1990 (11) TMI 285 - AT - Central Excise

Summary

Issues:
1. Proper demand raised under Section 11A of the Central Excises & Salt Act, 1944 based on show cause notice.
2. Validity of show cause notice dated 7-3-1988 and subsequent corrigendum dated 5-8-1988.
3. Requirement of specifying the amount in the notice for it to be legally maintainable under Section 11A.
4. Calculation of the period of demand and liability of the Respondent to pay the duty.

Analysis:

The appeal before the Appellate Tribunal CEGAT, Madras was filed by the Revenue challenging the order of the Collector of Central Excise (Appeals) regarding the classification of pharmaceutical dry yeast and the demand of duty amounting to Rs. 28,632.20. The Collector (Appeals) had set aside the duty demand as no proper demand had been raised. The Respondent's product was initially classified under Chapter XVIII but was later revised to Heading 2102.10 with a higher duty rate of 12%. A show cause notice was issued on 7-3-1988, and a corrigendum was issued on 5-8-1988, adding a demand of Rs. 61,593.60 based on the revised classification.

The Department argued that the show cause notice and the corrigendum were sufficient for the demand under Section 11A. On the other hand, the Respondent contended that the show cause notice dated 7-3-1988 was not proper, thus no valid demand was raised as required by law. The Tribunal observed that for a notice to be legally maintainable under Section 11A, it must specify the amount demanded along with the reasons. The show cause notice lacked the amount, which was only provided in the corrigendum. Therefore, the demand was considered properly communicated only upon the issuance of the corrigendum on 5-8-1988.

The Tribunal further held that the demand was effectively raised only on 5-8-1988, and the period of demand should be calculated from the receipt of the corrigendum by the Respondent. As the classification of goods was not disputed, the Respondent was liable to pay the duty demanded within the six-month period. Consequently, the Revenue's appeal was partially allowed, affirming the duty demand falling within the specified period.