ORDER
Harish Chander, Member (J)
1. M/s. Kay Bee Enterprises, New Delhi has filed the above captioned three appeals being aggrieved from the order passed by the Collector of Central Excise (Appeals) New Delhi. The Collector of Central Excise, New Delhi had dispensed all the three appeals by common order. The appellants have also filed three Stay Applications. The total duty involved in the above Stay Applications is Rs. 1,85,470.60. Shri A.M. Guha, learned Consultant who has appeared on behalf of the appellant pleaded that the applicant is a small-scale industrial unit and had applied for provisional registration with the Industries Department and the applicants were duly granted Provisional Registration vide their Provisional Certificate dated 13th July, 1987 which appears as Annexure-A with the Appeal Memo. He further relied on a Trade Notice No. 26/87 dated 28th April, 1987 of Bombay I Collector, in terms of which it was decided that Provisional Registration from the State Government’s authorities could be accepted for the purpose of exemption under the concessional rate of duty in the aforesaid certificate after proper verifications. Shri Guha also argued that the applicant had duly filed classification lists and with the classification lists, copy of the Provisional Certificate issued by the Industries Department was attached. And as such, the activity of the applicant was well within the knowledge of the Revenue authorities and the extended period of limitation cannot be invoked. He also pleaded that the Show-Cause-cum-Demand Notice was issued by the Superintendent of Central Excise which is dated 29th November, 1988 and extended period of limitation has been invoked and after the amendment of law with effect from 27th December, 1985 if at all any Show-Cause Notice is to be issued for extended period, it has to be extended by the Collector himself and the proceedings are void.
2. On financial aspect, he pleaded that the applicant’s financial position is not very sound. He has relied on the balance sheet for the year ending 31st March, 1989 where the net profit is stood at Rs. 18,201.17 and total capital of the partners is about Rs. 2,33,000.00 after adding the profits. He has pleaded for the grant of stay.
3. Shri M.S. Arora, the learned JDR who has appeared on behalf of the respondent, pleaded that before the matter can be taken up, it has to be ascertained whether the assessments were final or provisional in respect of clearances. On the point of jurisdiction, he left it to the discretion of the Bench but also stated that in case the Bench is inclined to grant stay, an early hearing may be ordered so that the Revenue authorities will be at liberty to proceed further in accordance with law.
4. We have heard both the sides and have gone through the facts and circumstances of the case. The Show-Cause-cum-Demand Notice was issued by the Superintendent of Central Excise and Hon’ble Gujarat High Court in the case of Gujarat State Fertilizer Co. Ltd. and Anr. v. Union of India and Ors. reported in 1988 (34) ELT 442, held that the Show-cause notice issued by the Superintendent is illegal where proviso to Section 11A of the Central Excises and Salt Act, 1944 is invoked. Para Numbers 3 and 4 from the said judgment are reproduced :
“Para No. 3:
Section 11A of the Act provides that when any duty of excise has not been levied or paid, a Central Excise Officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid requiring him to show cause why he should not pay the amount specified in the notice. Under this Sub-section power has been conferred on a Central Excise Officer to serve notice on the person chargeable with the duty which has not been levied or paid to show cause why he should not pay the same. The notice must be issued within six months from the relevant date, the expression, relevant date, having been defined in clause (ii) of Sub-section (3) of that section. We then come to the proviso which refers to cases of fraud, collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act or the Rules made thereunder with intent to evade payment of duty etc. Under this proviso where any duty of excise has not been levied or paid by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Act or the Rules made thereunder with intent to evade the payment of duty, the provisions of the Sub-section will have effect as if for the words ‘Central Excise Officer’, the words ‘Collector of Central Excise’ and for the words ‘six months’ the words ‘five years’ are substituted. Since the period in respect of which the duty is demanded exceeds six months, there can be no doubt that the Department proposes to invoke the proviso to Sub-section (1) of Section 11A of the Act. As pointed out above, the duty sought to be recovered is for the period from 1st January 1981 to 30th November 1986, that is, for a period exceeding six months from the relevant date. Mrs. Mehta was, therefore, unable to contend that the Department had not invoked the proviso to Sub-section (1) of the Section 11A of the Act. That being so, in view of the proviso the words ‘Collector of Central Excise’ have to be read in Sub-section (1) for the words ‘Central Excise Officer’. Once we substitute the words ‘Collector of Central Excise’ for the words ‘Central Excise Officer’ in Sub-section (1) of Section UA, it becomes obvious that the Collector of Central Excise only can issue a show cause notice if the Department seeks to invoke the proviso to Sub-section (1) of Section HA of the Act. In this view that we take, we are of the opinion that the impugned notice is illegal and in contravention of Sub-section (1) of Section HA of the Act.
Para No. 4:
In the result, this petition succeeds. The impugned notice dated 15th January 1987, Annexure X to the petition, is quashed and set aside. The rule is made absolute to the extent only. There will be no order as to costs.”
5. The Tribunal had followed this judgment in the case of Kapil Brothers v. Collector of Central Excise, Patna reported in 1988 (37) ELT 239 (Tribunal). Para Nos. 1 and 2 from the said judgment are reproduced below :
“Para No. 1:
The Appellants are required to deposit Central Excise duty of Rs. 2,75,459.52 and penalty of Rs. 20,000/-. The period covered by the demand is 1981-82 and 1982-83. The show cause notice was issued some 3 years later, on 6-2-1986, by the Superintendent of Central Excise. The show cause notice was under Section 11-A of the Central Excises & Salt Act, 1944, and it invoked the proviso to Sub-section (1) of Section 11-A which allowed the 5 years period for issue of the show cause notice where suppression of facts or fraud is alleged. After 28-12-1985, the amended Section 11-A required that such show cause notices should be issued only by the Collector of Central Excise and not by an officer lower in rank than the Collector. In a case where such a show cause notice was issued by the Superintendent of Central Excise, the Hon’ble Gujarat High Court in their judgment at 1988 (34) ELT 442 (Guj.) – Gujarat State Fertilizer Co. Ltd. and Anr. v. Union of India and Ors., held that the show cause notice was in contravention of Sub-section (1) of Section 11-A of the Act and was illegal and quashable. In view of this legal position, the appellants have a prima facie point in their favour on the legal ground.
Para No. 2 :
Accordingly, we allow the Stay Application and order waiver of the condition of pre-deposit as well as stay of recovery of the demand for duty as well as penalty till the disposal of the appeal.”
6. In view of the above discussion, we are of the view that prima facie the applicants appear to have a good case on merits. Since the matter is, sub judice, further observations by the Bench will not be proper. Accordingly, in view of the judgments of the Delhi High Court in the case of Uptron Powertronics v. Collector of Central Excise, Meenit reported in 1987 (28) ELT 61 and Jaya Shree Insulators Ltd. v. Collector of Central Excise, Calcutta reported in 1987 (28) ELT 279, we dispense with the pre-deposit of the duty amount of Rs. 1,85,470.60 and further order that during the perdency of the appeal the Revenue authorities shall not pursue the recovery proceedings.
7. During the course of arguments, Shri Arora, the Ld. JDR had made a prayer for the grant of early hearing and Shri A.M. Guha does not object to the same. We order that the appeal to be heard on merits on 12th September, 1990. It is made clear that no adjournment will be granted in any case. In the result, the above three Stay Applications are allowed. Shri Arora further made a statement across the Bar that he waives the right of filing of cross objection. And he does not propose to file any cross objection.