2016 (7) TMI 1339 - HC - Central Excise

Proceedings under Rule 56 of the Central Excise Rules, 1944 - Held that - the show cause notice has been issued along with the report of testing and the report of testing was issued prior thereto as required under sub-rule (2) of Rule 56 - as the statutory requirement of communication of test report has been violated the entire notice is liable to the quashed - appeal allowed.

Summary

Issues:
Challenging Show Cause Notice under Rule 56 of Central Excise Rules, 1944 for non-compliance with mandatory requirements.

Analysis:
The petitioners, engaged in manufacturing tobacco products, challenged a Show Cause Notice dated 10-2-2015 under Rule 56 of the Central Excise Rules, 1944. The petitioners contended that the mandatory requirement of Rule 56(2) was not complied with, which necessitates communicating test results to the manufacturer before issuing a show cause notice. The petitioners argued that since the reports from the Central Revenue Control Laboratory were not supplied to them, the notice demanding duty on the products should be quashed.

Judicial Precedent:
Reference was made to a previous judgment in W.P. No. 3650/2015 (M/s. Sahu Traders v. Union of India and others) where a similar issue was addressed. The court in that case found a violation of sub-rule (2) of Rule 56, leading to the quashing of the show cause notice. The judgment highlighted the importance of communicating test results to the manufacturer and providing the opportunity for re-testing within 90 days, which was not done in the present case.

Decision:
The High Court, considering the facts and reasoning from the previous judgment, allowed both writ petitions filed by the petitioners. The court quashed the impugned show cause notice dated 10-2-2015 (Annexure P-2) based on the non-compliance with the mandatory requirements of Rule 56(2). The court emphasized the significance of following statutory procedures and ensuring that manufacturers are informed of test results before initiating any action. The respondents were directed to proceed in accordance with the law from the stage of receiving the test report.