COLLECTOR OF C EX Vs. SOUTH INDIA PLYWOOD INDUSTRIES

JUDGEMENT

(1.) THIS appeal has been filed by the Collector of Central Excise, Cochin is directed against the order of the Collector of Central Excise (Appeals), Madras dated 29th February 1988 setting aside the order of the Assistant Collector of Central Excise, Kottayam, dated 13-7-1987 levying a differential duty of Rs. 15,487.90. On 18-8-1986 the Superintendent of Central Excise, Kottayam issued a demand notice to the respondents herein demanding the duty of Rs. 15,487.89 for the period from 1-3-1986 to 31-3-1986. THIS was challenged in appeal before the Collector of Central Excise (Appeals), Madras, who by order dated 10-11-1986, remanded the matter in the following terms:

(2.) Shri K.K. Bhatia, the learned S.D.R. contended that the finding of the lower appellate authority under the inpugned order that the demand of differential duty by the Department against the respondent is time-barred, is inconsistent with his earlier finding in the order dated 10-11-1986 cited supra. The learned SDR urged that if really the demand is time-barred, there was no reason as to why the Collector (Appeals) should have held that the Assistant Collector should decide the matter after issue of the show cause notice by adhering to the principles of natural justice. The learned SDR, therefore, submitted that it is only to satisfy the principles of natural justice a show cause notice on 12-12-1986 was issued by the Superintendent of Central Excise and the same will have to be construed in the context of the earlier demand notice of the Superintendent dated 18-8-1986 and, therefore, in the peculiar facts and circumstances of the case, the finding of the lower appellate authority that the demand of differential duty is time-barred is not legally sustainable.

(3.) I have carefully considered the submissions made before me. The short question that arises for my consideration in the present appeal is whether the demand of differential duty for the period 1-3-1986 to 24-3-1986 is time barred as held by the lower appellate authority under the impugned order or not. In respect of the differential duty for the period 1-3-1986 to 24-3-1986 the show cause notice has been issued for the first time on 12-12-1986 and the learned SDR does not dispute this factual position. I have carefully gone through the demand notice issued by the Superintendent on 18-8-1986 in order to consider whether the same could be construed to be a show cause notice under law. The learned SDR with characteristic fairness to a specific query from me, conceded that the demand notice of the Superintendent dated 18-8-1986 cannot be considered to be a show cause notice. It is an axiomatic proposition of law that before a person is called upon to pay any sum or amount, it has got to be preceded by an assessment after issue of show cause notice by a quasi-judicial authority in terms of the Act and Rules and in conformity with the principles of natural justice. It needs hardly to be emphasised that a person should be put on notice by means of a show cause notice unless otherwise waived under law, calling upon him to show cause against the levy of differential duty and in the present case the very first demand notice by the Superintendent of Central Excise dated 18-8-1986, made the whole issue a fait accompli, as it were, and the Superintendent of Central Excise issued a demand notice on 18-8-1986 demanding a sum of Rs. 15,487.89 and directing the respondent to make payment of the same within seven days. No doubt the Superintendent had indicated therein the reasons for his demanding the said sum and this, by no stretch of imagination, could be considered to be a show cause notice and this was very rightly conceded by the learned S.D.R. himself. Therefore, the only question that would survive for consideration in the context is as to whether the demand has been preceded by a show cause notice as per law and if so, when the show cause notice was issued and whether it was within the period of limitation. The show cause notice indisputably and admittedly has been issued only on 12-12-1986 demanding differential duty for the period 1-3-1986 to 24-3-1986 and this is clearly barred by limitation under Section 11A of the Central Excises and Salt Act, 1944. The first order of the Sower appellate authority in directing the Assistant Collector of Central Excise to adhere to the principles of natural justice and issue a show cause notice is only without prejudice to the rights of the party and the lower appellate authority has never held that the first communication of the Superintendent of Central Excise dated 1.8-8-1986 is a show cause notice. Therefore, on consideration of the entire materials on record, I am inclined to hold that the finding of the lower appellate authority under the impugned order that the demand is clearly barred by limitation is sustainable in law and in this view of the matter I uphold the impugned order of the lower appellate authority and dismiss the appeal.