1989 (12) TMI 203 - AT - Central Excise

Summary

Issues:
- Validity of demands raised on RT-12 returns without a proper show cause notice under Section 11A of the Central Excises and Salt Act.
- Interpretation of Rule 1731 of the Central Excise Rules regarding short levies on RT-12 returns.
- Comparison of conflicting judgments from the Bombay High Court, Supreme Court, and CEGAT on the necessity of a show cause notice for demands arising from assessment returns.
- Consideration of whether endorsements on RT-12 returns can serve as valid show cause notices.

Analysis:

The case involved appeals by the Collector of Central Excise, Bombay II, against an order of the Collector of Central Excise (Appeals) Bombay, regarding short levies pointed out on RT-12 returns. The Collector (Appeals) had set aside the demands, stating that the Assessing Officer did not follow the procedure under Section 11A of the Central Excises and Salt Act, making the demands unsustainable in law. The department argued that demands raised on RT-12 returns under Rule 1731 were valid and cited judgments from the Bombay High Court, Supreme Court, and CEGAT to support their position.

The department contended that assessments on RT-12 returns were quasi-judicial functions and did not require a separate show cause notice under Section 11A. They referenced the Bombay High Court's judgment in Swan Mill Ltd. case and the Supreme Court's decision in Collector of Central Excise v. Kosan Metal Products Ltd. to support their argument. Additionally, they cited a decision from the South Regional Bench in support of the validity of demands made on RT-12 returns without a separate notice.

However, the Tribunal referred to a recent decision of the CEGAT Special Bench 'C' in Vipul Dyes Chemicals Pvt. Ltd., which held that demands raised on RT-12 returns without a proper show cause notice were not valid. The Tribunal noted the Supreme Court's emphasis on the necessity of a show cause notice before demanding duty under Section 11A, as established in previous judgments.

The Tribunal concluded that short endorsements on RT-12 returns could not save limitation under Section 11A unless followed by a proper show cause notice. Despite the department's argument that the endorsements could be construed as show cause notices, the Tribunal found that they lacked the essential opportunity for the recipient to show cause and were more akin to direct demands for payment. Relying on the Supreme Court's decision and the CEGAT Special Bench ruling, the Tribunal held that the department's appeals were not sustainable and dismissed them accordingly.