1996 (11) TMI 84 - SC - Central Excise

Show-cause notice under Rule 9(2) must state specific grounds for evasion allegation so assessee can contest

SC held that a show-cause notice under Rule 9(2) alleging evasion of excise duty must explicitly state the ground relied upon so the assessee can ... Demand and penalty - Show cause notice under Rule 9(2) - evade payment of Excise duty - Limitation - Natural justice - HELD THAT:- This Court has held that the party to whom a show cause notice of this kind is issued must be made aware of the allegation against it. This is a requirement of natural justice. Unless the assessee is put to such notice, he has no opportunity to meet the case against him. This is all the more so when a larger period of limitation can be invoked on a variety of grounds. Which ground is alleged against the assessee must be made known to him, and there is no scope for assuming that the ground is implicit in the issuance of the show cause notice. The appeal is allowed and the order of the Tribunal under appeal is set aside. Issues involved: Show cause notice under Rule 9(2) of Central Excise Rules, 1944 lacking particulars of fraud or contravention.In this judgment, the Supreme Court addressed the issue of a show cause notice issued to the assessee under Rule 9(2) of the Central Excise Rules, 1944, without specifying particulars of fraud or contravention. The notice was issued beyond the prescribed period of six months, indicating potential grounds for penalty imposition. However, the Court emphasized that natural justice requires the party to be informed of the allegations to enable a fair defense. The absence of specific details in the notice deprived the assessee of the opportunity to respond effectively, violating the principles of natural justice as established in previous rulings such as Collector of Central Excise v. H.M.M. Limited and Raj Bahadur Narayan Singh Sugar Mills Limited v. Union of India.The Court allowed the appeal by the assessee, setting aside the Tribunal's order. Consequently, the bank guarantee provided by the appellant in compliance with previous orders was discharged, and any payments or deposits made in relation to those orders were to be refunded. No costs were awarded in this matter.