2001 (6) TMI 553 - AT - Central Excise

Tribunal emphasizes show cause notice necessity for confirming demands

The Tribunal held that demands cannot be confirmed without issuing a show cause notice, as mandated by Section 11A and Rules 9 and 49 of the Central ... Demand for short levy Issues:- Whether demands can be confirmed without issuing a show cause notice to the appellants and calling for an explanation.Analysis:1. The central issue in this appeal was whether demands could be confirmed without issuing a show cause notice to the appellants and calling for an explanation. The Counsel representing the appellants raised a preliminary objection, stating that the Revenue had not issued a show cause notice, which is essential under the Central Excise Rules for confirming demands. The Additional Commissioner confirmed in a reply that no show cause notice was issued due to the appellants' waiver of the same.2. The appellants' representative argued that the waiver of show cause notice procedure is not applicable in Central Excise Act proceedings, citing various judgments, including one from the Supreme Court. He emphasized that demands cannot be sustained without the issuance of a show cause notice, as established in legal precedents. The representative also referred to a specific case, Kiran Spinning Mills, which highlighted the necessity of a show cause notice for sustaining demands.3. The Department's representative suggested remanding the matter to rectify the defects, while the appellants' representative contended that similar proceedings had been set aside previously due to the non-curable nature of the lack of a show cause notice.4. After considering both sides' submissions and the report from the Additional Commissioner confirming the absence of a show cause notice, the Tribunal concluded that demands cannot be confirmed without issuing a show cause notice, as mandated by Section 11A and Rules 9 and 49 of the Central Excise Rules. The Tribunal cited Supreme Court judgments and its own previous decisions, such as Universal Electronics, Ekon Chemicals, and C.C.E. v. Alfa Engineers, to support the requirement of a show cause notice for confirming demands.5. The Tribunal established that issuing a show cause notice is fundamental in Central Excise Act proceedings for raising demands and that the absence of such notice renders the proceedings unsustainable. Even if a party waives the notice, the Department still has a statutory responsibility to issue it. Consequently, the Tribunal allowed the appeal, setting aside the impugned order and providing for consequential relief, if applicable.