Full Judgment
2. The following facts are not disputed. In both the cases, demands have been issued within the normal period of six months. The Collector (Appeals) has vacated the proceedings by setting aside the orders passed by the Assistant Collector confirming the demand and imposing penalties and directed the Assistant Collector to put up the papers to the jurisdictional Collector for such action as deemed fit by him. The aforesaid order was passed holding the view that the show cause notices allege that the Respondents have wilfully availed of wrong notional higher credit and the Assistant Collector has imposed penalties on the Respondents and hence proviso to Section 11A of the Act is attracted, wherein suppression or wilful mis-statement is alleged in the notice and the competent authority to adjudicate the case is the jurisdictional Collector. The jurisdictional Collector has authorised to file the appeal and in the grounds of appeal it is mainly pleaded that in all these cases, show cause notices are within the time limit and proviso to Section 11A of the Act was not invoked. There is no allegation of suppression of any facts made in the show cause notice.
The Collector (Appeals)'s reliance on the decision of the Tribunal in the case of Pratap Rajasthan Copper Foils & Laminates Ltd. v. Collector of Central Excise 1989 (44) E.L.T. 775 (Tri) is misplaced. There is no allegation of misdeclaration made in the show cause notices. Hence, the Sudt. of Central Excise is competent to issue show cause notices and the Assistant Collector is competent to adjudicate the case. The Collector (Appeals) is therefore, not justified in vacating the proceedings. He should have gone into the appeals on merits.
4. Shri S. N. Parekh, the ld. Advocate on behalf of the Respondents, on the other hand, contended as below. He refers to the decision of the Larger Bench in the case of Pratap Rajasthan Copper Foils & Laminates.
He particularly invites my attention to paras 36, 37 and 38, wherein a similar issue has been discussed. Even in that case, demand has been issued within six months and the Tribunal have held that where there is an allegation of suppression, wilful mis-statement etc., notice cannot be issued by the Supdt. and it should be issued by the Collector. Hence in this case, proceedings initiated by the Assistant Collector on the basis of the show cause notice alleging wilful availment of wrong notional higher credit have been rightly vacated. He also refers to the findings given by the Assistant Collector indicating that the Respondents are reputed concern manufacturing drugs and they know that bulk drugs attract effective rate of duty at 5%, irrespective of Small Scale exemption and hence they had wrongly availed higher notional credit knowing fully well that they are not entitled to same. Hence, viewed in the context of the findings and the allegations made in the show cause notice, the ratio of the judgment of the Tribunal in the case of Pratap Rajasthan Copper Foils & Laminates Ltd. would be applicable. He also points out that 5 Member of the Tribunal has approvingly quoted the aforesaid decision, in the case of Alcobox Metal Ltd. reported in 1992 (58) E.L.T. 108.
5. With regard to the Supreme Court decision, the gist of which was reported in 1993 (64) E.L.T. A197, which was put forth before him by the Bench, the ld. Advocate pleads that it is not a detailed judgment and it appears to be the case of issue of show cause notice under Rule 9(2) of the Rules read with Section 11A of the Act, for invoking the larger period of limitation and in that context, the order has been passed. However, no reasons have been given by the Supreme Court, whereas in the case of Pratap Rajasthan Copper Foils & Laminates Ltd., which has been approvingly adopted by the Larger Bench, detailed reasons have been given holding that under Section HA proviso, only the Collector is competent to issue notice, where there is wilful mis-statement or suppression etc. for invoking the larger period as well as even for issuing demand within six months, because penal provisions are attracted.
6. After hearing both the sides, I find that there is no dispute that the 'demands are within six months. The dispute is with regard to the competent authority, who could issue the show cause notice. Hence, I perused the show cause notice, the relevant portion of which is reproduced below: "Whereas it appears that M/s. May & Baker (I) Ltd. Bhandup, Bombay 78 holders of L-4 Licence No. I-Med/61 Ch. 29 and 30 of CETA 1985, have contravened the provisions of Notification No. 31 /88, dated 1-3-1988, in as much as they have wilfully availed of wrong notional higher credit amounting to Rs. 10,240/- (Rupees Ten thousand two hundred & forty only) on 14-10-1989 on the inputs procured by them viz. Benzyl Benseete I.P. which are bulk drugs attracting effecting rate of duty @ 5$ adv details of which are set out in Annexure A appended hereto." From the above the only objectional word used in the aforesaid para "wilfully availed of wrong notional higher credit." There is no allegation of wilful misstatement. There is no allegation of suppression. There is no allegation of fraud. As per the ingredients contained in the proviso to Section 11 A, the main ingredients are the following: "Fraud, collusion, wilful misstatement, suppression of facts, contravention of any provisions of the Act or the Rules with an intention to evade payment of duty." Even reading the other paras of the show cause notices, I do not find any such ingredients mentioned in the show cause notice. Even in the annexure to show cause notice, the same "wilful availment of wrong notional higher credit" is mentioned. Hence, prima facie I find that the essential ingredients in the proviso to Section HA have not been incorporated in the show cause notice. Wilful availment of wrong credit is something different from wilful mis-statement. There is no allegation of wilful mis-statement. Hence, without looking into the case law cited by the ld. Advocate, on the factual position based on the reading of the show cause notices, I find that the Supdt. or the Assistant Collector is competent to issue the show cause notice, especially when it is not disputed that the notices are within six months.
7. Now coming to the decision of the Tribunal referred to by the ld.Advocate, I find that in this case, the demands are within six months, but the allegation of suppression of facts etc. were incorporated in the show cause notice. In the circumstances, the Assistant Collector was held to be not competent to issue the notice even within six months. In the case of Alcobox Metal Pvt. Ltd., the demand was traversing beyond the period of six months, wherein a reference approvingly quoting the decision of Pratap Rajasthan Copper Foils & Laminates Ltd. has been made. However, in the case of the Supreme Court decision in M/s. Safari Industries v. CCE, Baroda, [1993 (64) E.L.T.A197] on an appeal filed against the order of the Tribunal bearing No.22/89D, dated 17-1-1989 the Supreme Court ordered as below: "The show cause notice was issued on 22-1-1987 for the period covering 5-7-1986 to 10-9-1986. If the period of 6 months is counted from backwards, it goes to 22-7-1986. Therefore, the show cause notice may be treated as valid under Section 11A for the period 22-7-1986 to 10-9-1986 and the judgment of the Tribunal may be set aside, and fresh order may be passed by the appropriate officer of Central Excise, Baroda in accordance with law." From the above it appears to me, though the aforesaid decision of the Supreme Court is not spelling out reasons, the decision clearly indicates that where a demand has been issued beyond a period of six months invoking the provision of Rule 9(2) of the Rules read with Section 11A relating to removals without payment of duty, the Supreme Court have ordered that the demand for a period of six months can be enforced. It is not open for the lower judicial forum including the quasi-judicial Tribunals to question the wisdom of the Supreme Court on a contention that no reasoning is given in the aforesaid order of the Supreme Court and on that ground, prefer the decision of the Larger Bench of the Tribunal or the decision of a co-ordinate Bench of the Tribunal. I therefore, have to follow respectfully the ratio of the order of the Supreme Court reported in the Court Room Highlights in the aforesaid case. Going by the Supreme Court order and applying the same, to these appeals, I find that the notice has been issued within six months and the jurisdictional Collector holds that this is not a fit case for making any allegation of suppression etc. for imposing penalty as is evident from the appeal filed by him. The Collector (Appeals) ought to have gone into the merits with regard to the sustainability of demand and decided the case on merits of the demand. As regards the penalty, in view of the circumstances discussed, it may not be called for in a case like this.
8. With the aforesaid observations, I allow the appeals from the Revenue and remand the case back to the Commissioner of Central Excise (Appeals), Bombay for deciding the appeals on merits and pass orders in accordance with law.