2009 (3) TMI 515 - HC - Central Excise

Second Show cause notice- The petitioner has challenged the said show cause notice before this Court primarily on the ground that the demand on account of late payment of duty amount has been set aside by the Commissioner (Appeals). The matter is pending before the Tribunal at the instance of the Revenue, therefore, the Revenue cannot issue a second show cause notice on the same issue which led to raising of earlier demand against the petitioner. Thus, the show cause notice was said to be illegal, without jurisdiction and an abuse of the process of law. Held that- the show cause notice issued by revenue wholly illegal unwarranted and unjustified. Initiation of proceedings by way of a subsequent show cause notice cannot be sustained in law before final adjudication by Tribunal.

Summary

Issues:
Challenge to a notice calling for penal action under Central Excise Rules and Central Excise Act for violations of rules.

Analysis:
The petitioner was charged with excise duty based on the capacity of production under Section 3A of the Central Excise Act. The Superintendent of Central Excise called for penalty payment due to the petitioner's failure to discharge duty liability within the prescribed time limit. The petitioner appealed against this demand, which was initially allowed but later overturned by the Customs Excise & Service Tax Appellate Tribunal (CESTAT). Subsequently, a new show cause notice was issued to the petitioner, which was challenged in the present writ petition.

The High Court found that the issuance of the show cause notice was not sustainable in law. The court noted that the Commissioner (Appeals) had already found the earlier demand illegal, and the matter was pending before the Tribunal due to an appeal by the Revenue. Therefore, issuing a second show cause notice on the same issue was deemed illegal, without jurisdiction, and an abuse of the legal process. The court emphasized that until the order of the Commissioner (Appeals) was modified or reversed by a competent authority, the Revenue could not serve another show cause notice for the same amount and period. As the basis of the show cause notice was identical to the issue pending before the Tribunal, the court concluded that the notice was wholly illegal, unwarranted, and unjustified.

In light of the above findings, the High Court allowed the writ petition, quashing the show cause notice with no order as to cost. The court's decision was based on the principle that initiating proceedings through a subsequent show cause notice before final adjudication by the Tribunal was not legally sustainable.