2016 (8) TMI 379 - AT - Central Excise

Existence of two SCNs - Invokation of extended period of limitation - Demand of differential duty - non-inclusion of warranty charges in the assessable value of goods - Held that - it is pertinent to see that the Two SCNs cannot be issued on the same issue and by invoking the extended period in both SCNs and second SCN becomes infructuous. There is no provision to confirm the demand in both SCNs. He cannot rely on both the SCNs one for confirming the demand and the other SCN for imposing personal penalties. - Appeal allowed by way of remand

Summary

Issues:
1. Maintainability of the second Show Cause Notice (SCN) dated December 2006.
2. Adjudication combining multiple SCNs.
3. Cross-examination of witnesses.
4. Confirmed duty demand on both SCNs.
5. Imposition of personal penalties.

Issue 1: Maintainability of the second SCN:
The appeal involved a demand for differential duty on warranty charges for a specific period. The appellants raised objections regarding the maintainability of the second SCN issued in December 2006, as they argued that the first SCN had already addressed the issue and confirmed the duty demand. They contended that the second SCN invoking the extended period for the same demand was redundant and lacked legal basis. The appellants also highlighted the lack of reasonable opportunity for cross-examination of witnesses during the proceedings.

Issue 2: Adjudication combining multiple SCNs:
The Legal Advisor (LA) argued that the adjudicating authority appropriately combined both SCNs in the order, covering the total demand under both notices. The LA justified the consolidation of the SCNs, emphasizing that the Directorate General of Central Excise Intelligence (DGCI) initiated nationwide investigations, unaware of the initial SCN issued by the Commissioner. The LA defended the authority's decision, stating that it was within legal boundaries to consolidate the two SCNs and that the order adequately discussed relevant case laws.

Issue 3: Confirmed duty demand on both SCNs:
Upon review, the Tribunal acknowledged the issuance of two SCNs by different authorities, both invoking the extended period for demanding duty on warranty charges. The Tribunal found that the adjudicating authority had confirmed the duty demand on both SCNs, despite the overlapping nature of the issues addressed in each notice. Notably, the first SCN demanded a higher amount compared to the second, which proposed a personal penalty on co-noticees. The Tribunal concluded that confirming the demand on both SCNs and imposing penalties based on separate notices was procedurally incorrect.

Issue 4: Imposition of personal penalties:
The Tribunal noted discrepancies in the penalties imposed, with the Managing Director facing a penalty based on the second SCN while the first SCN did not propose any personal penalties. The Tribunal emphasized that two SCNs on the same issue, invoking extended periods, rendered the second notice redundant. As a result, the Tribunal deemed it necessary to remand the case to the adjudicating authority for a fresh decision, directing a reevaluation based on a single SCN to ensure procedural fairness and adherence to natural justice principles.

In conclusion, the Tribunal allowed the appeals by remanding the case to the adjudicating authority for a fresh determination based on a single SCN, emphasizing the importance of following due process and conducting proceedings within a specified timeframe.