Kanpha Labs Vs. Union of India (Uoi)

Kanpha Labs vs Union of India (Uoi)

Type Court Judgment Court Karnataka Decided Jan 04, 1999

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Citation: sooperkanoon.com/387257
Court: Karnataka High Court
Judge: V.K. Singhal, J.
Decided On: Jan 04, 1999
Case Number: Writ Petition Nos. 31752-53 of 1992
Subject: Excise

Case Summary

AI-generated summary - not the official court judgment text.

Held: Natural Justice - Classification--Change--Show Cause Notice--ITEOL-33--When a classification is made different from both the one declared by the assessee (SH. 3003.10) as well as that sought by the Department (SH. 3301.00), a show cause notice for the change in the classification to a third category (SH. 3808....

Key legal issue: Excise
Acts & sections: Central Excise Act - Sections 37B

Parties & Advocates

Appellant / Petitioner

Kanpha Labs

Advocate Rajesh Chander Kumar, Adv.

Respondent

Union of India (Uoi)

Advocate Ashok Haranahalli, CGSC

Legal References

Acts: Central Excise Act - Sections 37B
Reported In: 1999(66)ECC543; 1999LC471(Karnataka); 1999(113)ELT32(Kar)

Excerpt

.....(sh. 3808.90 in the present case) should be issued. since this was not done, the impugned order was violative of the principles of natural justice, and is therefore vitiated.2. classification - cbec circular--section 37b empowers the cbec to issue instructions for the purpose of uniformity in classification. it is only when there are more than one manufacturers that a cbec circular can be made applicable to all of them. such instructions or directions cannot be for a particular case or assessee, as has been done in the present case, unless that assessee is the sole manufacturer of such goods in the country. matter remanded to determine whether there are other manufacturers of such goods, in which case cbec circular may not be relied upon. cea: section 37b.petitions allowed by remand. - code of civil procedure, 1908.[c.a. no. 5/1908]. order 41, rules 23a: [n. kumar, j] remand of case - when additional evidence is tendered in appeal, the lower appellate court should act under order 41, rules 27 to 29 and not remand the whole case under order 41, rule 23a. but if the appellate court reverses the finding of the trial court on preliminary issue, it has no option except to remand the suit to the trial court for trial and it is a case of an open remand. -- order 41, rules 27: production of additional evidence - lower appellate court on an application under order 41, rule 27, reversed the judgment and decree of trial court and ordered re-trial. held, it is an order passed under order 43, rule 23a c.p.c., and an appeal lies under order 43, rule 1(u) read with section 104 c.p.c., whenever additional evidence is allowed to be produced, the appellate court may either take such evidence or direct the court from whose decree the appeal is preferred or any other subordinate court, to take such evidence and send it to the appellate court as required under rule 28 c.p.c., orderv.k. singhal, j.1. the order passed by the additional collector of central excise dated 22-10-1992 have been assailed in this petition. petitioner is a manufacturer of iteol-3. the dispute is with regard to the classification as to whether it falls under sub-heading 3301.00 or 3003.10. show cause notice was issued to classify the item under sub-heading 3301.00 and the petitioner was asked to explain why the duty of 20% ad valorem be not levied.the item manufactured is an antiseptic and disinfectant. learned counsel for the petitioner has argued before me on two points.1. that the show cause notice was issued to treat the product as falling under chapter 33 while the duty has been levied under chapter 30 which is against the principles of natural justice;2. that the circular issued by the central board of excise and customs, dated 29-7-1992 is contrary to the provisions of section 37b of the central excise act.2. arguments of both the learned counsel for the parties have been heard.in the order of determination dated 22-8-1992 beside the other evidence on record, it is mentioned that the board has held that the product is appropriately classifiable under sub-heading 3808.90. admittedly no notice was issued to determine the liability of duty payable under this sub-heading. it is appropriate that when a classification is made different than the one declared by the assessee he should be provided opportunity to make his application for change of classification. in the course of adjudication proceedings, it is also possible that the duty has been paid treating the item as falling in one category and notice is issued treating it to be falling under a second category and finally the adjudicating authority may come to the conclusion that the item falls in the third category. in such a situation before coming to the conclusion, it is proper that attention of the assessee should be drawn as to why the item should not be classified in the third category and then after.....

Full Judgment

ORDER

V.K. Singhal, J.

1. The order passed by the Additional Collector of Central Excise dated 22-10-1992 have been assailed in this petition. Petitioner is a manufacturer of ITEOL-3. The dispute is with regard to the classification as to whether it falls under sub-heading 3301.00 or 3003.10. Show cause notice was issued to classify the item under sub-heading 3301.00 and the petitioner was asked to explain why the duty of 20% ad valorem be not levied.

The item manufactured is an antiseptic and disinfectant. Learned Counsel for the petitioner has argued before me on two points.

1. that the show cause notice was issued to treat the product as falling under Chapter 33 while the duty has been levied under Chapter 30 which is against the principles of natural justice;

2. that the circular issued by the Central Board of Excise and Customs, dated 29-7-1992 is contrary to the provisions of Section 37B of the Central Excise Act.

2. Arguments of both the learned Counsel for the parties have been heard.

In the order of determination dated 22-8-1992 beside the other evidence on record, it is mentioned that the Board has held that the product is appropriately classifiable under sub-heading 3808.90. Admittedly no notice was issued to determine the liability of duty payable under this sub-heading. It is appropriate that when a classification is made different than the one declared by the assessee he should be provided opportunity to make his application for change of classification. In the course of adjudication proceedings, it is also possible that the duty has been paid treating the item as falling in one category and notice is issued treating it to be falling under a second category and finally the adjudicating authority may come to the conclusion that the item falls in the third category. In such a situation before coming to the conclusion, it is proper that attention of the assessee should be drawn as to why the item should not be classified in the third category and then after providing the opportunity, adjudication can be made. Since the determination of liability is without issuing the show cause notice for the classification determined in the order passed, the order is vitiated on that ground alone. It may further be observed that Section 37B has empowered the Board to issue instructions for the purpose of uniformity in the classification of excisable goods. But such instructions or directions cannot be for a particular case or assessee. Learned Counsel for the petitioner submitted that there are other manufacturers for which he may even file additional affidavit. At this stage, I am not deciding that issue. It is made clear that, where there are more than one manufacturer, then the instruction or circular be made applicable to all of them. If a particular product is manufactured by one person only then the Board can issue the direction for that assessee alone. If the petitioner is in a position to establish that similar product is manufactured by other manufacturers, then the instructions issued by the Board may not be relied upon and the assessing authority may determine the duty independent of the circular issued.

Annexure-O is accordingly quashed.

Matter is remitted to assessing authority for passing a fresh order in accordance with law. If there is any other objection petitioner would be free to raise them before the authority concerned. Department may now issue corrigendum to the notice if it is found necessary.

Petition stand disposed of with the above observations.

Same Court & Year Karnataka · 1999 Same Parties Kanpha Labs vs Union of India (Uoi) Same Subject Excise Same Judge V.K. Singhal, J. Acts & Sections Central Excise Act - Sections 37B

Excise