JUDGMENT
A.K. Sikri, J.
1. The petitioners in these petitions have
challenged the demand show cause notices wherein it is
stated that the petitioners were erroneously levied
certain duties/charges and the amount was recoverable
fro the petitioners under Section 11A of the Central
Excise and Salt Act, 1944. Although the demand show
cause notices are of different dates, issue involved in
these show cause notices is same an show cause notices
are similarly worded. In these show cause notices the
petitioners are asked as to why they should not be
required to pay the amount mentioned therein. All
these petitioners are having cotton fabrication
plants/units/ By Notification dated 15th July, 1977
cotton fabrics falling under Tariff item No. 19 were
exempted fro so such of the duty as was excess if the
duty specified in the notification. It is the case of
the petitioners that some dispute about the
interpretation of this notification arose and by orders
dated 23rd May, 1981 October, 1981, the
Assistant Collector of Excise Duty held that the
exemption from duty was available not only at the stage
of processing stage but also at the stage of
manufacture. In view of these orders, the petitioners
were permitted to clear the goods after availing of 6
per cent of duty concession as per the notification
dated 15th July, 1977. Thereafter the Government took
the view as is contained in letter dated 17th July,
1984 that 6 per cent concession in duty was available
only in respect of unprocessed cotton fabrics and not
the processed powerloom cloth when it is processed by
the independent processor and for this reason the
respondents, prima facie, found that the petitioners
had paid less duty and the impugned show cause notices
were issued. The challenge to the aforesaid show
causes notices is on the ground that exemption from
duty is available not only at the processed stage but
also at the stage of manufacture. This was so held by
Assistant Collector of Central Excise by orders passed
earlier. It was not open to the respondent No. 4 to
reopen the issue which amounts to unlawful and
impermissible ‘review’ of earlier orders dated 23rd
May, 1981 and 28th October 1981.
2. The show cause notices are purportedly issued
under proviso to Section 11A. We have gone through the
show cause notices, perusal whereof shows that it is
not stated that the condition prevailing necessary for
invoking the said provision has been complied with.
The matter is covered by a decision of the Apex Court
in the case of Kaur and Singh v. Collector of Central
Excise, New Delhi reported in 1997 (94) ELT 289 wherein
it has been held that the party to whom a show cause
notice of this kind is issued must be made aware of the
allegation against it. This is a requirement of
natural justice. Unless the assessed is put to such
notice, he has not opportunity to meet the case against
him. This is all the more so when a larger period of
limitation can be invoked on a variety of grounds.
Which ground is alleged against the assessed must be
made know to him, and there is no scope for assuming
that the ground is implicit in the issuance of the show
cause notice. (See Collector of Central Excise v.
H.M.M. Limited, 1995(76) ELT 497 and Raja Bahadur
Narayan Singh Sugar Mills Limited v. Union of India,
1996 (88) ELT 24.) On the contrary the earlier orders
were passed by the authorities relying upon their own
interpretation to the Notification dated 15th July,
1977.
3. In all these cases the show cause notice were
issued much after one year of earlier assessment order
passed. Therefore, show cause notice under Sub-section
(1) of Section 11A, which has to be issued within, one
year from the relevant date, has become time barred.
As per first proviso to the aforesaid Section, a show
cause notice can be issued within five years from the
relevant date only if the duty short levied or short
paid etc. is by reason of fraud, collusion or any
willful mis-statement or suppression of facts, or
contravention of any of the provisions of the Act or of
the Rules made there under with intent to evade payment
of duty. This proviso is in the following terms:
“Provided that where any duty of excise
has not been levied or paid or has bee
short-levied or short-paid or erroneously
refunded by reason of fraud, collusion or
any willful mis-statement or suppression
of facts, or contravention of any of the
provisions of this Act or of the rules
made there under with intent to evade
payment of duty, by such person or his
agent, the provisions of this sub-section
shall have effect. [as if , for the words
{one year}, the words “five years” were
substituted:”
4. In none of the show cause notices, which are
the subject matter of the present petitions, any such
allegation of fraud, collusion etc. is imputed.
Rather, as mentioned above, the basis of show cause
notices is alleged wrong interpretation given by the
authorities to their notification dated 15th July, 1977
while passing the assessment order. This cannot be the
ground covered by the proviso.
5. Keeping in view the aforementioned
pronouncement of the Apex Court, we are of the opinion
that the impugned show cause notices cannot be
sustained. These writ petitions are allowed. The show
cause notices dated 15th July, 1977 whereby the penalty
sought to be initiated against the petitioners, is
quashed._