1993 (9) TMI 222 - AT - Central Excise

Summary

Issues:
Appeal against Modvat Credit disallowance based on inclusion of value in assessable value for previous year.

Analysis:
The appeal was against the Order-in-Appeal of the Collector of Central Excise (Appeals), Bombay, which upheld the demand raised in relation to Modvat Credit availed on gummed/adhesive tapes. The Assistant Collector had initially withdrawn the demand, but the Collector ordered an appeal based on the non-inclusion of the value of the input in the assessable value for the previous year. The main issue was whether the Department could introduce a new ground for appeal not mentioned in the Show Cause Notice.

The Advocate for the appellant argued that the Collector (Appeals) exceeded the scope of the Show Cause Notice by considering a new ground for disallowance of Modvat Credit. On the other hand, the SDK contended that the Department could order a review under Section 35E of the Act based on the points raised in the Show Cause Notice. The argument was made that if the appellant felt they were not given a proper opportunity to explain, the matter could be remanded for further consideration.

The Tribunal noted that the Show Cause Notice only mentioned the disallowance of Modvat Credit based on the tapes not being inputs for the final product. The Tribunal emphasized that the Collector's power under Section 35E did not allow for introducing new grounds beyond the scope of the Show Cause Notice for filing an appeal.

It was established that while certain legal issues could be raised at the appellate stage, they should be pure questions of law that do not require additional evidence or examination of new factual aspects not presented during adjudication. The Collector's decision to order an appeal based on a ground not raised in the Show Cause Notice was deemed inappropriate.

The Tribunal concluded that the Collector (Appeals) erred in considering a ground not specified in the Show Cause Notice and set aside the order, allowing the appeal with consequential relief. It was suggested that the Department could issue a fresh Show Cause Notice if permissible under the law to address the new issue raised before the Collector (Appeals).