2010 (10) TMI 473 - HC - Central Excise

Demand - once the matter has been finalised on merits the adjudicating authority had no jurisdiction to initiate proceedings in the same matter without a provision to that effect in the Act - As per statutory Scheme only remedy of the department against an alleged erroneous order of adjudicating authority is to invoke power under Section 35E(2) of the Act - Accordingly this writ petition is allowed

Summary

Issues:
Quashing of Show Cause Notice under Section 11A of the Central Excise Act, 1944 for alleged wrongful availment of CENVAT Credit on inputs/input services.

Analysis:
The petitioner sought the quashing of a Show Cause Notice dated 19-2-2010 issued under Section 11A of the Central Excise Act, 1944. The petitioner's grievance was that a similar notice had been issued earlier, which was contested and subsequently dropped after it was found that the CENVAT Credit on inputs/input services had not been wrongfully availed. The petitioner argued that once the matter had been finalized with a specific finding, the adjudicating authority had no jurisdiction to issue a fresh Show Cause Notice in the same matter.

The respondent contended that a second Show Cause Notice was justified as it was discovered that the petitioner had misrepresented or suppressed material facts regarding the availment of CENVAT Credit. However, the petitioner argued that the statutory scheme only allowed the department to challenge an erroneous order of the adjudicating authority through a specific provision under Section 35E(2) of the Act. The petitioner supported their argument by citing various judgments, including Union of India v. Vicco Laboratories and other relevant cases.

The High Court, after hearing both parties, found that there was no provision in the Act allowing the issue to be reopened by the same authority through a second Show Cause Notice. The court noted that the respondent could not dispute the applicability of the judgments cited by the petitioner. Consequently, the court allowed the writ petition and quashed the Show Cause Notice dated 19-2-2010. However, it was clarified that the respondents were free to pursue other permissible proceedings in the matter as per the law.