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2007 (9) TMI 149 - AT - Central ExciseSCN issued to categorize the Underwater Battery under S. No. 12 of Not. 64/95 whereas goods actually deserves to fall under S.No. 3 Opportunity not given to assessee to reply the relevant letter Adjudication order after lapse of 10 yrs of issue of SCN is baseless Appeal of assessee allowed
Issues involved:
Interpretation of Notification No.64/95-CE dated 16.3.95 regarding classification of goods supplied to Indian Navy under Serial No.12 or Serial No.3, legality of the Orders of Adjudication and First Appellate Order, lapse of time between show cause notice and disposal of proceedings. Analysis: The Appellant argued that the Iron Clad Motive Power Battery sold to the Indian Navy falls under Serial No.12 of Notification No.64/95-CE, making it a duty-free item. The Department's show cause notice did not specify that the goods were under-water batteries, and no verification was conducted to confirm this. The Appellant contended that all goods other than cigarettes supplied should fall under Serial No.3 of the Notification. The Appellant's submission was not ruled out, and the fact that the goods were supplied to the Indian Navy was also not denied. The Appellant claimed that the decision in the Orders of Adjudication and First Appellate Order was baseless and departed from the show cause notice. The Tribunal noted that the principal grievance of illegality warranted a hearing on merit, and predeposit was dispensed with for common disposal of the appeal. It was observed that the fact that the Iron Clad Motive Power Battery was an under-water battery had not been addressed in the lower authorities' orders. The show cause notice indicated a bias towards taxing the Appellant without providing an opportunity to respond to a letter dated 25.6.96. The Order of Adjudication passed on 28.2.06, after a lapse of ten years from the show cause notice, was deemed to lack a basis for dilatory disposal without proper consideration of the facts. The Appellant's eligibility to be governed by Serial No.3 of the Notification was upheld, rendering the Order of the Appellate Authority unsustainable. Consequently, the appeal was allowed, and the impugned Order was set aside. The judgment highlights the importance of proper application of mind, adherence to procedural fairness, and the need for authorities to consider all relevant aspects before making decisions in tax matters.
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