2011 (3) TMI 1269 - HC - Central Excise

Court upholds legality of duty demand on chemical preparation for film; petitioner can challenge during adjudication.

The court upheld the legality of the show cause notices demanding duty on chemical preparation for cinematography film, based on the 2009 order confirming ... Duty Demand - Petitioner produces chemical preparations for processing cinematography films - Held that:- The argument advanced on behalf of the petitioner that the impugned show cause notices have been issued contrary to the decision of the Tribunal dated 11-7-2008 as also the decision of this Court dated 24-6-2009/12-11-2009 is also totally incorrect. By order dated 11-7-2008 the Tribunal has set aside the order-in-original dated 24-4-2007 and not the order dated 31-5-2000. Show cause notices have been issued on the basis of the order in original dated 25-8-2009 and not on the basis of the order dated 31-5-2000 issued on 26-6-2000 - merely because the order dated 31-5-2000 is referred to in the impugned show cause notices, it cannot be inferred that the show cause notices are issued on the basis of the order dated 31-5-2000 - Decided against the assessee Issues:Challenge to show cause notices regarding duty recovery on chemical preparation for cinematography film, dispute over whether the activity amounts to manufacture, compliance with previous tribunal and court orders, legality of impugned show cause notices.Analysis:The petitioner challenged show cause notices demanding duty on the chemical preparation for cinematography film, arguing that the activity does not amount to manufacture based on a previous CESTAT decision upheld by the court. The Excise Authorities had previously dropped similar show cause notices in 2000, but later held the activity as manufacture in 2007. The Tribunal set aside the 2007 order and remanded the matter, which was upheld by the court. Subsequently, the adjudicating authority confirmed duty demand in 2009, leading to pending appeals before the CESTAT.The petitioner contended that the impugned show cause notices disregarded the tribunal and court orders, citing judicial discipline to follow higher authorities' decisions. However, the court found no merit in these arguments, noting that the adjudicating authority's 2009 order, based on which the show cause notices were issued, was compliant with the tribunal and court orders. The court emphasized that the pending appeal did not prevent the competent officer from issuing the notices based on the 2009 order.Regarding the petitioner's argument that the notices contradicted the tribunal and court decisions, the court clarified that the 2008 tribunal order set aside the 2007 order, not the 2000 order, and the court did not address the validity of the 2000 order. The impugned notices were based on the 2009 order, not the 2000 order, to follow the latest decision. Therefore, the court rejected the petitioner's claim that the 2000 order was set aside.Ultimately, the court concluded that the impugned show cause notices were issued based on the 2009 order and not the 2000 order, allowing the petitioner to contest the duty demand during adjudication. As a result, the court dismissed both petitions, finding no grounds to quash the notices before adjudication.