2016 (6) TMI 513 - AT - Central Excise

Recovery of duty on assessable value and imposition of penalty - proposed adoption of the price declaration in the delivery note as the value of the grey fabrics - demand on grounds not imposed in the SCN - Held that - in view of the decisions of Hon ble Supreme Court in the case of Commissioner of Central Excise Nagpur Versus M/s Ballarpur Industries Ltd 2007 (8) TMI 10 - SUPREME COURT OF INDIA in the case of Saci Allied Products Ltd. Versus Commissioner of C. EX. Meerut 2005 (4) TMI 65 - SUPREME COURT OF INDIA and in the case of Commr. of Central Excise & Customs Surat Versus M/s Sun Pharmaceuticals Inds. Ltd. & Ors. 2015 (12) TMI 670 - SUPREME COURT the impugned order cannot be sustained and is set aside. - Decided in favour of appellant

Summary

Issues: Assessment based on price discrepancy in delivery notes, Commissioner's confirmation of demand beyond grounds in show-cause notice, Applicability of judicial precedents on scope of show-cause notice.

Analysis:
1. The case involved M/s Sharda Synthetics Ltd. processing grey fabrics from M/s Karnataka Handloom Development Corporation Ltd. (KHDCL) based on price declarations. Revenue alleged discrepancies in price declarations on delivery slips, leading to a show-cause notice for duty recovery. The notice compared assessable values with another manufacturer, M/s Bangalore Textile. The Commissioner confirmed the duty demand and imposed penalties.

2. The appellant argued that the sole ground in the notice regarding price from delivery notes was dropped by the Commissioner. The Order-in-Original highlighted that the transit risk component in the price declaration was not justified for assessable value determination. The Commissioner, however, confirmed the demand on different grounds not raised in the notice. Citing legal precedents, the appellant contended that the Commissioner exceeded the show-cause notice's scope, contravening judicial guidelines.

3. The Appellate Tribunal observed that the Commissioner's decision to confirm the demand based on grounds not in the show-cause notice was impermissible. Referring to legal precedents, including the cases of Ballarpur Industries Ltd., Saci Allied Products Ltd., and Sun Pharmaceuticals, the Tribunal emphasized the significance of adhering to the grounds raised in the notice. The Tribunal set aside the impugned order, ruling in favor of the appellant and allowing the appeals.

4. The judgment underscored that the foundation for duty recovery lies in the show-cause notice, emphasizing the importance of restricting decisions to the issues raised therein. By invoking relevant legal precedents, the Tribunal upheld the principle that authorities cannot exceed the notice's scope when confirming demands. The decision highlighted the necessity of procedural fairness and adherence to legal principles in tax assessments and appeals.