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2011 (9) TMI 118 - HC - Central ExciseClandestine removal of goods - without seeking central excise registration - penalty u/s 11AC - Non issuance of notice (SCN) - SSI exemption - clubbing of clearance - Held that - in so far as the issue raised in the appeal filed by KRC that no liability could be fastened on it as a show cause notice was not issued is an issue which will have to be found in favour of the respondent. The reason is that the provisions of Section 11A of the C.E. Act are mandatory in nature as held by the Supreme Court in Metal Forging (2002 -TMI - 46358 - SUPREME COURT OF INDIA). Regarding clubbing of turnover - Held that - The Tribunal was certainly duty bound to examine the issue raised in the revenue s appeal as to whether the Commissioner (Appeals) could have clubbed the clearances of KSI Jeet and Hi-Tech in the hands of KRC. In respect of this aspect we set aside the order of the Tribunal and remand this issue to the Tribunal for appropriate orders in that regard. It is ordered accordingly.
Issues Involved:
1. Whether the Tribunal was correct in holding that no duty or penalty could be imposed on KRC due to the absence of a show cause notice. 2. Whether the Commissioner (Appeals) was justified in clubbing the clearances of KSI, Jeet, and Hi-Tech in the hands of KRC. Issue-wise Detailed Analysis: 1. Absence of Show Cause Notice to KRC: The Tribunal allowed the appeals of Hi-Tech, Jeet, KRC, and KSI, while dismissing the revenue's appeal. The revenue contended that the Tribunal's observation regarding the absence of a show cause notice to KRC was not sustainable. It was argued that Avtar Singh, being the common thread in the four entities, provided sufficient notice, thus complying with Section 11A of the Central Excise Act (C.E. Act). The respondents countered that the provisions of Section 11A were mandatory, and without a show cause notice, no liability could be fastened on KRC. The Supreme Court's judgment in Metal Forgings vs UOI was cited to support this argument. The Court agreed with the respondents, emphasizing that Section 11A's provisions are mandatory. The Court referenced the Supreme Court's observations in Metal Forgings, which stated that a show cause notice must be issued in a specific format under a specific provision of law, indicating the amount demanded and giving the assessee an opportunity to object. The absence of such a notice invalidates the demand. Therefore, the Tribunal's decision that no duty or penalty could be imposed on KRC due to the lack of a show cause notice was upheld. 2. Clubbing of Clearances by the Commissioner (Appeals): The revenue argued that the Tribunal did not address their grievance that the Commissioner (Appeals) could not have clubbed the production/clearances of KSI, Jeet, and Hi-Tech in the hands of KRC. The Commissioner (Appeals) had concluded that KRC should be treated as the manufacturer and thus entitled to the SSI exemption notification No. 1/93. Consequently, the duty for the period March 1995 to 1998 was calculated as Rs 3,72,760/-, with a penalty of Rs 2,25,000/- imposed under Section 11AC read with Rule 173Q. The Commissioner (Appeals) held the appellants jointly and severally liable for the penalty, with no separate penalty for Avtar Singh under Rule 209A. The Court noted that the Tribunal did not address whether the Commissioner (Appeals) erred in clubbing the clearances of KSI, Jeet, and Hi-Tech in the hands of KRC. This issue was crucial as it impacted the overall duty liability and the applicability of the SSI exemption. The Court remanded this specific issue back to the Tribunal for appropriate orders, emphasizing that it was incumbent on the Tribunal to decide this aspect. Conclusion: The appeal was disposed of with the Court upholding the Tribunal's decision on the absence of a show cause notice to KRC, but remanding the issue of clubbing clearances back to the Tribunal for further examination.
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