Decided on April 24,2017

Cona Industries Respondents


- (1.) In this appeal of the Revenue, the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dated 15th July, 2005 [2005 (190) E.L.T. 208 (Tribunal)] is challenged. This appeal was admitted on 11th April, 2007 on the following substantial question of law :- "Whether the CESTAT was justified in holding that the SON dated 13-1-1999 invoking the provisions of Section 11A(1) is barred by limitation on the basis of SON dated 23-6-1997 which is issued only for the purpose of seizure of the goods and not for any demand under Section 11A?"
(2.) The Tribunal, in the order under challenge, was considering the issue arising out of the order passed by the Commissioner of Central Excise decided on 29th October, 2004.
(3.) After setting out the facts and the circumstances leading to the investigation and issuance of a show cause notice, it is found by the Tribunal that the Preventive Officers commenced an inquiry on 29th September, 1996 and a show cause notice dated 26th March, 1997 was issued. The adjudication was held and an order came to be passed on 12th December, 1997. An appeal was filed with the Commissioner of Central Excise (Appeals) but it was not pressed. Based on the very investigation and documents, another show cause notice dated 13th January, 1999 was issued by the Commissioner to deny benefit of Notification No. 56/95-C.E. and recover duty for the period 1994-95 to 1996-97. This demand in the show cause notice was confirmed on 29th October, 2004 under proviso to Section 11A(1). Therefore, the appeal to the Tribunal. The Commissioner's order has been referred to and the Hon'ble Supreme Court judgment in the case of Sanghi Textile Processors - 1997 (68) ECR 570 = 1993 (65) E.L.T. 357 (S.C.) to submit that on the same set of allegations, a second show cause notice could not have been issued. After having considered all this, the Tribunal concluded that the documents were not supplied, in any case, after the inquiry was over, those documents, which were not relied upon were taken into consideration. That has caused prejudice and no effective defence could be placed by the assessee. Therefore, the principles of natural justice have been violated. They have been violated additionally by denial of cross-examination of the witnesses. Preceding that, in para 2.1, the Tribunal observed thus :- "2.1 The Commissioner in para 21 of the order impugned before us observes that all the documents were supplied to the appellants on four occasions i.e. 17-11-1997, 1-12-1997, 5-3-1999 and 7-5-1999 and therefore the non-receipt claim on documents in the show cause notice issued on 13-1-1999 was not upheld after considering the correspondence exchanged and taking note of the Supreme Court decision in case of Sanghi Textile Processors - 1997 (68) ECR 570 SC : 1993 (65) E.L.T. 357 (S.C.) brought to the notice of the department. We cannot uphold the supply of documents prior to issue of the present proceedings i.e. 27-11-1997 and 1-12-1997, to be compliance of the onus on the department to supply the copies relied upon documents in the case initiated by notice dated 13-1-1999. Moreover, if the department is arguing that the material documents are the same as in the earlier proceedings conducted by the Additional Commissioner, then this subsequent notice dated 13-1-1999 invoking the proviso to Section 11A(1) should be held to be barred by limitation as it demands duties for the period 1994-95 and 1996-97 when facts were already known and cognizance of evasion taken in notice dated 26-3-1997 reliance on the Apex Courts decision in the case of E.C.E. Industries - 2004 (164) E.L.T. 236 (S.C.) is well founded to hold the proceedings to be barred by limitation." ;

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