ORDER
V.K. Agrawal, Member (T)
1. The issue involved in this Appeal filed by M/s. Allahabad Glass Works (P) Ltd. is whether in the year 1988, show cause notice invoking the proviso to Section 11A(1) of the Central Excise Act can be issued by the Additional Collector of Central Excise.
2. Shri B.L. Narasimhan, learned Advocate submitted that a show cause notice dated 31.8.88 has been issued to the Appellants for demanding the Central Excise duty for the period from 1983-84 to 1986-87 alleging the suppression of value by the Appellants; that during the relevant period only the Collector of Central Excise was authorized to issue a show cause notice invoking extended period of limitation; that in case of CCE, Indore v. Oil and Natural Gas Commission, 1998 (103) ELT 3 (SC), the Apex Court has held that when the show cause notice is issued within the ambit of the proviso to Section 11A(1) of the Central Excise Act, “the show cause was required to be issued by Collector of Central Excise.”
3. Countering the arguments, Shri S.M. Tata, learned Senior Departmental Representative, submitted that during the relevant period as per the provisions of Rule 2 of the Central Excise Rules, 1944, Collector includes Additional Collector, and as such the Additional Collector was competent to issue a show cause notice invoking the extended period of limitation. He, further, submitted that by virtue of provisions of Section 110 of the Finance Act, 2000, any notice issued or served on any person under the provisions of Section 11A of the Act during the period from 17.11.80 to the date on which the Finance Act, 2000 received the ascent of the President for demanding the duty shall be deemed to be valid for all purposes; that thus, even if the show cause notice has been issued by Additional Collector, it is deemed to have been issued validly and effectively for the purpose of demanding the duty. Finally, he relied upon the decision in the case of Commissioner of Customs v. Virgo Steels, wherein the Supreme Court has held that “the proper officer does not derive his power to initial proceedings for recovery of escaped duty from Section 28 of the Act. Such power is conferred on him by other provisions of the Act which mandate the proper officer to collect the duty leviable.” The Supreme Court has further held that “the charging Section which authorises the levy of customs duty is found in Section 12 of the Act.” Learned Senior Departmental Representative contended that applying the ratio of the said decision, the power of the proper officer is conferred by the charging Section; that the charging Section for levy and collection of Central Excise duty is Section 3 of the Central Excise Act and the proper officer does not draw his power to initiate proceedings for recovery of escaped duty from Section 11A of the Act; that the power to recover duty which has escaped collection is a concomitant power arising out of levy of Central Excise duty under Section 3 of the Central Excise Act.
4. In reply the learned Advocate submitted that the definition of the “Collector” at the relevant time was not given in the Central Excise Act; that the term ‘Collector’ was only defined in the Central Excise Rules, 1944 and that definition was meant only for the purpose of Central Excise Rules and therefore, the same cannot be brought into the Act. He also contended that provisions of Section 110 of the Finance Act, 2000 validated the notice issued for demanding duty under Section 11A(1) of the Act notwithstanding any approval, acceptance or assessment relating to the rate of duty on, or value of, the excisable goods by any Central Excise officer under any other provisions of the Central Excise Act or the Rules made therein; that in the present matter, the show cause notice has been issued not in respect of any approval etc. relating to the rate of duty or value but on account of charge of suppression of value by the Appellants and as such these provisions are not applicable to the present show cause notice; that if the contention of the learned Senior Departmental Representative is accepted, any show cause notice which has been issued beyond the period of five years would be valid in view of provisions of Section 110 of the Finance Act, 2000. Finally, he mentioned that the decision in the case of Virgo Steels is also not applicable as in that case the respondents had waived the requirement of show cause notice and the Tribunal had allowed the Appeal filed by them against confirmation of duty on the ground that non-issuance of show cause notice as required under Section 28 of the Act has vitiated the proceedings; that no such issue is involved in the present matter. Finally, he mentioned that as held by the Supreme Court in the case of Union of India v. Madhumillan Syntex Pvt. Ltd., , a show cause notice before demanding any Central Excise duty is a must.
5. We have considered the submissions of both the sides. During the relevant period when the show cause notice was issued, it was the requirement of the Proviso to Section 11A(1) of the Central Excise Act that the show cause notice for demanding the Central Excise duty not levied or short levied etc. by reason of fraud, collusion etc. has to be issued by Collector of Central Excise. No doubt as per Rule 2 of the Central Excise Rules, 1944 Collector includes Additional Collector but this definition was only for the Rules only. This definition cannot be brought into effect from the purpose of interpreting the term ‘Collector’ in the Central Excise Act. There was no provision in the Central Excise Act which provides that Collector also includes Additional Collector. In view of this, the show cause notice for the extended period of limitation was required to have been issued only by the Collector of Central Excise and Additional Collector does not have the jurisdiction to issue a show cause notice. This was the decision of the Supreme Court in the case of Oil and Natural Gas Commission. There is no force also in the submission of the learned Senior Departmental Representative that as the provisions of Section 110 of the Finance Act has validated all the notices issued with effect from 17.11.80 since the validation was only in respect of show cause notices demanding Central Excise duty notwithstanding any approval acceptance and/or assessment relating to the rate of duty on or value of the excisable goods by the Central Excise officer under any other provisions of the Central Excise Act or Rules. Section 110 of the Finance Act, in our view, does not validate all the notices issued under Section 11A on any count. The decision in the case of Virgo Steels also does not apply as the facts are entirely different as the issue involved therein was whether mandatory requirement of a statute regarding issue of show cause notice can be waived by the party concerned. In that context, the Apex Court has observed, after referring to various provisions of Customs Act, such as Section 12, Section 17, Section 28 and Section 142, that cumulative reading of these provisions clearly shows that jurisdiction of a proper officer to initiate proceedings which has escaped collection is not traceable to Section 28. Further, the Supreme Court in Virgo Steels case has held that the law laid down by the Supreme Court in CC, Calcutta v. Tin Plate Co. of India, is that issue of a notice under Section 28 is a mandatory requirement of that Section with which the Supreme Court was in agreement. In view of this and decision of the Supreme Court Madhumillan Syntex Pvt. Ltd. case, we hold that issue of a notice under Section 11A(1) of the Central Excise Act is a condition pre-requisite before and demand of duty etc. can be levied on an assessee. As in this case the show cause notice has been issued for the extended period of limitation by Additional Collector who was not authorized to do so, the show cause notice is without jurisdiction. Accordingly, we set aside the impugned order and allow the Appeal.