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2019 (10) TMI 1216 - AT - Central ExciseClandestine Removal - it was alleged that appellants have diverted/misused/non-accounted for a quantity of 4,36,097 OTS cans during the period August 2001 to September 2005 - HELD THAT - The investigation has clearly established that there was a non-accounted shortage/diversion of OTS cans and we find that the same has been accepted by Shri V.S. Purushotam Reddy, Accounts Officer of M/s PBPL and others. Therefore, there is no doubt regarding the duty liability on the OTS cans to be payable by M/s PBPL - the appellants other than making the averments in the submissions before the Commissioner and in the grounds of appeal have not produced any records evidencing the same. In the absence of the same, their submissions do not hold water and therefore, we are not inclined to accept the same. Invocation of section 11 of CEA - HELD THAT - Section 11 pertains to recovery of sums due to the Government. That is to say, there should be a confirmed demand against the notice, on the date of invocation of the section, as on the day of notice. As on the date of transfer of unit from M/s PBPL to the appellants M/s JISL even the show cause notice was not issued. The show cause notice was issued on 31.10.2008 and was confirmed by Order-in-Appeal dt.27.07.2010 against M/s PBPL. Therefore, the issue of SCN to M/s JISL as on 31.10.2008 was premature as there was no confirmed demands as on that date. Even the SCN was not in existence. Therefore, the invocation of section 11 in show cause notice even before the demands are confirmed is not as per law. The invocation of section 11 at the stage of SCN is immature. A notice issued immaturely does not merit confirmation. Therefore, there is force in the contention of the appellants and the Order-in-Appeal is not sustainable, to the extent. Appeal allowed in part.
Issues:
Confirmation of duty liability on OTS cans by M/s PBPL, imposition of penalty on Shri V.S. Purushotam Reddy, Accounts Officer, and liability of M/s JISL, Chittoor. Interpretation of Section 11 of the Central Excise Act, 1944 regarding recovery of sums due to the Government and its application in the case of M/s JISL. Analysis: 1. Confirmation of Duty Liability: The case involved M/s PBPL procuring OTS cans without duty payment under an exemption. Following a search, a show cause notice was issued for diversion of OTS cans. The Commissioner (Appeals) confirmed a reduced duty liability of &8377; 7,15,732 on 1,94,916 OTS cans. The Tribunal upheld this decision, noting the lack of evidence supporting the appellants' claims of usage in export goods or wastage. The duty liability was affirmed, resulting in the rejection of appeal E/640/2011. 2. Liability of M/s JISL: Appeal E/53/2011 by M/s JISL questioned their liability for dues of M/s PBPL. The Tribunal observed that no show cause notice was issued to M/s JISL directly. The invocation of Section 11 of the Central Excise Act, 1944, for recovery from M/s JISL was premature as no confirmed demands existed against them. The Tribunal emphasized that Section 11 applies post-confirmation of demands, citing the necessity of a confirmed demand against the notice. Relying on legal precedent and the statutory provisions, the Tribunal allowed appeal E/53/2011, finding the Order-in-Appeal unsustainable due to premature invocation of Section 11. 3. Interpretation of Section 11: A detailed analysis of Section 11 highlighted the conditions for its application, emphasizing the need for confirmed demands before invoking recovery measures. The Tribunal referenced a Bombay High Court case to support the interpretation that Section 11 operates post-confirmation of dues. Premature invocation of Section 11, as seen in the present case, was deemed legally unsound, leading to the allowance of appeal E/53/2011. In conclusion, the Tribunal upheld the duty liability on OTS cans for M/s PBPL while ruling in favor of M/s JISL regarding their liability under Section 11. The judgment provided a nuanced interpretation of legal provisions, emphasizing the importance of confirmed demands in invoking recovery mechanisms under the Central Excise Act, 1944.
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