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TMI Blog2017 (6) TMI 895X X X X Extracts X X X X X X X X Extracts X X X X ..... 6/82 was rescinded. The department has taken this opportunity to include in the show cause notice the proposal for demand of duty and interest. Relating to the classification dispute raised in the SCN dated 18.12.1982. In our view, such a SCN issued belatedly after adjustment of the rebate / refund claim, and that too after much agitation of the issues, is not legal and proper. The Hon’ble Supreme Court in the case of Metal Forgings Vs. Union of India [2002 (11) TMI 90 - SUPREME COURT OF INDIA] has held that a SCN is a mandatory requirement for raising demand. The letter dated 2.5.2003 or 14.5.2003 issued by the department raising the demand for the first time or the show cause notice dated 13.5.2004 issued by the department belatedly pursuant to Order-in-Appeal dated 8.1.2004 will not take the place of a show cause notice for the dispute relating to the show cause notice dated 18.12.1982. Whether the department can suo moto adjust from the sanction refund / rebate? - Held that: - reliance placed in the case of COMMISSIONER OF C. EX., BANGALORE-III Versus STELLA RUBBER WORKS (UNIT-II) [2013 (3) TMI 299 - KARNATAKA HIGH COURT], where it was held that Section 11 of the Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sification and denial of exemption benefit. The appellants challenged this order before the Collector (Appeals) who upheld the order of the original authority vide Order-in-Appeal No.303/1983 dated 1.9.1983. On further appeal before CESTAT, Special Bench, New Delhi, the appellant's appeal was clubbed along with 10 other appeals involving similar issue filed by other manufacturers. The Tribunal allowed appeals of the appellants therein as reported in 1994 (71) ELT 547. The Revenue carried the matter before the Hon'ble Apex Court in Civil Appeal Nos.12043 to 12054/1995. The Hon'ble Apex Court decided these appeals on 6.2.2003 as reported in 2003 (152) ELT 241 (SC), allowing the appeal filed by Revenue. It is submitted by the appellant that since the challenge by the department against the Tribunal's order was not with respect to the part conceded by the departmental representative before the Tribunal, an application was moved to that effect before the Hon'ble Apex Court by which a clarificatory order dated 13.3.2003 was passed setting aside the order of the Tribunal to the extent appealed against and restoring the order passed by the Assistant Collector to that extent. Before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leged duty liability of ₹ 9,34,624/- against the sanctioned rebate / refund amount of ₹ 14,16,906/- (Rs.11,41,377/- sanctioned in letter dated 14.11.2003 + ₹ 2,77,529/- sanctioned by letter dated 11.5.2004) and also proposed to adjust the interest on the rebate of ₹ 4,82,282/- towards alleged interest liability of ₹ 15,94,673/-. The appellant replied to the show cause notice vide letter dated 20.7.2004 contesting the validity of the duty demand raised as well as the adjustment of the sanctioned refund / rebate claims. This show cause notice was adjudicated by the original authority and vide Order-in-Original No. 17/2004 dated 10.9.2004, the entire duty demand as well as adjustment of the same against the sanctioned refund / rebate claim under section 11 of the Central Excise Act, 1944 was confirmed as also the interest. It is submitted that the original authority has not expressed any opinion on the classification dispute with reference to the orders of the Hon'ble Supreme Court. Against this order, the appellant filed appeal before the Commissioner (Appeals) and vide Order-in-Appeal No.4/2005 dated 18.1.2005, the Commissioner (Appeals) set aside the O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 11A was issued to the appellant, the said plea was rejected. The appellant is now before the Tribunal against this order. 11. On behalf of the appellant, learned counsel Ms. Maithili argued in detail. The main contention put forward by her is that the issued show cause notice dated 18.12.1982 is only with regard to the classification dispute. This show cause notice only proposed to deny the benefit of exemption under Notification No. 66/82 dated 28.2.1982 without specifying the period of dispute, the value of clearances or the duty demand proposed. This show cause notice not being in the format prescribed under section 11A raising a duty demand and the same cannot be treated as a show cause notice for recovery of the demand of ₹ 4,61,268/-. That there being no demand by the issuance of show cause notice, the question of demand of interest in terms of Section 11AA would also not arise. Further, without prejudice to the above contentions, it was argued that as per the provisions of Section 11A, the demand for differential duty even if proposed would have been made only for a period of six months prior thereto. The period for disputed demand being October 1982 to Feb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification, the appellant cannot now contend that no show cause notice was issued raising the demand of duty. The defect, if any, has been rectified by issuance of the show cause notice dated 13.5.2004. He therefore argued that the adjustment vide letter dated 14.11.2003 has been rightly done by the department and that the impugned order does not call for any interference. 13. We have heard the submissions made by both sides and perused the records. 14. The main contention put forward by the learned counsel for the appellant is that the department has suo moto adjusted the refund / rebate against duty demand which has never been adjudicated or crystalized by issuance of a show cause notice. That for the same reason, the amounts have not become payable / due to the Government. She stressed on the point that the appellant has been deprived of an opportunity to defend the demand of duty by not issuing a show cause notice. It is also contended by her that the issue of classification dispute that was answered by the Hon'ble Supreme Court is not squarely applicable to the classification dispute that was adjudicated in the appellant's case. The Tribunal having clubbed other 10 ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) in this order has directed only to issue a show cause notice. We do not find any provision in the law which allows the Commissioner (Appeals) to give such direction for rectifying a defect in the proceedings appealed before him. Sub-section (3) of Section35A states that Commissioner (Appeals) shall, after making such inquiry as may be necessary, pass such order, as he thinks just and proper, confirming, modifying or annulling the decision or order appealed against. Therefore such direction is beyond his powers. Even if the Commissioner (Appeals) has given such a direction, it has no legal sanctity since it intends not only to plug the lacunae in the decision adjusting the refund, but also rectifying a mistake of lower authority belatedly which is not provided by law. 16. The Hon'ble Supreme Court in the case of Metal Forgings Vs. Union of India - 2002 (146) ELT 241 (SC) has held that a show cause notice is a mandatory requirement for raising demand. The relevant portion of the order is reproduced as under:- "10. It is an admitted fact that a show cause notice as required in law has not been issued by the Revenue. The first contention of the Revenue in this regard is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing for the revenue contended that by virtue of Section 11 of the Central Excise Act, 1944, the revenue was empowered to adjust the amounts due to the revenue by way of interest out of the amount due by the Department to the assessee by way of rebate. Therefore, the Tribunal committed a serious error in interfering with the said order of adjustment and therefore he submits that the impugned order requires to be interfered with. Section 11 of the Act would deal with the recovery of sums due to the Government reads as under :- ...... ...... ...... A perusal of the aforesaid provision makes it very clear that if any duty or other sums due to the Central Government under the Act and recovery of certain amounts, if any person owing money to the assessee, the revenue may proceed against such person and recover the duty and other sums due to the Government. It is in the nature of garnishee proceedings. The said provision does not contemplate adjustment of monies due to the assessee towards the amount due to the revenue. Therefore reliance placed on the said provision does not help the revenue. Apart from the said provision, the learned counsel was not able to point out any other p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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