2010 (3) TMI 720 - AT - Central Excise

Demand - Double taxation - two factors weigh heavily on the appellants, one is that no opportunity was given to the appellants of being heard and the figures are obtained from the Accountant General, Rajasthan, Jaipur, which is contrary to Rule 8 - The principles of natural justice is not followed in this case by the respondent by depriving a hearing - Appeal is allowed

Summary

Issues:
Challenge to Demand Notice dated 6-6-2008 for Rs. 5,64,293 for the period from 1/2006 to 9/2006. Interpretation of Textiles Committee (Cess) Rules, 1975 regarding show cause notice. Applicability of Section 5A(1) of the Textiles Committee Act, 1963. Allegation of double taxation due to payment of central excise duty. Comparison with a previous case TCA No. 69/2004. Validity of figures taken from the Accountant General, Rajasthan, Jaipur in the Demand Notice.

Analysis:
The appellants contested a Demand Notice issued on 6-6-2008 for Rs. 5,64,293, covering the period from 1/2006 to 9/2006, on various grounds. The appellants argued that the Demand Notice was invalid as no show cause notice was provided as per Rule 8 of the Textiles Committee (Cess) Rules, 1975. They claimed that being non-manufacturers of textiles, Section 5A(1) of the Textiles Committee Act, 1963 did not apply to them. Additionally, they alleged double taxation since they had already paid central excise duty. They further contended that their case was similar to a previous case, TCA No. 69/2004, which should result in setting aside the Demand Notice.

In response, the respondent's counsel refuted the appellants' arguments. They cited a Supreme Court judgment establishing that processes like bleaching, dyeing, printing, etc., constitute manufacturing, making the appellants liable to pay the cess. The respondent's counsel also argued against the claim of double taxation and distinguished the current case from TCA No. 69/2004, asserting that the judgment of the previous case was not applicable. The respondent maintained that the appellants had been given a show cause notice, which they failed to respond to, leading to the issuance of the Demand Notice.

The appellants highlighted an error in the Demand Notice, pointing out that the figures were sourced from the Accountant General, Rajasthan, Jaipur, instead of the Central Excise Department as required by Rule 8. The Presiding Officer noted that the failure to grant the appellants an opportunity to be heard and the use of figures from an incorrect source rendered the Demand Notice unsustainable under the law. Emphasizing the violation of natural justice principles by not providing a hearing, the Presiding Officer quashed the Demand Notice and allowed the appeal, ruling in favor of the appellants.