1987 (7) TMI 282 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for benefit under Notification 119/75-C.E.
2. Legality of the show cause notice under Rule 10 of the Central Excise Rules.
3. Validity of the demand for differential duty and penalty.

Issue-wise Detailed Analysis:

1. Eligibility for Benefit under Notification 119/75-C.E.:
The appellants, a unit of Simon Carves India Ltd., claimed benefit under Notification 119/75-C.E. for fabrication work. The department contended that this benefit was only available to job workers receiving materials from a customer and returning the fabricated product to the customer. The department argued that since the material was sent from one unit of the company to another, the despatching unit could not be considered a customer. The appellants argued that their units at Bombay and Calcutta dealt with the Adityapur unit as independent customers. However, the tribunal concluded that despite the procedural formalities, all units were part of the same company and thus were not distinct legal entities. Consequently, the Adityapur unit was not entitled to the benefit under Notification 119/75-C.E., as it was not a job worker in the legal sense.

2. Legality of the Show Cause Notice under Rule 10 of the Central Excise Rules:
The show cause notice issued on 19-6-1980 did not quantify the duty demanded or specify the period for which the demand was raised. The appellants argued that this omission rendered the notice invalid under Rule 10, which required the quantum of duty to be mentioned. The department relied on the Delhi High Court's decision in Hindustan Aluminium Corporation Ltd., which held that the omission to mention the quantum of duty would not invalidate the notice. The tribunal noted that in the present case, the department lacked the necessary information to quantify the duty because the appellants had not furnished the required details. The tribunal concluded that the notice was fundamentally defective due to the absence of specified details, rendering the adjudication invalid.

3. Validity of the Demand for Differential Duty and Penalty:
The Assistant Collector demanded differential duty on the cost of raw materials received by the Adityapur unit from the Bombay and Calcutta units and imposed a penalty of Rs. 2,000/-. The appellants contended that the confirmation of the demand was invalid due to non-compliance with Rule 10. The tribunal found that the department had not complied with the statutory requirements of Rule 10, as the notice did not specify the duty amount or the period. The tribunal held that the demand for an unspecified amount and period was not valid in law. Consequently, the confirmation of the demand and the penalty was set aside.

Separate Judgments by the Judges:
The tribunal members delivered separate judgments. One member concluded that the show cause notice was fundamentally defective, and the adjudication should be set aside on that ground. The other member held that the absence of details in the notice was not fatal and upheld the order of adjudication. The President of the tribunal resolved the difference, concluding that the show cause notice was valid despite the lack of specific details, given the appellants' failure to furnish necessary information.

Final Order:
The appeal was dismissed except to the extent that the demand for duty from the appellants would be enforceable only for the period of five years preceding the date of the show cause notice. The balance of the demand for the prior period was set aside.