2005 (1) TMI 196 - AT - Central Excise

Valuation - Demand - Res judicata - adjudication - manufacturing biscuits - Penalty - HELD THAT - The Assistant Commissioner dropped the proceedings on the ground that the price lists were not provisionally approved, but have become final. There is no indication from the records that the appellants had suppressed any facts. In fact, based only on the balance sheet of the appellants' principal the demand was made. In the second show cause notice issued by the Commissioner, the amount of demand is exactly same for the same period. This demand is also based on the balance sheet of the principal. In other words, after the conclusion of the first proceedings initiated by the Assistant Commissioner, no new development took place. There was no seizure of any new document. All the documents which were available during the first proceedings formed the basis of the second proceedings. In the first proceedings, the Assistant Commissioner has dropped the demand. Against the Assistant Commissioner's order, the Revenue has gone in appeal which is yet to be decided. Thus, we strongly feel that there is no point in the Commissioner initiating a second proceedings for the same period and for the same amount invoking longer period. There is no suppression of facts. So, longer period is ruled out. In that case, the demand is time barred. We also hold that the principle of res judicata is applicable. Thus, the Order-in-Original has no merit. The same is liable to be set aside. This order is without prejudice to the proceedings before the Commissioner (Appeals) against the Assistant Commissioner's order. The Commissioner (Appeals) may decide the issue without influenced by our observations in this order. For the reasons stated above, we allow the appeal.

Summary

Issues: Valuation of goods manufactured, imposition of penalty under Rule 173Q(1), confiscation of plant and machinery under Rule 173Q(2), application of res judicata principle.

Valuation of Goods Manufactured: The appellant, a job worker manufacturing biscuits, challenged the demand of Rs. 48,46,194/- confirmed by the adjudicating authority for the period from 22-11-92 to 31-3-96. The Assistant Commissioner had dropped the demand in a previous order, citing final approval of price lists by the Department. The Revenue issued a second show cause notice for the same amount and period, based on the balance sheet of the appellant's principal. The Tribunal found no suppression of facts and held that the demand was time-barred, applying the principle of res judicata. Citing legal precedents, the Tribunal emphasized that repeated show cause notices for the same period after a case has been dropped are hit by res judicata.

Penalty and Confiscation: A penalty of Rs. 15,00,000/- was imposed on the appellant under Rule 173Q(1), and the plant and machinery were confiscated under Rule 173Q(2). The appellant strongly contested these actions. The Tribunal observed that the proceedings lacked merit and set aside the Order-in-Original, emphasizing that the decision was without prejudice to the proceedings before the Commissioner (Appeals) against the Assistant Commissioner's order. The Commissioner (Appeals) was directed to decide the issue independently.

Application of Res Judicata: The Tribunal held that the principle of res judicata applied to the case, as the demand was based on the same facts and period as a previous dropped case. Citing legal principles and case law, the Tribunal emphasized that multiple proceedings on the same matter cannot be pursued simultaneously. The Tribunal allowed the appeal, ruling in favor of the appellant based on the lack of merit in the Order-in-Original.