2008 (8) TMI 649 - AT - Central Excise

Summary

Issues involved:
1. Validity of demand notice issued without a show cause notice.
2. Applicability of Section 11A of the Central Excise Act.
3. Sustainability of appeal against the notice of demand.
4. Justification of passing the impugned order by the Commissioner.

Analysis:

Issue 1: Validity of demand notice issued without a show cause notice
The Appellate Tribunal observed that the department proceeded to recover amounts without issuing a show cause notice, which is a violation of the procedure under Section 11A of the Central Excise Act. The Tribunal held that such a demand notice is unsustainable as it does not follow the prescribed legal process. The Tribunal emphasized that the demand notice should be set aside in such cases, as it has been consistently held in various judgments by higher courts and tribunals.

Issue 2: Applicability of Section 11A of the Central Excise Act
The learned Counsel argued that any demand should only be recovered after due process of law, which includes issuing a show cause notice as mandated by Section 11A of the Central Excise Act. The Tribunal agreed with this argument, highlighting that the Revenue cannot directly proceed to issue a demand notice without following the procedure laid down in Section 11A. This indicates the importance of adhering to the statutory provisions for recovery of amounts in excise matters.

Issue 3: Sustainability of appeal against the notice of demand
The Commissioner (A) had dismissed the appeal on the ground that no decision or order had been passed in the case, making the appeal not sustainable under Section 35 of the Act. However, the Tribunal disagreed with this reasoning, stating that the appeal against the notice of demand is indeed maintainable, especially when the demand notice itself is found to be unsustainable due to procedural irregularities.

Issue 4: Justification of passing the impugned order by the Commissioner
The Tribunal found that the impugned order passed by the Commissioner (A) was not justified, as it failed to consider the procedural lapses in issuing the demand notice without a show cause notice. By setting aside the impugned notice of demand and the Order-in-Appeal, the Tribunal allowed the stay application and appeal, granting the Revenue the liberty to proceed with recovery following the principles of natural justice and the requirements of Section 11A of the Central Excise Act.

In conclusion, the Appellate Tribunal's judgment emphasized the importance of adhering to the statutory procedures, particularly the issuance of show cause notices before demanding amounts in excise matters. The decision highlighted the significance of following due process and ensuring procedural fairness in such cases.