Case: Bhor Industries Limited Vs. Union of India

the representative of the petitioner-company held that the goods cleared by the petitioner company were and are not one covered by the classification list and consequently the goods cleared by the petitioner company are without filing the classification list. The Collector also pointed that the petitioner company is not entitled for the benefit of notification issued under Tariff Item 17 (2). Consistent with these findings the Collector passed the following order: Under Rule 173-Q (1) of the Central Excise Rules, 1944, I imposed a penalty of Rs. 10,000/- (Rupees ten thousand only) on M/s. Bhor Industries Ltd., Bhor. I also order confiscation of the 644 packages of paper valued at Rs. 2,83,723.00 under the same Rule. However, I give M/s. Bhor Industries Ltd., Bhor an option to redeem the goods, within three month of the date of this order, on payment of a fine of Rs. 30,000/- (Rupees Thirty Thousand only) only. I also demand from M/s. Bhor Industries Ltd., Bhor under Rule 9 (2) of the Central Excise Rules, 1944 duty on the 14,18,207. 00 Meters (380001. 25 Kgs.) PVC coated paper removed by them without payment of duty upto 13-10-1976 at the appropriate rate. The goods under seizure if redeemed, shall be cleared on payment of duty. It is thus clear that the order passed by the Collector also proceeds on the footing that the petitioner have contravened the provisions of Rule 9 (2) of the Rules. ( 7 ) THE petitioner Company aggrieved by the said order preferred an appeal to the Central Board of Excise and Customs, New Delhi and the learned Member of the Central Board of Excise and customs, New Delhi vide his order dated 23-12-1978 modified the order passed by the Collector as regards the confiscation and penalty holding that it is case for leniency. The learned member opinion that there is no evidence that the petitioner Company has knowingly filed a wrong classification list. The Board then observed. the subject matter is quite controversial and the petitioner Company might very well have been under the impression that they were entitled to exemption. In any event it was the duty of the Assistant Collector to whom the classification list was submitted, together with necessary information about the article and to confirm or amend the classification list filed by the party. As the Board does not doubt the bonafides of the petitioner-company it orders that both the personal penalty and the confiscation may be set aside. What follows is the important direction in the order and we may reproduce the same :during the personal hearing it was also submitted that the clearance in this case had taken place with the knowledge of the Department and therefore Rule 173 (Q) will not apply to this case. It was contended that according to the ratio of the decision in the Elphinstone Mill Judgment the department could invoke only Rule 10 to demand this duty. In view of the foregoing finding of the Board that there was no malafide on the part of the appellant and that they had submitted a classification list which should have been properly scrutinized before approval by the Assistant collector, the Board agrees with them that only Rule 10 (as amended by Rule 173-J) can be invoke in this case to demand the duty. Subject to the above modification, the Collectors order is confirmed. ( 8 ) IT is this order which is the subject matter of challenge in this writ petition. The show cause notice was based upon facts constitution contravention of Rule 9 (1) of the Rules. The learned member of the Board in paras 6 and 7 finds otherwise and accordingly order of the Collector was modified. The learned Member also pointed, the Collector or the Assistant Collector may invoke Rule 10 as amended by Rule 173-J of the Rules. Mr. Petal therefore urged that the show cause notice was totally silent as regards the contravention of Rule 10 as amended by Rule 173-J of the Rules and in view thereof the impugned order which is inconsistent with the show cause notice must be quashed and set aside. ( 9 ) MR. Desai appearing for the respondents, however, urged that the show cause notice at Exh.B undoubtedly refer to Rule 9 (1) of the said Rules but the substance contained therein is referable to Rule 10 as amended by Rule 173-J and, therefore, there is no error on facts which would invalid the show cause notice. In support of his submission Mr. Desai drew our attention to the judgment of the Supreme Court in N. B. Sanjana, Assistant Collector of Central Excise, Bombay v. The Elphinstone Spinning and Weaving Mills Co. Ltd. 1978 (2) ELT (J 399 ). In particular, he drew our attention to the first head-note which reads as under: - Demand Notice - Quoting of wrong rule not invalid - If the authorities have the power to issue notice either under Rule 10a or Rule 9 (2), the fact that the notice refer specifically to a particular rule which may not be applicable, will not make the notice invalid. Mr. Desai also drew our attention to paragraph 14 of the judgment. On careful reading of the judgment of the Supreme Court we are of the opinion that the said judgment is clearly distinguishable. In the present case the show cause notice was issued under Rule 9 (1) of the rules and the contents of the said notice were based upon the requirements contemplated under the said rule. The requirements as regards the show cause notice under Rule 10 read with amended Rule 173-J are different. Even the Central Board of Excise and Customs in its order has held that the approval by the Assistant Collector was due to inadvertence. If this be so we are unable to read the contents of the show cause notice issued to the petitioner Company as if fulfilling the requirements of Rule 10 as amended by Rule 173-J of the Rules.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]In the present case the show cause notice was issued under Rule 9 (1) of the rules and the contents of the said notice were based upon the requirements contemplated under the said rule. The requirements as regards the show cause notice under Rule 10 read with amended RuleJ are different. Even the Central Board of Excise and Customs in its order has held that the approval by the Assistant Collector was due to inadvertence. If this be so we are unable to read the contents of the show cause notice issued to the petitioner Company as if fulfilling the requirements of Rule 10 as amended by Rule