2017 (9) TMI 1186 - HC - Central Excise

Validity of SCN - Whether the Tribunal has erred in holding that non-invocation of a proviso appended to Notification in the show cause notice issued by the department which was otherwise covered by Rule 9 and 49 of the Central Excise Rules 1944 invoked in the show cause notice can be a ground for dismissal of the said show cause notice? - Held that - Admittedly under the trade notice No. 112/94-CE dated 15.12.1994 the duty liability could have been discharged by the assessee at single yarn off spindle stage. However subsequently by issuance of notification dated 18.05.1995 the aforesaid exemption which was granted to the assessee was withdrawn. In other words from 18.05.1995 onwards the assessee was required to discharge the duty liability only after doubling multi-folding of the yarn at the time of clearance - the show cause notices were invalid merely on the ground that in the show cause notices no specific mention has been made to the proviso added to the notification dated 18.05.1995. It is evident that the aforesaid show cause notice gives the sufficient particulars with regard to the basis on which the demand of duty penalty and interest was being made by the Revenue. It is pertinent to mention here that the assessee did not raise the issue with regard to vagueness of the show cause notices either before the Adjudicating Authority or before the Appellate Authority. The aforesaid contention has been raised for the first time in the objections which have been filed in this appeal. Therefore the assessee cannot be allowed to raise a new plea for the first time in this appeal. Appeal allowed - decided in favor of Revenue.

Summary

Issues:
Appeal under Section 35(G) of the Central Excise Act, 1944 - Tribunal's error in holding non-invocation of a proviso appended to Notification in show cause notice as ground for dismissal.

Detailed Analysis:

1. Background and Facts:
The respondent, a textile mill, contravened Central Excise Rules by not paying adequate duty from November 1994 to July 1996. Show cause notices were issued, demanding duty, penalty, and interest. The Commissioner discharged the notices, but the Tribunal upheld some. The Revenue appealed, arguing that the notices were valid despite not mentioning a specific notification.

2. Contentions:
The Revenue argued that the notices were valid as they provided sufficient details, and lack of mention of the notification did not prejudice the respondent. The respondent claimed the notices were vague, causing prejudice, and referred to Supreme Court decisions supporting their stance.

3. Judgment Analysis:
The Court noted the exemption withdrawal via a notification, making duty payable only after doubling/multi-folding of yarn. The Tribunal found the notices invalid due to lack of specific mention of the proviso in the notification. The Court referred to a show cause notice providing clear particulars, rejecting the respondent's claim of vagueness. Citing a Supreme Court case, it emphasized that new pleas cannot be raised in appeals if not raised earlier.

4. Decision and Rationale:
The Court ruled in favor of the Revenue, dismissing the claim of vagueness in the notices. It set aside the previous orders, allowing the Revenue to demand duty, penalty, and interest from May 18, 1995, onwards. The appeal was disposed of in favor of the Revenue.

This detailed analysis covers the issues, background, contentions, judgment analysis, and the final decision of the High Court in the mentioned legal judgment.