TaxTMI 
TaxTMI 
2004 (1) TMI 517
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....ecovery of interest in terms of Section 11AB. He has also imposed penalty of Rs. 1,70,000/- on V. Sathyanarayana and Rs. 1,10,000/- on V. Ramesh under Rule 209A of Central Excise Rules, 1944. 2. It is submitted that an amount of Rs. 3,50,000/- paid by the Appellant and confirmed by the Lower Adjudicator, may be treated as Pre-deposit and the Main Appeal itself decided as there is an incurable fundamental defect, which renders the impugned order unsustainable. The preliminary submission is that no show cause notice has been issued to : 1. M/s. SVS Graphics, No. 31 & 32, Peters Road, Royapettah, Chennai-600014. 2. M/s V. M. Graphics, 24/1, Misa Ali Gulam Street, ....
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....o prove their independent existence and consequent eligibility for SSI exemption. The Lower Adjudicator has instead assumed that these two units are dummies of Sri Vaasavi Printers and hence as proposed in the SCN clubbed their turnover with the turnover of SVP. The appellants have quoted various decisions rendered by the Hon'ble Supreme Court and Appellate Tribunal which have categorically held that non-issue of show cause notice to the alleged dummy units will vitiate the proceedings and hence the Order is liable to be set aside. There are a catena of decisions on this subject matter, some of which are enumerated below : UOI & Others v. Madhu Milan Syntex Pvt. Ltd. - 1988 (35) E.L.T. 349 (S.C.) : In this case, the Hon'ble Supreme Court has held : "Demand raised without notice or hearing invalid - Post Facto Show Cause Notice and hearing does not make it valid, prior notice is a condition precedent under Section 11A of the Central Excises and Salt Act, 1944 - Section 11A of the Central Excises and Salt Act, 1944 clearly proceeds that prior show cause notice must be issued to the person against whom any demand on ground of short levy or non-levy of excise duty is proposed ....
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.... for clubbing of units, which were in existence and carrying out transactions, admittedly there was business transactions and the Bench referred them as group of Dawn Industries. This fact itself is not sufficient to hold that the second unit namely DFI is a dummy unit.......In this case particularly, there is an existence of unit and the department was required to have shown he financial flow back and sharing of profits and for that they ought to have issued show cause notice to the other unit, which has not been in the present case and in view of the judgment rendered in the case of Ogesh Industries and in the case of Hindustan Foam Industry, the contention of appellants that non-issue of show cause notice has vitiated the proceedings is required to be upheld on this ground alone, the appellants are entitled to succeed." This theme runs through in the following decisions also : CCE v. Sompura Ceramics - 2001 (130) E.L.T. 195 (T) CCE v. Maganlal Nandlal & Sons - 1999 (113) E.L.T. 597 (T) CCE v. Mehta Cold Forge - 2001 (133) E.L.T. 215 In the absence of Show Cause Notice to M/s. SVS and M/s. VM Graphics, the Department cannot proceed to recover the duty by excluding ....
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....rcular No. 290/6/97-CX., dated 20-1-1997 stipulates : "As per existing instructions, a party has an option to waive show cause notice provided the changes are explained to the party. However, it has come to the notice that in some cases such waiving of show cause notice is creating problems particularly when cases involve offences or high stakes and/or involve legal questions. The CBEC has taken note of the fact that in such cases waiving of the show cause notice and/or not explaining the charges and the ground thereof to the concerned parties leads to defective proceedings against the interest of the revenue. 2. After careful consideration the Board has, therefore, decided that wherever, prima facie, offences of serious nature or high stakes and/or legal questions are involved, show cause notices must not be waived and the same should be issued and served on the concerned parties. However, if the concerned party requires expeditious adjudication for any reasons, they may file their replies at the earliest, and request that their case be heard expeditiously for early finalisation of the adjudication proceedings. 3. These instructions should be adhered to strictly." ....