2018 (8) TMI 1396 - HC - Central Excise

Validity of second SCN - Time limitation - relevant date for raising demand - Whether, arising from the same set of facts, the Department is entitled to raise two Show Cause Notices, one within the period of limitation of one year and the other beyond the period of limitation on the allegations of clandestine removal and suppression by the appellant? Held that;- On the date when the second show cause notice dated 27.3.2002 was issued, the Commissioner of Central Excise had no fresh material to justify as a cause of action for the issuance of the second show cause notice dated 27.3.2002. In fact, there is no reference to the Order-in-Original passed by him dated 07.1.2002 nor the proceedings, which were initiated earlier. In fact, that should have been specifically referred to in the second show cause notice, which is an inherent error and it will vitiate the second show cause notice dated 27.3.2002. Whether, with the same set of facts, the Authority could have issued the second show cause notice, especially when the second show cause notice was issued after the first show cause notice culminated in an Order-in-Original dated 07.1.2002? - Held that - The answer to this question should be in the negative i.e in favour of the assessee and against the Revenue. On facts, that the Authority was not justified in doing so in the absence of fresh materials for issuance of the second show cause notice dated 27.3.2002. That apart, in the statement of facts appended to the first show cause notice dated 14.8.2001, it is evidently clear that the entire material was available with the Commissioner and that the question of initiation of fresh proceedings on the same set of facts would amount to double jeopardy or in other words, the assessee cannot be vexed twice for the same set of allegations - the Commissioner of Central Excise and the Tribunal fell in error in coming to the conclusion that the second show cause notice initiated was entirely different and not relatable to the first proceedings initiated vide show cause notice dated 14.8.2001. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Limitation period for demand raised by the Department.
2. Issuance of two Show Cause Notices (SCNs) on the same set of facts.
3. Findings on technical aspects contrary to expert reports.

Issue-Wise Detailed Analysis:

1. Limitation Period for Demand Raised by the Department:
The court did not specifically address this issue in the judgment as it was contingent on the decision of the second issue.

2. Issuance of Two Show Cause Notices on the Same Set of Facts:
The primary issue was whether the Department could issue two SCNs based on the same set of facts—one within the limitation period and another beyond it. The appellant argued that this was contrary to the principles of natural justice and amounted to double jeopardy. The court noted that the first SCN dated 14.08.2001 was based on an inspection and special stock taking conducted between 25.10.2000 and 14.12.2000. The Commissioner, in the first SCN, proposed confiscation and penalty under Rule 173Q of the Central Excise Rules, 1944, which was adjudicated, and the goods were ordered to be released to the assessee with a penalty of ?10,000 for improper maintenance of records. The second SCN dated 27.03.2002, issued by the same officer, proposed to demand excise duty, levy penalty, and interest. The court found that the second SCN was based on the same set of facts and documents as the first SCN and did not introduce any new material. The court held that issuing the second SCN on the same set of facts was impermissible, as it amounted to double jeopardy and vexing the assessee twice for the same allegations. The court concluded that the second SCN was invalid, and the subsequent order demanding duty and imposing penalties was set aside.

3. Findings on Technical Aspects Contrary to Expert Reports:
The court did not address this issue directly, as the decision on the second issue rendered it unnecessary to consider the third issue.

Conclusion:
The court allowed the appeal, setting aside the orders passed by the Commissioner of Central Excise dated 07.10.2002 and the Tribunal dated 03.07.2015. The court held that the second SCN dated 27.03.2002 could not have been issued on the same set of facts as the first SCN, and thus, the proceedings initiated by the second SCN were invalid. The court also ordered the refund of ?30 lakhs paid by the assessee as a condition precedent for maintaining the appeal before the Tribunal.