2017 (12) TMI 219 - AT - Central Excise

Tribunal Upholds Timely Notice & Natural Justice: Precedent on 5-Year Limitation

The Tribunal found that the show cause notice was not time-barred as the Department initiated proceedings within 5 years of obtaining information. Citing ... Clandestine removal - principles of natural justice - Held that: - Since the Central Excise Department never visited the factory of the appellant for further investigation and the specific request for cross-examination of the concerned persons/witnesses were turned down, though specifically prayed for in the reply to show cause notice, the principle of natural justice have been violated in this case - this is a fit case for remand to the original authority for providing the opportunity to the appellant to properly defend its case - appeal allowed by way of remand. Issues: Limitation period for show cause notice, violation of principles of natural justice.Analysis:1. Limitation period for show cause notice:The appeal challenged the order passed by the ld. Commissioner upholding the demand confirmed by the original authority. The appellant contended that the proceedings were time-barred as the search and seizure occurred in 2010, but the show cause notice was issued in 2015, beyond the normal period under Section 11A of the Central Excise Act, 1944. However, the Tribunal found that since the Department initiated proceedings within 5 years of obtaining information from the supplier, the notice was not barred by limitation. Citing the case of CCE, Visakhapatnam Vs. Mehta and Co., the Tribunal held that in cases of suppression of facts, a show cause notice can be issued within the prescribed 5-year limitation period from the date of knowledge by the Central Excise Department.2. Violation of principles of natural justice:The appellant argued that the demand confirmation was based on third-party investigation without providing an opportunity for cross-examination, thus violating the principles of natural justice. The Tribunal observed that the appellant's request for cross-examination was not considered by the adjudicating authority, leading to a violation of natural justice. Consequently, the Tribunal allowed the appeal by remanding the case to the original authority for providing the appellant with the opportunity to cross-examine the persons/witnesses involved in the case. The Tribunal emphasized the importance of natural justice and directed the original authority to grant the appellant a personal hearing before deciding the issue afresh, allowing the appellant to raise any relevant issues during the fresh adjudication process.