1989 (9) TMI 264 - AT - Central Excise

Summary

Issues:
1. Appeal against order setting aside differential duty levy.
2. Time-barred demand of differential duty.

Analysis:
The appeal was filed by the Collector of Central Excise, Cochin against an order setting aside a levy of differential duty. The initial demand notice was issued by the Superintendent of Central Excise, Kottayam on 18-8-1986, challenging the respondents to pay Rs. 15,487.89 for the period from 1-3-1986 to 31-3-1986. This demand was contested, leading to a remand by the Collector of Central Excise (Appeals), Madras, directing the Assistant Collector to decide the matter after issuing a show cause notice and adhering to principles of natural justice. Subsequently, a show cause notice was issued on 12-12-1986, resulting in an order by the Assistant Collector on 13-7-1987, which was set aside in the impugned order.

The main contention raised by the learned S.D.R. was that the lower appellate authority's finding that the demand was time-barred contradicted its earlier directive to issue a show cause notice. The S.D.R. argued that the show cause notice of 12-12-1986 was issued to comply with principles of natural justice, and should be viewed in conjunction with the initial demand notice of 18-8-1986. However, the lower appellate authority upheld that the demand for differential duty was time-barred.

Upon careful consideration, the judge concluded that the demand for differential duty for the period 1-3-1986 to 24-3-1986 was indeed time-barred. The judge emphasized that a show cause notice is a prerequisite before demanding payment, and the initial demand notice did not fulfill this requirement. The show cause notice issued on 12-12-1986 was acknowledged to be beyond the limitation period as per Section 11A of the Central Excises and Salt Act, 1944. The judge highlighted that the lower appellate authority did not consider the initial communication as a show cause notice, and therefore, the demand was rightfully deemed time-barred. Consequently, the judge upheld the impugned order, affirming that the demand was legally unsustainable and dismissed the appeal.