2000 (11) TMI 191 - AT - Central Excise

Summary

Issues involved: Duty demand denial under SSI Notifications, non-issuance of show cause notice to related company, imposition of penalty.

In the present case, the Appellate Tribunal CEGAT, New Delhi addressed the appeal arising from a duty demand confirmation by the Commissioner of Central Excise, Allahabad. The duty demand of Rs. 21,21,385/- was imposed on the appellants, manufacturers of PP medicines falling under CET Sub-heading 3003.10, by denying them the benefit of SSI Notifications 175/86 dated 1-3-1986 and Notification 1/93 dated 28-2-1993. The Commissioner held that the appellants, owned by another company, were not eligible for the exemption and imposed a penalty of Rs. 21 lakhs.

The appellants contended that the non-issuance of a show cause notice to the related company vitiates the proceedings, citing precedents such as Ogesh Industries and M/s. Dawn Fire Works Factory. The Tribunal acknowledged the force in this submission, citing the case of Ogesh Industries where it was held that failure to issue a notice to all relevant units renders the proceedings invalid. The Tribunal found that the Department's action was based on the aggregate value of clearances of both the appellants and the related company, thus applying the precedent set in previous cases and setting aside the impugned order on this basis alone.

The Tribunal's decision was influenced by the principle established in prior cases, emphasizing the importance of issuing show cause notices to all relevant units when determining duty demands. By following the precedent set in cases like Ogesh Industries and M/s. Dawn Fire Works Factory, the Tribunal concluded that the failure to issue a notice to the related company invalidated the proceedings, leading to the setting aside of the impugned order without delving into the merits of the case.