ORDER
R. Jayaraman, Member (T)
1. This is an appeal directed against the order of the Additional Collector of Central Excise & Customs, Baroda bearing No. 29/Demand/89 dated 27.6.89 confirming the demand for an amount of Rs.88,656.59 against the appellants for a period from 25.12.85 to 6.1.86 and holding that the demand issued by him for the period earlier thereof is not enforceable because the extended period of limitation invoked is not applicable.
2. Shri Willingdon Christian, the learned advocate for the appellants, took us through the show cause notice dated 25.6.86 issued by the Supdt. covering the period from 4.12.85 to 6.1.86. From this show cause notice, we observe that no allegation of suppression or fraud has been made. All the same, the show cause notice traversed beyond a normal period of six months. Next Shri Willingdon Christian took us through the show cause notice issued by the Additional Collector which is dated 29.8.88 covering the same period. In the show cause notice by the Additional Collector two aspects are noticed: (i) it alleges suppression of material facts for invoking the extended period, (ii) in para 9 of the show cause notice, it is stated that “this show cause notice is issued in place of show cause notice No. MP/SCN/PM/86 dated 25.6.86 in compliance of Hon’ble High Court of Gujarat, Ahmedabad order dated 11.2.88 passed in SCA No. 6655/87 and 3509/87 filed by GSFC, Baroda and Ors. -1988 (34) ELT 442 (Guj.)”. It is also mentioned in the show cause notice that “this notice is issued without prejudice to the decision of the Supreme Court in an appeal filed, if any, by the department against the aforesaid order dated 11.2.88 of the Hon’ble Gujarat High Court, Ahmedabad.” Thereafter Shri Willingdon Christian took us through the relevant portion of the order of the Additional Collector whereby he seeks to give lift to the show cause notice dated 25.6.86 issued by the Supdt. The relevant portion referred to by him is extracted as below:
“Show cause notice No. V26A(4)25/LBIS86 dated 29.8.88 came to be issued only on account of the orders of the Hon’ble High Court in repect of S.C.N. filed by M/s. G.S.F.C. which ruled that the show cause notice should be issued by the competent officer. Therefore, this show cause notice does not nullify the effect of the show cause notice dated 25.6.86. In other words, six months period has to be accounted immediately prior to 25.6.86. Thus the demand for the period from 4.12.85 to 24.12.85 is time barred.”
Shri Willingdon Christian, the learned advocate, referred to the judgment of the Gujarat High Court cited in the second show cause notice issued by the Additional Collector, wherein the Gujarat High Court has held that the show cause notice issued by the Supdt. for the period exceeding six months from the relevant date is illegal and in contravention of proviso to sub-sec. (1) of Section 11A of the Central Excises and Salt Act, 1944. This judgment of the Gujarat High Court has not been appealed against by the department, as per his information. The second notice has been issued only on the ground that the Gujarat High Court has held that the notice issued by the Supdt. traverse beyond a period of six months as illegal. The Additional Collector has, therefore, replaced that notice by issue of another show cause notice, wherein the allegation of suppression etc. has been made by him. In the circumstances, if the demand covered by the second show cause notice is enforceable, it can cover a period of six months from the date of the second show cause notice, namely from 29.8.88. The entire period of demand falls beyond a period of six months since the Additional Collector has come to the conclusion that there is no element of suppression or fraud. In that case, he has to only discharge the show cause notice issued by him and he cannot give life to the notice issued by the Supdt. which has already been replaced by issue of a second show cause notice by the Additional Collector. He, therefore, contended that the order passed by the Additional Collector is bad in law and is required to be set aside.
3. Heard Shri C.P. Arya, the learned SDR, for the department. He contended that the show cause notice issued by the Additional Collector is without prejudice to the decision of the Supreme Court in an appeal filed, if any by the department. Hence the view taken by the Additional Collector that the earlier show cause notice could be enforced and the subsequent show cause notice cannot be said to nullify the effect of the first show cause notice is correct. He also contended that since the earlier show cause notice issued by the Supdt. does not allege suppression or fraud but only traverses beyond a period of six months, it can be enforced for a period of six months, which the Additional Collector has done.
4 After hearing both sides and perusing the available records to which we were taken, we observe that the main issue to be decided is whether the Additional Collector is competent to adjudicate on the show cause notice issued by the Supdt. for the purpose of demanding duty in respect of a period of six months from the date of issue of the show cause notice by the Supdt. For considering this main issue the….The show cause notice issued by the Additional Collector clearly indicates that it is “in the place of the notice issued by the Supdt. dated 25.6.86 and the notice issued by the Additional Collector was in compliance of the Gujarat High Court judgment in GSFC case. According to that judgment notice issued by the Supdt. beyond a period of six months can not be acted upon since it is illegal. In view of this admitted position and also the specific mention in the show cause notice issued by the Additional Collector that it is issued” in place of earlier show cause notice, it is evident that the Additional Collector even at the time of issue of show cause notice by him, has superseded the earlier show cause notice. Hence when at the time of adjudication, he comes to a different conclusion, namely that the extended period is not applicabble and there is no element of suppression, he has to discharge the show cause notice issued by him. The notice for adjudication before him is the one which was issued by himself alleging fraud or suppression etc. invoking the extended period. Obviously and admittedly the notice issued by the Supdt. was not the one before him for adjudication. It is also not open for him to revive the show cause notice issued by the Supdt. once he has specifically stated that this show cause notice issued by himself is “in place of the show cause notice dated 25.6.86 issued by the Supdt. In this view of the matter, we accept the argument of the learned advocate Shri Willingdon Christian on this point of law and hold that the order of the Additional Collector seeking to enforce the demand limited to a period of six months from the date of issue of the earlier notice by the Supdt. which has already been replaced by another notice, is illegal and therefore not sustainable. In the result, we allow the appeal.
