2007 (2) TMI 402 - AT - Central Excise

Summary

Issues:
1. Finalization of provisional assessments under Rule 9B of the Central Excise Rules, 1944.
2. Validity of differential duty demanded by the department.
3. Scope of the show cause notice (SCN) and authority to demand differential duty.

Analysis:

1. The appellants were involved in manufacturing "P or P medicines" and had provisional assessments for the period 1992-93 to 1996-97 due to uncertainties in quantifying deductions like freight and cash discounts. The department proposed to finalize the assessments based on the differential duty payable, amounting to Rs. 13,16,071.25. The Dy. Commissioner finalized the assessments, finding an excess duty payment of Rs. 2,23,924 by the assessee, which was deemed non-refundable. The department appealed to the Commissioner (Appeals) seeking recovery of Rs. 37,65,075 as differential duty. The lower appellate authority upheld the department's contention, leading to the present appeal against this decision.

2. The appellate tribunal observed that the lower appellate authority exceeded the scope of the show cause notice by demanding a higher duty amount than proposed in the SCN. The SCN had specified the total differential duty payable as Rs. 13,16,071.25, whereas the Dy. Commissioner found an excess payment of only Rs. 2,23,924. The tribunal emphasized that the department should have issued a corrigendum to the notice if intending to demand a different duty amount. The tribunal deemed the department's action of seeking a higher duty amount impermissible in law, as it was not in line with the initial SCN proposal. Therefore, the tribunal concluded that the lower appellate authority's decision favoring the department's appeal was not sustainable.

3. Consequently, the tribunal allowed the appeal against the decision of the lower appellate authority, emphasizing that the department's attempt to recover a higher duty amount than proposed in the SCN was legally untenable. The tribunal highlighted the importance of adhering to the specifics outlined in the show cause notice and rejected the department's appeal for a higher differential duty amount. The decision was pronounced in open court on 7-2-2007, in favor of the appellants, thereby setting aside the lower appellate authority's ruling.