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Crystic Resins (India) Pvt. Ltd. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1985)(19)ELT285TriDel
AppellantCrystic Resins (India) Pvt. Ltd.
RespondentCollector of Central Excise
Excerpt:
.....to recover duty, which he thinks was short paid must tell the assessee how much duty has been short recovered and why he thinks that more duty is recoverable.it is not that demands of duty by central excise are always correct.the manner of issuing this notice deserves the strongest criticism.unless there has been a short recovery and that short recovery can be shown in the notice, even if only indirectly, as might perhaps be the case when a notice says that duty should have been recovered at one rate whereas, in reality, it had been recovered at a lower rate, the assessee would not know the additional liability to which he is going to be subjected. he must know the manner, the time as well as the reasons why the notice issuer says that the money was recoverable as duty. while it may.....
Judgment:
1. This is an appeal that arose from the order-in-appeal No. CE/DLH/83 dated 28-3-1983 passed by the Appellate Collector of Central Excise, New Delhi. That order of the Appellate Collector arose in turn from the order-in-original No. V(15A)30/2/72/Val./Pt. 2946 dated 27-3-1922 of the Assistant Collector of Central Excise, Div. III, Faridabad.

2. The dispute arose in the assessment of polyester resin under concessional rate of duty provided by Notification No. 7/80, dated 27-2-1980.

3. Much arguments were presented before the Tribunal on the merits and demerits of the action of the Assistant Collector and the Appellate Collector. But when we refer to the show-cause notice, we find that it is so bad a piece of work that the only right thing to do is to pronounce it invalid and of no effect and any action based upon it should be held to be null and void.

4. This show cause notice call upon M/s. Crystic Resins, the Appellants, to show cause to the Assistant Collector of Central Excise, Division III, Faridabad, why the synthetic polyester resins manufactured by it should not be charged to duty at 40% ad valorem under notification No. 5/80 dated 27-2-1980, and "why the differential duty involved, if any, due to availing concessional rate of duty at 29% ad valorem by them should not be recovered from them under Section 11-A of the Central Excises and Salt Act, 1944". Now one can see that when the Superintendent issued this notice, he did not even know if there was any differential duty. Important matters of this kind cannot be dealt with in this perfunctory manner without any regard to the rights and wrongs of it. A Central Excise Officer, who wants to recover duty, which he thinks was short paid must tell the assessee how much duty has been short recovered and why he thinks that more duty is recoverable.

It is not that demands of duty by Central Excise are always correct.

The manner of issuing this notice deserves the strongest criticism.

Unless there has been a short recovery and that short recovery can be shown in the notice, even if only indirectly, as might perhaps be the case when a notice says that duty should have been recovered at one rate whereas, in reality, it had been recovered at a lower rate, the assessee would not know the additional liability to which he is going to be subjected. He must know the manner, the time as well as the reasons why the notice issuer says that the money was recoverable as duty. While it may not always, perhaps, be possible to calculate the exact money proposed to be recovered as duty, the notice giver should notify the notice receiver how and by what method he arrived at and deduced the short recovery which he proposes to revover under the notice. The utmost accuracy and certainty must be the aim of a notice of this kind, and not a shot in the dark like the notice before us is.

It is clear that the notice issuer did not know if any duty had been short levied. It is not merely that he did not specify the amount he wanted to recover but he was not certain if there was any short levy: hence the experimental and tentative "if any". Evidently, the Supdt.

hoped to strike it rich and stumble upon a short recovered sum of money, should luck favour him; but he was not too sure so he would only send up a trial baloon first.

5. In one of the paragraphs he says that M/s. Crystic Resins were availing proforma credit on styrene monomer, epikote, phthalic anhydride and maleic anhydride etc. falling under Tariff Items 15A and 68 under Notification No. 201/79, dated 4-6-1979, and as such, the concessional rate of duty upto 29% ad valorem on synthetic polyester resin under Notification No. 7/80-C.E., dated 27-2-1980 was not applicable to them. But Notification No. 7/80 does not say that if they obtained proforma credit under Notification No. 201/79, it would not be applicable to the manufacturer. Here is where the notice issuer should have explained his process of reasoning. It is not enough to assume that the notice receiver will read his mind and know what he means by the notice; he must be told as clearly as possible by the Central Excise why he was considered disentitled to the exemption.

6. A minor point of the show cause notice is that it is dated 4/2 by the Supdt., who signs at the end of the notice and dates his signature 3/2. We do not know the year of the notice, the notice issuing people thought it too much trouble to date the notice properly with the date, the month and year. We find too many faults have afflicted the show cause notice and we must not allow this piece of document to be the base for an important action like recovering duty from an assessee. We set it aside and with it all the actions based upon it.


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