2018 (2) TMI 201 - AT - Central Excise

Appellate Tribunal sets aside duty demand & penalty based on second notice, highlights jurisdictional issues

The Appellate Tribunal CESTAT Chennai ruled in favor of the appellant, setting aside the demand for duty and penalty based on the second Show Cause ... Validity of second SCN - Benefit of N/N. 83/1994-CE dt. 11.4.1994 - job-work - Held that: - proceedings on the very same dispute had been initiated by the Department in earlier show cause notice dated 04.0.2005, involving the very same period, which however had been set aside by the Tribunal on the ground of jurisdiction - it is evident that the second SCN also sought to cover the very same issue, the very same period of dispute, and the very same apparent duty liability that was initiated in the earlier SCN dated 04.07.2005. The proceedings initiated by the second SCN dated 26.03.2007, which culminated in the impugned order, cannot sustain and will necessarily have to be set aside - appeal allowed - decided in favor of appellant. Issues:- Denial of exemption under notification 83/1994-CE- Territorial jurisdiction for issue of Show Cause Notice- Barred proceedings by limitationAnalysis:Issue 1: Denial of exemption under notification 83/1994-CEThe case involved the appellant, a small scale unit manufacturing steel fabricated items, seeking exemption under notification 83/1994-CE. The dispute arose when goods cleared for galvanization on job-work basis were directly sent to a project site instead of being used in the appellant's factory for manufacturing final products. This led to a demand for duty and penalty, which was upheld by the Commissioner (Appeal). However, CESTAT Chennai set aside the demand in an earlier order due to jurisdictional issues. Subsequently, a new Show Cause Notice was issued for recovery of duty and penalty, leading to the current appeal. The Tribunal, after considering the facts and legal precedents, held that the second Show Cause Notice was based on the same issue and period as the earlier notice, and therefore, could not be sustained. The appeal was allowed with consequential relief.Issue 2: Territorial jurisdiction for issue of Show Cause NoticeThe initial Show Cause Notice and Order-in-Original were set aside by CESTAT Chennai due to lack of territorial jurisdiction. Subsequently, a new Show Cause Notice was issued by the correct jurisdictional authorities. The Tribunal noted that the second notice covered the same issue and period as the earlier notice, and thus, the proceedings initiated based on the second notice were deemed unsustainable. The Tribunal relied on legal precedents to emphasize that similar facts could not be considered suppression of facts to enable the issuance of a second Show Cause Notice. Consequently, the proceedings based on the second notice were set aside.Issue 3: Barred proceedings by limitationDuring the hearing, the appellant argued that the proceedings were barred by limitation since the facts were known to the authorities when the first Show Cause Notice was issued. The appellant cited legal precedents to support this argument. The Tribunal considered this argument along with the jurisdictional issues and concluded that the second Show Cause Notice, issued after the first notice was set aside, could not be sustained. The Tribunal allowed the appeal and provided consequential relief as per the law.In conclusion, the Appellate Tribunal CESTAT Chennai ruled in favor of the appellant, setting aside the demand for duty and penalty based on the second Show Cause Notice. The Tribunal emphasized the importance of jurisdictional issues and the principle that similar facts cannot be used to justify the issuance of multiple notices on the same issue and period.