2016 (12) TMI 971 - AT - Central Excise

Demand of interest - scope of SCN - Classification of goods - Notification No.9/2000 dated 01.03.2000 - Held that - We find that the show cause notice does not call upon the appellant to show cause as to why interest should not be paid by them. Therefore, the direction of Ld. Commissioner (Appeals) to the appellant to pay interest is beyond the scope of show cause notice. The order-in-Appeal passed by Ld. Commissioner (Appeals) to that extent has traveled beyond show cause notice - appeal allowed partially.

Summary

Issues:
- Appeal against Order-in-Appeal No.50-CE/MRT-I/2006 dated 31.03.2006
- Classification declaration amendment and duty rate discrepancy
- Entitlement to benefit of SSI under Notification No.9/2000
- Recovery of Central Excise Duty
- Payment of interest not mentioned in show-cause-notice
- Jurisdiction of Ld. Commissioner (Appeals) to order payment of interest

Analysis:
The appeal was filed against Order-in-Appeal No.50-CE/MRT-I/2006 dated 31.03.2006 passed by the Commissioner (Appeals) Customs & Central Excise, Meerut-I. The case revolved around a show-cause-notice issued to the appellants regarding the amendment of a classification declaration, specifically questioning the rate of duty applicable. The Original Authority, in the Order-in-Original dated 25.05.2005, held that the appellants were not entitled to the benefit of Small Scale Industry (SSI) under Notification No.9/2000, leading to a demand for Central Excise Duty amounting to ?3,48,996. This decision was challenged before the Ld. Commissioner (Appeals), who upheld the Order-in-Original, including the demand for duty. Additionally, the Ld. Commissioner (Appeals) ordered the payment of interest, stating that even if not mentioned in the show-cause-notice, interest was required to be paid.

The grounds of appeal primarily focused on the absence of any mention of interest in the show-cause-notice or the Order-in-Original. The appellant argued that the direction to pay interest by the Ld. Commissioner (Appeals) exceeded the scope of the show-cause-notice and adjudication order. During the hearing, the learned counsel reiterated that no direction regarding interest payment was given by the Original Authority, and the Ld. Commissioner (Appeals) overstepped by ordering the payment of interest. On the other hand, the Ld. DR for Revenue supported the impugned Order-in-Original and Order-in-Appeal.

Upon considering the arguments presented, the Tribunal found that the show-cause-notice did not address the payment of interest by the appellant. Consequently, the Tribunal concluded that the Ld. Commissioner (Appeals) had exceeded the scope of the show-cause-notice by directing the appellant to pay interest. As a result, the Tribunal set aside the order to pay interest and modified the Order-in-Appeal dated 31.03.2006 accordingly, partially allowing the appeal. The decision highlighted the importance of adherence to the scope of show-cause-notices in adjudicating matters related to duty demands and interest payments.