2017 (5) TMI 517 - HC - Central Excise

Principles of natural justice - Whether the tribunal was justified in deciding the matter without considering the effect of the depositing of duty by the appellant before issuance of the notice? Held that - Sub-section 2 B of Section 11 A provides that if any excise duty has not been levied or paid, but is subsequently paid by the person concerned before the issuance of the SCN, sub-section 2 B of Section 11 A contemplates that the CEO shall not serve any notice under sub-section 1 of Section 11 A for the purposes of realization of duty. A perusal of the SCN reveals that it is not notice u/s 11 (A) (1) of the Act for the realization of the duty rather it is a notice for the confiscation of the seized goods and for the imposition of the penalty. This is quite distinct from a notice u/s 11 (A) (1) of the Act - The notice dated 24.9.2004 was for the purposes of an order u/s 33 as envisaged by the Section 33 A of the Act. It was not a notice u/s 11 (A) (1), which is said to be prohibited by Section 2 B of Section 11 A. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Appeal against order of confiscation of goods and imposition of penalty under Central Excise Act, 1944.
2. Substantial question of law regarding the effect of duty deposit before issuance of show cause notice.

Analysis:
1. The appellant filed an appeal against the order of the CESTAT confirming the confiscation of seized goods, appropriation of deposited duty, and imposition of penalties under the Central Excise Act, 1944. The appellant, a manufacturer of excisable items, faced shortage and excess in stock during an inspection, leading to a show cause notice for confiscation and penalty. The appellate authority and tribunal upheld the order. Section 11 A of the Act allows serving a notice for duty payment within a year of the relevant date.

2. The substantial question of law raised was whether the tribunal erred in not considering the effect of duty deposit before the issuance of the notice. The show cause notice was issued for confiscation and penalty, not for duty realization. The notice was traced back to Sections 33 and 33 A of the Act, dealing with adjudication of confiscation and penalties. The adjudicating authority must provide a hearing to the party as per natural justice principles. The notice in question was not under Section 11 (A) (1) but under Section 33, making the deposit of duty prior to the notice irrelevant to the adjudication proceedings.

3. The Court clarified that the deposit of duty before the issuance of the show cause notice had no impact on the completed adjudication proceedings under Section 33 of the Act. Therefore, the question raised in favor of the revenue and against the appellant. Consequently, the appeal was dismissed based on the above analysis and legal interpretation.