2001 (9) TMI 186 - AT - Central Excise

Appeal allowed by CEGAT: Show cause notice lacked basis, extended limitation period not applicable.

The Appellate Tribunal CEGAT, Mumbai allowed the appeal, setting aside the impugned order demanding duty and penalty from the appellant. The Tribunal ... Requirement of basis in show cause notice for allegation of contravention of notification - benefit of exemption under Notification 203/92 - Modvat credit and advance licence linkage - extended period of limitation under subsection (1) proviso of Section 28Requirement of basis in show cause notice for allegation of contravention of notification - Modvat credit and advance licence linkage - Validity of the show cause notice and consequential demand/penalty where the notice alleged that Modvat credit had been taken and thereby Notification 203/92 benefit was wrongly availed, but did not disclose any material basis for that allegation. - HELD THAT: - The Tribunal found that the show cause notice merely alleged that Modvat credit had been taken without indicating any material or factual basis for that allegation. The shipping bills and AR4 under which the goods were exported did not contain the asserted declaration that Modvat credit had been taken. Reliance placed on earlier Tribunal authority Auto Ignition Ltd. and other decisions underscores the principle that, where an allegation of contravention of the condition of a notification is made, the notice must disclose a basis for the allegation; absent such basis the notice is without authority. Applying that principle, the Tribunal held that the departmental case lacked the requisite foundation and that the confirming order proposing demand and penalty could not be sustained. [Paras 2, 3]The show cause notice was without authority of law for failing to disclose a basis for the allegation that Modvat credit had been taken, and the order confirming the demand and penalty was not maintainable.Extended period of limitation under subsection (1) proviso of Section 28 - Validity of invoking the extended period of limitation where the show cause notice did not disclose any basis for such invocation. - HELD THAT: - The Tribunal observed that the notice did not disclose any material basis for invoking the extended period of limitation under the proviso to subsection (1) of Section 28. Consistent with the requirement that extended limitation can be invoked only on specified grounds supported by material, and having found no such basis in the notice, the Tribunal concluded that the extended period could not be legitimately relied upon to sustain the demand. [Paras 2, 3]Invocation of the extended period of limitation was not justified as the show cause notice contained no basis for doing so.Final Conclusion: Appeal allowed; impugned order demanding duty and imposing penalty set aside for want of lawful foundation in the show cause notice. The Appellate Tribunal CEGAT, Mumbai allowed the appeal, setting aside the impugned order demanding duty and penalty from the appellant. The Tribunal found that the show cause notice lacked basis for alleging Modvat credit misuse and invoking extended limitation period. The order confirming the demand was deemed not maintainable. (Case Citation: 2001 (9) TMI 186 - CEGAT, Mumbai)