2014 (2) TMI 550 - HC - Central Excise

Demand pursuant to withdrawal of Exemption under Notification No.32/99-CE dated 08.07.1999 vide section 154 of Finance Act, 2003 - a dispute arose as to entitlement of the appellant for refund on the one hand and liability to pay the amount claimed by the department on the other. - adjudicating authority held that the appellant was not entitled to refund and was liable to pay duty - Following the decision in R.C. Tobacco (P) Ltd. & Anr. vs. Union of India & Anr. 2005 (9) TMI 80 - SUPREME COURT OF INDIA appeal dismissed - Decided against the assessee.

Summary

Issues Involved:

1. Whether the CESTAT was correct in disposing of the appeal after only giving the appellant an opportunity to argue on the stay application.
2. Whether the courts correctly appreciated the issuance of a show cause notice and limitation under Section 11A of the Central Excise Act, 1944.
3. Whether the recovery procedure under Section 154(4) of the Finance Act, 2003 was followed correctly.
4. Whether interest on the duty amount was correctly confirmed under the amended provisions of Section 11AB for the period prior to 2001.
5. Whether the principles of natural justice were violated by the Commissioner of Central Excise, Shillong by passing an ex parte order without giving an opportunity of personal hearing to the appellant.

Detailed Analysis:

1. Disposal of Appeal by CESTAT:

The appellant contended that the CESTAT disposed of the appeal without adequately hearing their arguments, focusing only on the stay application. The court found that the CESTAT relied on the Supreme Court's judgment in R.C. Tobacco (P) Ltd. vs. Union of India, which resolved the issue based on Section 154 of the Finance Act, 2003. Thus, the appeal was disposed of on the basis of established law, and no further detailed hearing was deemed necessary.

2. Issuance of Show Cause Notice and Limitation under Section 11A:

The appellant argued that the show cause notices were issued in 2001, while the retrospective amendment was introduced in 2003, thus denying them the opportunity to contest the retrospective withdrawal of the exemption. The court held that the retrospective withdrawal of the exemption was upheld by the Supreme Court, making the issuance of the show cause notices and the subsequent proceedings valid. The court emphasized that the retrospective effect of the legislation had been upheld without any exception.

3. Recovery Procedure under Section 154(4) of the Finance Act, 2003:

The appellant questioned whether the correct recovery procedure was followed. The court referred to the Supreme Court's judgment in R.C. Tobacco, which stated that the law permitted the retrospective withdrawal of exemptions and the recovery of duty. The adjudicating authority's actions were found to be within the scope of the amended law, and the recovery of the duty with applicable interest was deemed proper.

4. Interest on Duty Amount under Section 11AB:

The appellant challenged the confirmation of interest on the duty amount for the period prior to 2001. The court reiterated that the retrospective withdrawal of the exemption and the subsequent demand for duty and interest were upheld by the Supreme Court. Therefore, the interest on the duty amount was correctly confirmed under the amended provisions of Section 11AB.

5. Violation of Principles of Natural Justice:

The appellant claimed that the ex parte order by the Commissioner of Central Excise, Shillong, violated the principles of natural justice by not providing an opportunity for a personal hearing. The court noted that the statutory provisions of Section 154 of the Finance Act, 2003, and the Supreme Court's judgment in R.C. Tobacco validated the retrospective withdrawal of the exemption and the recovery of duty. The court concluded that the absence of a personal hearing did not cause any prejudice to the appellant, as the statutory scheme and the Supreme Court's judgment were binding.

Conclusion:

The court found no merit in the appeal and dismissed it, upholding the retrospective withdrawal of the exemption, the issuance of show cause notices, the recovery procedure, and the confirmation of interest on the duty amount. The principles of natural justice were not violated, as the statutory scheme and the Supreme Court's judgment were binding on the appellant.