1988 (10) TMI 170 - AT - Central Excise

Appellate tribunal limits duty demand timeframe, emphasizes need for proper show cause notice.

KIRAN SPINNING MILLS Versus COLLECTOR OF CENTRAL EXCISE

The appellate tribunal partially allowed the appeal, ruling that the demand for payment of the differential duty beyond six months preceding the show ... Demand - Limitation Issues:1. Whether the demand of the differential duty or any part of it is barred by timeRs.2. Whether the letter dated 26-11-1977 issued by the Superintendent can be considered as a show cause noticeRs.Detailed Analysis:Issue 1: The primary issue in this case was whether the demand for the payment of the differential duty was time-barred. The show cause notice was issued on 17-2-1978, demanding the duty for the period from 6-7-1977 to 31-12-1977. The appellants argued that since there was no allegation of wilful suppression or misdeclaration, the period of limitation to claim the differential duty would be six months. As the notice was issued on 17-2-1978, any demand for the period exceeding six months before that date would be time-barred. The authorities below considered a letter dated 26-11-1977 from the Superintendent as a show cause notice, extending the limitation period. However, the appellate tribunal disagreed with this interpretation, stating that there was no presumption that everyone knows the law, and ignorance of the law is not an excuse. The tribunal set aside the part of the order that invoked a larger period of limitation.Issue 2: The second issue revolved around whether the letter dated 26-11-1977 from the Superintendent could be deemed a valid show cause notice. The Superintendent's letter informed the appellants about a specific notification and requested details of clearances made after its issuance. The letter did not specify the amount of duty or differential duty payable. The tribunal held that a show cause notice must not only indicate the duty to be paid but also provide a reasonable opportunity for the appellants to present their case. Referring to previous judgments, the tribunal emphasized that a show cause notice entails the opportunity to lead evidence and contest the charges. Therefore, the tribunal rejected the argument that the letter could be considered a valid show cause notice under the law.In conclusion, the appellate tribunal partially allowed the appeal, ruling that the demand for the payment of the differential duty beyond six months preceding the show cause notice date was time-barred. The tribunal rejected the notion that the Superintendent's letter could serve as a valid show cause notice, emphasizing the need for a proper notice with specific details and a fair opportunity for the appellants to respond.