2017 (7) TMI 403 - AT - Central Excise

Clandestine removal - AMSM was indulging in removing cotton yarn in the guise of hank yarn - time limitation - case of appellant is that that since two show cause notices were issued on identical set of facts evidences allegations the subsequent show cause notice raising a demand of 32, 73, 025/- is barred by limitation - Held that - the basis for demand of duty in the first show cause notice and the second show cause notice is entirely different. The department has relied upon 59 documents for issuance of the second show cause notice whereas in the first show cause notice they have relied upon 25 documents as stated earlier. All these would go to show that both the show cause notices are entirely different. We do take note of the argument put forward by the learned AR that there was a time limit prescribed under section 110 of Customs Act 1962 for issuance of show cause notice proposing for confiscation of the goods when the goods have been seized. Thus the first show cause notice appears to have been issued by the department to comply with this statutory time limit and confining the proposal for confiscation imposition of fine penalty and duty demand to such allegation only. Though the date of recording of statements may be before issuance of first show cause notice (6.6.2002) we have to consider the fact that department would require more time for investigation follow-up action formulation of allegations based on such statements and invoices for issuing of the second show cause notice raising the allegation of clandestine removal of goods and duty demand on this count. Considering the voluminous nature of evidences we do hold that the issuance of the second show cause notice dated 7.5.2004 is legal and proper and not hit by limitation. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Whether the second show cause notice issued to demand duty is barred by limitation?

Analysis:
The case involved the appellant, a cotton yarn manufacturer, suspected of evading Central Excise duty by clearing cotton yarn as hank yarn. The Central Excise Department conducted search operations and seized relevant documents. Two show cause notices were issued - one proposing a duty demand of &8377; 2,06,726/- and the other for &8377; 32,73,025/- for clandestine clearances. The adjudicating authority confirmed the demands, penalties, and confiscation. The Commissioner (Appeals) upheld the decision, reducing the redemption fine for some parties. The appellant argued before the Tribunal that the second notice was time-barred as it was based on the same facts as the first notice. The appellant relied on the Nizam Sugar Factory case to support this contention.

The appellant contended that since both show cause notices were based on identical facts, the second notice was barred by limitation. However, the Tribunal disagreed, stating that the first notice was limited to duty demand for seized goods, while the second notice detailed the clandestine removal modus operandi. The second notice relied on 59 documents compared to 25 in the first notice, showing distinct allegations. The Tribunal noted that the first notice complied with the statutory time limit for confiscation proposals, and more time was needed for investigations leading to the second notice. The Tribunal held that the second notice was legally issued and not time-barred.

In conclusion, the Tribunal found no grounds to interfere with the impugned order, upholding the decision and dismissing the appeals.