ORDERS passed without authority of law arc void CENTRAL EXCISES & SALT ACT, 1944: Sections 11A, 37A(d).
ORDER
S. Kalyanam, Member (J)
1. This appeal is directed against the order of the Collector of Central Excise (Appeals), Madras, dated 24-7-T987 confirming Jhe order of the Superintendent of Central Excise (Technical), Virudhunagar, dated 9-1-1987 demanding a differential duty of Rs. 4,736.80 at Tariff rate on grounds of under-filling of matches in 200 bundles.
2. The appellant is a manufacturer of matches under two brand names, “No. 16” brand and “We Two” brand. The appellant is admittedly a middle sector unit not entitled to any concessional benefits in terms of Central Excise Notification 22/82, dated 23-2-1982. On 1-4-1986, the Central Excise Preventive Party visited the appellant’s factory at Virudhunagar and scrutinised the Central Excise documents and made physical verification of the matches and bandroles in the factory. The authorities found that the appellant had kept 200 bundles of “No. 16” brand and 500 bundles of “We Two” brand after clearance on payment of duty. The said goods were kept in the appellant’s premises, because, according to the appellant, lorry was not available for effecting clearance of the same and transporting the same outside the factory. The authorities verified the contents of the matches and found that everything was in order insofar as 500 bundles of “We Two” band were concerned. On a scrutiny of the “No. 16” brand matches, the authorities found that on an average the boxes contained only 44 sticks instead of 50 sticks. Shri Gnanamani, the Power Agent of the appellant, who was present at the time, gave a statement before the authorities that the under-filling had occurred because of the “carelessness of the box-filling workers and expressed regret for the same”. It is in these circumstances, after further investigations, the Superintendent of Central Excise (Technical) gave a show cause notice dated 2.7.1986 demanding differential duty under Rule 63 and Notification 22/82, dated 23.2.1982 and directing the appellant to show cause against imposition of penalty for the contraventions under the Act. The proceedings instituted thereafter resulted in original order of adjudication demanding the differential duty and penalty and on appeal the duty was confirmed and the penalty was dropped under the impugned order by the lower appellate authority and this appeal arises out of the said impugned order.
3. Shri Subramaniam, the learned Consultant for the appellant, submitted that the appellant admittedly being one in the middle sector is not entitled to the benefits of any concessional Notification such as Notification 22/82 referred to supra, and, therefore, reference to the same in the show cause notice and inviting action on the ground is irrelevant. The learned Consultant further submitted that reference to Rule 63 for raising a demand for differential duty is mis-conceived in law, since Rule 63 merely prescribes the number of sticks a box should contain with penal consequences on a breach thereof. It was, therefore, contended that the show cause notice itself is not legally valid and has been issued without proper application of mind vitiating the order of the original authority. It was further urged that the Superintendent has no power or jurisdiction or authority to adjudicate in respect of short levy, which would be covered by only Section 11A of the Act under which power of adjudication is vested only with the Assistant Collector or the Collector, as the case might be. The learned Consultant further contended that the appellant sought some clarification after receipt of the show cause notice such as the basis for the duty demanded and also the quantum of duty and, without the appellant being fur-nished with the relevant data, the impugned order of the original authority came to be passed. The order was, therefore, assailed as violative of the principles of natural justice.
4. The learned Consultant also further submitted that even if the boxes contained lesser number of sticks than what it should contain, that would not be a ground for fastening a duty liability or invoking the Tariff rate.
5. Shri Vadivelu, the learned D.R., contended that the demand of duty under Rule 63 or reference to the Notification No. 22/82 is not relevant and this point has also been conceded in favour of the appellant in the impugned order by the Collector (Appeals). The learned D.R. contended that the Superintendent is competent to issue the show cause notice and though the order of adjudication is signed by the Superintendent, it should be construed to be one on behalf of the Assistant Collector. The learned D.R. further submitted that breach of Rule 63 will not only entail penal consequences but also differential duty liability on the appellant, because it would pave the way for the appellant to clear the difference of quantity in matches without payment of duty.
6. I have carefully considered the submissions made before me. The non-applicability of Rule 63 or Notification 22/82 in the present case is conceded even in the impugned order in favour of the appellant. The impugned order of the original authority has been passed by the Superintendent of Central Excise (Technical). Though the Superintendent of Central Excise has issued the show cause notice and demanded differential duty by referring to breach of Rule 63 and also non-applicability of Notification 22/82, dated 23.2.1982, the substance of the show cause notice would reveal that differential duty was demanded only on the ground that consequent on the admitted under-filling of matches in each match box the appellant would be liable to pay duty under the Tariff rate and not at the rate of Rs. 3.50 per gross boxes of matches. I, therefore, do not find any merit in the submission of the learned Consultanffor the appellant that the show cause notice is vague and there was no proper application of mind. The further question that arises for my consideration is whether the impugned order of the original authority is within his power or without jurisdiction in law. The differential duty on ground of short levy is sought to be levied in terms of Section 11A of the Act, which is the only Section dealing with short levy under the Act, The learned D.R. does not dispute this legal proposition. Under Section 11 A, Sub-section (2) of the Act it is only the Assistant Collector of Central Excise or the Collector of Central Excise, as the case may be, who would be competent authorities to determine the amount of duty leviable on ground of short levy from a manufacturer. Section 33 of the Act dealing with the power of adjudication of confiscation and penalty imposes a limit on the powers of the Assistant Collector. Section 37A, Sub-clause (d) states that the Central Government may by Notification in the official gazette direct that, subject to such notification, if any, as may be specified in the notification any power exercisable by an Assistant Collector of Central Excise under the Act may be exercisable also by a gazetted officer of Central Excise empowered in this behalf by the Board. In the present case no such notification has been relied upon in the order of the original authority though a specific contention was raised on behalf of the appellant in regard to his want of competence or authority and jurisdiction to adjudicate the matter. The scope and applicability of Section 11A has also not been adverted to or considered. Therefore, with reference to the materials available on record and having regard to the wording of Section 11A of the Act, I am inclined to hold that in the absence of proof of any valid delegation of power by express notification envisaged by Section 37A(d) of the Act, referred to above, I hold that the impugned order of the original authority is without jurisdiction and incompetent. I, therefore, do not feel called upon to pronounce upon the merits of the issue otherwise.
7. The Collector of Central Excise (Appeals) has not adverted to these aspects in the impugned order. Therefore, I set aside the order of the original authority, which has merged with the order of the lower appellate authority. At this stage, the learned D.R. submitted that even if the original order of adjudication by the Superintendent of Central Excise (Technical) is without the authority of law and without jurisdiction, the show cause notice having been clearly issued in terms of Section 11A of the Act it would be open to the Assistant Collector to take up the adjudication afresh as per law. Shri Subramaniam, the learned Consultant for the appellant, intervened to submit that in such an event it is open to the appellant to put forth such legal pleas as are open to him against such adjudication. I am not inclined to express any opinion on this question at this stage as the same does not arise before me now and leave it open. In the result the impugned order is set aside.