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TMI Blog2018 (8) TMI 1396X X X X Extracts X X X X X X X X Extracts X X X X ..... ow 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. - Civil Miscellaneous Appeal No.2475 of 2015 and MP.No.1 of 2015 - - - Dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Investigating Team reported that there has been difference in physical stock when compared to their statutory records. 4. Pursuant to the above investigation, a special stock taking was ordered under Rule 223A of the Central Excise Rules, 1944 (hereinafter called the Rules). The assessee has four units namely A, B, C and H. The special stock taking, as ordered by the Department, was conducted by the officers in A, B and C Units on 12.12.2000 and in H Unit on 14.12.2000. The Department would state that the stock taking report revealed excess physical stock in certain variety of goods as compared to R.G.-1 records. The goods, which were found in excess at A, B and C Units, were valued at ₹ 61,33,214/- and they were seized under mahazar dated 16.2.2001 on a reasonable belief that they were kept unaccounted for removal without payment of duty. The goods found in excess in Unit H were valued at ₹ 1,58,597/- and seized for the same reason on 08.5.2001. 5. The official of the assessee, in his statement given to the Superintendent of Central Excise, on 06.2.2001, explained the reasons for the excess stock and among other things, he stated that it was due to wrong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e DSA/RG-1 records, for which, monthly RT-12 returns were submitted to the Department, that the goods were stored legally for removal on payment of duty as mandated under the Central Excise Act, 1944 (hereinafter referred to as the Act) and the Rules framed thereunder and that the action of the Preventive Department was unsustainable in law. On these submissions, the assessee requested the Department to drop the proceedings. 9. The reply given by the assessee was considered and the Commissioner of Central Excise passed Order-in-Original No.2/2002 dated 07.1.2002. The discussion and finding are from paragraphs 11 to 14 of the said order. Ultimately, the Commissioner imposed a penalty of ₹ 10,000/- for not maintaining RG-1 register properly under the erstwhile Rule 173Q of the Rules and the seized goods were ordered to be released to the assessee with a direction that they should be properly accounted for in the RG-1 register. 10. After about two months, another show cause notice dated 27.3.2002 was issued, in which, the following proposal was made by the Commissioner of Central Excise, Trichy : (a) The central excise duty amounting to ₹ 1,87,30,437/- (BED S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rification was conducted in respect of finished goods at the end of the year and the procedure of physical verification of the stock followed by the management was reasonable and adequate in relation to the size of the company and nature of business. It was also pointed out that the discrepancies noticed on verification between physical stock and book records, though not material, were properly dealt with in the books of accounts. In this regard, the relevant pages in the annual report were appended. It was pointed out that the annual reports were already submitted to the Excise Officials every year for their perusal and the assessee requested the Commissioner of Central Excise to drop the proceedings. 15. The Commissioner of Central Excise passed the second Order-in-Original dated 07.10.2002 and the discussion and finding are found in paragraph 30 of the order and ultimately, the Commissioner demanded duty of ₹ 1,84,19,199/- under Proviso to Section 11A(1) of the Act read with Rule 223A of the Rules and imposed equivalent penalty under Section 11AC of the Act and also demanded interest on the said amount under Section 11AB of the Act. Aggrieved by the order of the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice. Therefore, we are essentially required to look into the question as to what was the basis for issuance of the first show cause notice and what weighed in the mind of the Assistant Commissioner prior to issuance of the first show cause notice. Admittedly, the first show cause notice emanated from the inspection and the special stock taking. Thus, entire materials were available with the Commissioner and what the Commissioner proposed in the first show cause notice was to confiscate the seized goods and levy penalty under Rule 173Q of the Rules. 21. The assessee submitted their reply and written submissions and the Commissioner adjudicated the matter and accepted the stand taken by the assessee that the excess goods were still lying in the factory premises, that there was no evidence that they were likely to be cleared clandestinely and that there was no justification for confiscation of the goods, as the same were required to be released to the assessee. 22. The discussion and findings rendered by the Authority in paragraphs 12 and 13 would be relevant and are quoted as hereunder : 12. In defence, the assessee submitted that the goods seized on 16.2.2001 and 08.5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed clandestinely, there is no justification for the confiscation of the said goods and the same are released to the assessee. 23. On the above findings, the Commissioner of Central Excise dropped the proposal to confiscate and directed the seized goods to be released with a direction to be properly accounted for in the RG-1 register and also imposed a penalty of ₹ 10,000/- for not maintaining the RG-1 register. Thus, the assessee was of the firm view that the curtain had been drawn and the proceedings had attained finality. However, this belief was short lived, as, within two months, the second show cause notice dated 27.3.2002 was issued proposing to demand excise duty, levy penalty and demand interest. 24. We find from the second show cause notice dated 27.3.2002, more particularly in paragraph 8, which refers to certain documents, based on which, it came to be issued. All those documents are all prior to issuance of the first show cause notice dated 14.8.2001. Thus, 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 cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee that the accumulated differences were for over a period of 15 years. 28. Mr.A.P.Srinivas, learned Senior Standing Counsel for the Revenue has contended that the observations contained in paragraph 12 of the order dated 07.1.2002 are the submissions of the assessee. 29. However, we do not agree with the said submission because it is contained in the portion relating to 'discussion and finding' in the order passed by the Commissioner i.e. to say that the the submissions of the assessee were found acceptable to the Commissioner and accordingly, he held that there was no question of clandestine removal. In such circumstances, the finding rendered by the Tribunal that the Adjudicating Authority decided the first show cause notice for confiscation and imposition of penalty under Section 173 of the Act for improper maintenance of the records and that the second show cause notice was entirely different, as it related to excess stock, cannot be accepted. 30. At the risk of repetition, we wish to point out that there was only one inspection of the factory on 05.9.2000, followed by the special stock taking conducted on 25.10.2000, 12.12.2000 and 14.12.2000 and this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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