excise, Delhi was not illegal and the vesting of powers was also correctly done.
13. We observe that the Profit & Loss Account has not been filed; nor have the appellants filed details of personal assets and liabilities.
14. Taking all aspects of the matter into consideration, all that we can say at this stage is that the applicant have a good prima facie case and we therefore, dispense with the pre-deposit of the duty amount of Rs. 12,84,437.44 and penalty of Rs. 50,000/- during the pendency of the appeal. We also direct that no coercive steps shall be taken by the authorities during the period.
15. In order to safeguard the interest of Revenue, we direct that the applicant shall not alienate his immovable or movable assets except the stock in trade without the prior permission of the Tribunal. The applicant should file complete details of all his movable and immovable assets as on 31-3-1990 duly supported by an affidavit to the effect that there are no other assets except those mentioned in the list. This should be submitted by 28th February, 1991 and the matter should be placed before the Bench for reporting compliance by 10th March, 1991.