Som Flavours Vs. Commissioner of Central Excise,

1. The appellants were issued a show cause notice dated 30-4-97 in which it is alleged that on 31-10-96, the Anti-Evasion Officers of Central Excise Commissionerate, New Delhi intercepted one three wheeler auto loaded with 8 gunny bags containing polypacks of Talab brand gutka. The statement of Shri Deepak Gaur, driver of the auto was recorded. On physical verification of the, goods loaded in the three wheeler auto they found 8 gunny bags containing 3200 poly pouches of Talab brand Gutka valued at Rs. 48,640/- involving the Central Excise duty of Rs. 19,456/-. Since the goods were not accompanied by a document evidencing the payment of Central Excise duty, the same were seized along with the three wheeler auto. The licensed premises of the appellants were also searched and on conducting the physical verification of stock of the finished goods, there was found to be a shortage of 1760.700 kgs of gutka valued at Rs. 3,20,473/- involving the Central Excise duty of Rs. 1,28,189/- The authorised representative of the appellants, Shri Inder Dev Tripathi in his statement of even date admitted that the goods loaded and seized from the three wheeler auto were without any Central Excise invoice/bill or challan. Further, he admitted the shortage of 1760.700 kgs of finished goods at their premises. Accordingly, a show cause notice dated 30-4-97 was issued to the appellants in which they were called upon to show cause why the goods seized from the three wheeler auto should not be confiscated under Rule 173Q of the Central Excise Rules, 1944 and why the Central Excise duty of Rs. 1,28,189/- in respect of the goods found short at their premises should not be confirmed under Rule 9(2) read with Section 11A of the Central Excise Act, 1944, They were further called upon to show cause why a penalty equal to 100% of the excise duty involved on the goods found short should not be imposed under Section 11AC and a further why a penalty should not be imposed on them under Rule 173Q. In the same notice, Shri Deepak Gaur, driver of the three wheeler was called upon to show cause why a penalty should not be imposed upon him under Rule 52A read with Rule 209A and the auto should not be confiscated under Section 115 of the Customs Act, 1962 as made applicable to like matters of Central Excise. ; 2. On considering the case of the noticee parties, the Assistant Commissioner of Central Excise, New Delhi, vide his order dated 30-7-97 ordered for the confiscation of the seized goods and the auto but gave an option to the party to get the release the same on payment of fines of Rs. 15,000/- and Rs. 5,000/- respectively apart from a penalty of Rs. 19,456/-. He further confirmed the duty of Rs. 1,28,189/- on the appellants and imposed a penalty of an equal amount to duty under Section 11AC. He further imposed a penalty of Rs. 19,456/- on the appellants under Rule 173Q and a penalty of Rs. 2,000/- on Shri Deepak Gaur, driver under Rule 209A of the Central Excise Rules, 1944.

3. The appellants M/s. Som Ravours filed an appeal before the Commissioner (Appeals), New Delhi against the aforesaid order passed by the Assistant Commissioner and raised a preliminary question regarding the jurisdiction of the Assistant Commissioner to adjudicate the case on allegation of non-levy of excise duty on account of fraud, collusion and suppression of facts, etc. in terms of the Board Circular No.299/15/97-CX., dt. 27-2-97. The Commissioner (Appeals), New Delhi accepted this objection relating to the jurisdiction of the Assistant Commissioner to adjudicate the case and vide order dated 17-1-2001, she remanded the case for adjudication by the competent adjudicating authority in the following terms :- "I have gone through the records of the case very carefully. I observe that in the show cause notice dated 30-4-97, it has been proposed to impose penalty under the provisions of Section 11AC i.e.

there is an allegation of non-levy of duty of excise etc. on account of fraud, collusion, willful mis-statement, suppression of facts, etc. In terms of powers of adjudication of Central Excise Officers fixed by the Central Board of Excise & Customs vide Circular No. 299/15/97-CX., dt. 27-2-97, the Assistant Commissioners are not entitled to adjudicate the cases involving the aforementioned allegations and therefore are not entitled to adjudicate the cases where penalty under Section 11AC is proposed to be imposed.

Accordingly, I set aside the Order-in-Original and remand the matter for adjudication by the competent adjudication authority. At the time of readjudication, the adjudicating authority may also deal with the question raised by the appellants of issue of the show cause notice within the stipulated period of six months." 4. On remand, the case is adjudicated by the Joint Commissioner of Central Excise, New Delhi and vide his order dated 31-5-2001, he has confirmed the same finding and the amounts of duty, fine, penalties as arrived at earlier by the Assistant Commissioner vide his order dated 30-7-97.

5. The party again filed an appeal and the Commissioner. (Appeals) vide his order dated 28-8-2001 rejected the appeal upholding the order-in-original passed by the Joint Commissioner.

6. This appeal is against the impugned order of the Commissioner (Appeals). I have heard Shri Randhir Singh, ld. Advocate for the appellants and Shri B.C. Mahey, ld. JDR for the respondents. The appeal is only by M/s. Som Flavours. The ld. Counsel for the appellants submits that the original authority in this case did not give them an opportunity of personal hearing and thus order-in-original is passed in violation of the principles of natural justice. He submits that the point relating to the violation of the principles of natural justice by the original authority is raised before the Commissioner (Appeals) but the same is not admitted by him. The lower appellate authority has observed that the written defence of the appellants has been sufficiently considered before passing the order and that nothing new has been added by the appellants in their defence in the opportunity given after the said order. It is further observed that the failure of the appellants in attending the personal hearing has not in any way affected their defence. Another point raised by the appellants is that the show cause notice in this case is issued by the Superintendent of Central Excise who at the material time was not competent to issue the same in terms of the aforesaid circular dated 27-2-97 of the Board.

However, this contention of (he appellants is also rejected by the lower appellate authority on the ground that the issue of show cause notice by the Superintendent of Central Excise is only a technical lapse. The appellants have raised the same points before me in the present appeal. On perusal of the record, it is, however, observed that the party never raised any objection regarding the competence of the Superintendent of Central Excise in issuing the show cause notice. As we can see from the above extracts from the order dated 17-1-2001 of the Commissioner (Appeals), when the matter first went up before that authority, the party had only challenged the competence of the Assistant Commissioner to adjudicate the case. The objection of the party was accepted and the matter remanded for re-adjudication by the competent authority. In the second stage of proceedings, when the matter again came up before the Commissioner (Appeals) though he has rejected this contention of the party as only a technical lapse but however since the earlier order dated 17-1-2001 of the Commissioner (Appeals) had already achieved finality, in my view this point could not have either been agitated or considered in the subsequent proceedings in the same matter. The matter was remanded to the competent adjudicating authority vide order dated 17-1-2001 of the Commissioner (Appeals) but it is observed that the case has been adjudicated by the Joint Commissioner. The Joint Commissioner is not a competent authority to adjudicate the cases involving suppression and fraud, etc. as could be seen from the Board circular dated 27-2-97 as follows :- "Those show cause notices where adjudication orders are not passed upto 28th February, 1997, will be adjudicated as provided hereinafter - (A) All cases involving fraud, collusion, any willful mis-statement, suppression of facts, or contravention of Central Excise Act/Rules made thereunder with intent to evade payment of duty and/or where extended period has been invoked in show cause notice, [including Modvat cases, Rule 9(2) cases of this type] will be adjudicated by :-Commissioners - without limitAddl. Commissioners - upto 10 lakhs" 7. Therefore the order dated 31-5-2001 passed by the Joint Commissioner and the impugned order of Commissioner (Appeals) cannot be sustained.

The impugned order is, therefore, set aside and the matter is remanded to the Addl. Commissioner of Central Excise for de novo consideration.

The appellants shall be afforded a reason opportunity of hearing before taking a final view in the matter.