1996 (5) TMI 178 - AT - Central Excise

Tribunal grants stay in benefit denial case due to untimely show cause notice

RACHNA (P) LTD. Versus COLLECTOR OF CENTRAL EXCISE, ALLAHABAD

RACHNA (P) LTD. Versus COLLECTOR OF CENTRAL EXCISE, ALLAHABAD - 1996 (87) E.L.T. 393 (Tribunal) Issues:Stay application regarding order-in-original passed by Commissioner, denial of small scale industry benefits, reasons for denial not communicated, request for adjudication order, submission of required registration certificate, violation of principles of natural justice, time-barred show cause notice, relevance of certificates produced, filing an appeal on classification issue, sufficiency of certificates for the purpose.Analysis:The case involves a stay application filed in response to an order-in-original issued by the Commissioner, Allahabad, in 1996. The appellants, a small scale unit, had filed a classification list in 1989 claiming benefits under Notification No. 175/86. The Assistant Collector later amended the classification list in 1991, denying the small scale industry benefits without providing reasons for the amendment. The appellants sought clarification but received a show cause notice in 1994 demanding payment for failing to produce a registration certificate from the Directorate of Industries as per the notification.The appellants contended that they had submitted the required registration certificate to the Central Excise Superintendent in 1988 and were eligible for the claimed benefits. They also expanded their activities and obtained necessary approvals. They argued that the Assistant Collector erred in denying their benefits and violated principles of natural justice by not providing a show cause notice or a hearing before amending the classification list.The appellants highlighted that the show cause notice issued after more than three years was time-barred, and the Department had no justification for invoking the extended period of limitation as all required information was provided during the initial filing. They referenced a case to support their stance on the limitation period. The Department argued that the required certificate was not produced before the Collector and the certificates submitted were irrelevant or dated after the period in question.The Tribunal acknowledged the appellants' early submission of the classification list and the registration certificate, suggesting that they had provided necessary information to the Department. The Tribunal found merit in the argument that the appellants had a stronger case on the time bar issue. The sufficiency of the certificates and their relevance under the IDR Act were deemed arguable and subject to further consideration during the main appeal hearing. Considering the circumstances, the Tribunal waived the pre-deposit amount and stayed its recovery pending the appeal process.