1992 (9) TMI 194 - AT - Central Excise

Issues Involved:
1. Legality of demand without a show cause notice.
2. Interpretation of Rule 173-I and its application.
3. Compliance with Section 11A of the Central Excises and Salt Act.
4. Validity of endorsements in RT-12 returns as notices.
5. Time-barred nature of the demand.

Issue-wise Detailed Analysis:

1. Legality of Demand Without a Show Cause Notice:
The appellants contended that the demand raised without issuing a show cause notice was illegal and void. They cited several judgments, including the Madhumilan Syntax Ltd v. Union of India and Chowgule & Co. (Hind) Pvt. Ltd. v. Collector of Central Excise, which held that any demand without a show cause notice is vitiated. The appellants argued that the principles of natural justice were denied as they were unable to respond to the demand without a show cause notice.

2. Interpretation of Rule 173-I and Its Application:
The appellants argued that Rule 173-I authorizes Central Excise officers to assess the monthly return and issue directions for duty short paid or excess paid primarily to rectify accounting errors, not requiring the application of a judicious mind. They contended that in other cases, the assessing authority must issue a show cause notice. However, the Tribunal found that the Superintendent's actions were in line with Rule 173-I, which allows for further inquiry and assessment based on the RT-12 return. The Tribunal upheld the view that corrective action indicating short payment in the RT-12 return does not necessitate a notice under Section 11A.

3. Compliance with Section 11A of the Central Excises and Salt Act:
The appellants argued that the provisions of Section 11A are applicable in all cases of demand for short payment, with no exceptions. They contended that if there is a conflict between Rule 173-I and Section 11A, the latter should prevail. However, the Tribunal found that the demand was in accordance with Rule 173-I and the classification list submitted by the appellants themselves. The Tribunal upheld the view that a notice under Section 11A was not necessary in this case.

4. Validity of Endorsements in RT-12 Returns as Notices:
The Tribunal examined the endorsements in the RT-12 return and found that the details of the calculation and the excess credit availed were clearly spelt out in Annexure 'A' to the Assessment Memorandum. The Tribunal referred to the decision of the Allahabad High Court in Indian Oxygen Ltd. v. Superintendent of Central Excise, which held that an endorsement in the RT-12 return directing the factory to debit the amount in question should be treated as a show cause notice. The Tribunal also referred to the Bombay High Court decision in Dindayal Rolling & Refineries Pvt. Ltd. v. A. V. Borkar, which rejected the contention that there was no show cause notice issued when the contents of the notice were clear.

5. Time-barred Nature of the Demand:
The appellants contended that no show cause notice had been issued within six months from the date of submission of the RT-12. They cited several judgments to support their contention that the demand was time-barred. However, the Tribunal found that the Superintendent had assessed the RT-12 return within six months from the relevant date, and the demand was raised in accordance with Rule 173-I.

Conclusion:
The Tribunal upheld the view that the demand raised in the RT-12 return without a separate show cause notice was valid and in accordance with Rule 173-I. The appeal was dismissed, and the demand for short payment of duty was confirmed.

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