2018 (8) TMI 885 - AT - Central Excise

Tribunal allows appeal due to improper order, emphasizes need for proper adjudication

The appeal was allowed by the Appellate Tribunal CESTAT CHANDIGARH due to the legal unsustainability of the impugned order by the Commissioner (Appeals). ... Refund claim - refund rejected in terms of value addition norms - Area Based Exemption - N/N. 56/02-CE dt.14.11.2002 - Held that:- As the SCN dated 7.5.2014 was not adjudicated, in that circumstance, the impugned order was not required to be passed by the Commissioner (Appeals). Moreover, the proceedings were initiated vide show cause notice dated 7.5.2014 has been drooped against the appellant - impugned order not sustainable - appeal allowed - decided in favor of appellant. Issues:1. Applicability of area-based exemption Notification No.56/02-CE2. Classification of products under Chapters 38, 39, and 40 of Central Excise Tariff Act3. Validity of show cause notice dated 7.5.20144. Sustainability of impugned order by Commissioner (Appeals)Analysis:1. The appellant, availing the benefit of area-based exemption Notification No.56/02-CE, was engaged in manufacturing plastic compound, PVC compound, and TPR compound, classifying them under Chapters 38, 39, and 40 of the Central Excise Tariff Act, 1985. The Revenue contended that all products fell under Chapter 39, leading to proceedings initiated via show cause notice No.IV-6(33)/HQ/Prev/Sigma/2012/8-85 dated 07.5.2014. However, during the pendency of this notice, refund claims were reviewed, resulting in the impugned order by the Commissioner (Appeals) on 6.7.2015 classifying the goods under Chapter 39. The appellant appealed this decision.2. The appellant's consultant argued that the show cause notice from 7.5.2014 had been adjudicated on 31.7.2014, and the Commissioner (Appeals) dropped the proceedings on 8.6.2018. Thus, the impugned order was challenged as unsustainable. After hearing both parties, it was observed that since the show cause notice from 7.5.2014 was not adjudicated, the Commissioner (Appeals) should not have passed the impugned order. Additionally, as the proceedings initiated through the show cause notice were dropped against the appellant, the impugned order was deemed legally unsustainable. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.This judgment from the Appellate Tribunal CESTAT CHANDIGARH highlights the importance of proper adjudication before passing orders and the necessity for legal sustainability in decisions, especially concerning the classification of goods under specific tariff chapters and the implications of area-based exemptions.