2007 (5) TMI 382 - AT - Central Excise

Demand - Validity of SCN - Held that - in the absence of proper investigation and correct show cause notice, the impugned orders suffers from the vice of vagueness. There is no quantification of the demand and there is also no quantification of the goods cleared by the appellants. In these circumstances, we are not in a position to uphold the impugned order - appeal allowed - decided in favor of appellant.

Summary

Issues involved: Appeal against Order in Appeal confirming demand of duty and penalty for contravention of Central Excise Rules regarding manufacturing and clearance of telecom equipment for captive consumption without proper investigation and quantification.

Analysis:
1. Show Cause Notice and Lack of Investigation:
The appeal challenged the Order in Appeal confirming the demand of duty and penalty imposed by the Commissioner of Customs and Central Excise. The show cause notice dated 21st December 1994 accused the appellant of contravening Central Excise Rules by manufacturing and clearing telecom equipment for captive consumption without filing a classification list. The notice was criticized for being vague and lacking clear details of the goods involved. The original authority confirmed the duty demand without proper quantification, imposing a penalty of 40%. The Tribunal noted the absence of proper investigation and quantification, highlighting the vagueness of the orders due to the lack of specific information.

2. Co-operation with Department and Exemption Notification:
The Departmental Representative argued that the appellant's lack of cooperation necessitated the action taken. However, upon review, the Tribunal found fault with the investigating officers for failing to accurately identify the contraventions. The appellant's counsel contended that the factory operated under the government's control, manufacturing equipment for the Central Government and benefiting from exemption Notification 197/87, thus exempt from duty liability. This argument, combined with the lack of proper investigation and clarity in the show cause notice, led the Tribunal to question the validity of the impugned order.

3. Decision and Relief Granted:
After careful consideration, the Tribunal concluded that the impugned order suffered from vagueness due to the absence of quantification of the demand and goods cleared by the appellants. As a result, the Tribunal decided not to uphold the order, allowing the appeal with consequential relief. The decision was based on the insufficiency of investigation, lack of clarity in the show cause notice, and absence of quantification, leading to the grant of relief to the appellant.

In summary, the Tribunal's decision to allow the appeal was primarily influenced by the lack of proper investigation, vagueness in the show cause notice, and absence of quantification in the impugned order, leading to the grant of relief to the appellant regarding the demand of duty and penalty imposed for contravention of Central Excise Rules related to manufacturing and clearance of telecom equipment for captive consumption.