Decided on October 30,1991



R. Jayaraman, Member (T) - (1.) FOR hearing the applicants' appeal on merits, they are required to deposit a sum of Rs. 85,70,747.67 towards duty and Rs. 8.50 lacs towards penalty.
(2.) SHRI L.B. Attar, the Manager of the applicants' firm, pleaded that soon after the introduction of the MODVAT Scheme they wrote to the Assistant Collector submitting that many of the components are got done by job workers and the inputs namely Aluminium Ingots will be directly sent to the job workers and the basis of the duty paying documents they would be taking credit and components will be returned by the job workers. Shri Attar referred to their letter dated 1 -3 -1986 and pleaded that they wanted to avoid unnecessary transport cost and requested the Department to allow this facility. Thereafter there was a show cause notice issued by the Supdt. under rule alleging that they have contravened the provisions of rule read with Notification No. 214/86 dated 1 -3 -1986, since they failed to follow the requisite procedures. This show cause notice has been issued after the amendment of Section 11A CESA. On that basis adjudication has been done by the Assistant Collector and when the matter was taken before the Collector (Appeals), he set aside the order on the ground that the action of the Supdt. and the Assistant Collector was without any authority and directed the Assistant Collector to transmit the relevant papers to his Collector for such action as deemed fit. Thereafter, without issue of any fresh show notice, treating the case as the one of transfer, the Collector directed them to file a reply within a period of 30 days and after getting the reply, the impugned order was passed demanding the duty amounting to Rs. 85,70,747.67 and imposing a penalty of Rs. 8.50 lacs. He contended that the order based on the show cause notice, which is ab initio void, is not legally sustainable. Moreover, it is only a procedural infraction and even the show cause notice does not allege anything beyond that. Hence the substantiative benefit cannot be denied.
(3.) SMT . Lipika Majumdar Roy Choudhury, the Ld. SDR, on the other hand, pleaded that the applicants could send the inputs directly to the job workers only after 20 -6 -1986. Even for that, the prescribed procedure is there. Even this procedure has not been followed. Credit cannot be taken merely on the basis of duty paying documents. Demand has been issued only under Rule 57 -I and not under Section 11A. After hearing both the sides, we find prima facie that the Department, having accepted the order of the Collector (Appeals) treating the notice as under Section 11A and holding such a notice as ab initio void and issued without jurisdiction, ought to have issued a fresh notice for adjudication. The applicant seems to be having an arguable case on merits. In the circumstances, we direct the applicants should be give an undertaking to keep balance in RG 23A an amount of Rs. 86.00 lacs, till the disposal of the appeal and on compliance with this requirement, there shall be stay and waiver of recovery of both the duty and penalty amounts.;

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.