TaxTMI 
TaxTMI 
TaxTMI 
2015 (6) TMI 370
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....he furnace and pouring into patterns and moulds. These castings are made as per customer specifications. The principal raw material is steel scrap or stainless steel scrap. The steel scrap/stainless scrap is procured from the local scrap dealers or manufacturers. The petitioner also imports scrap from overseas. The petitioner used to issue purchase orders for procurement of scrap with description/specification. The duty paid on inputs is available as credit for payment of duty subject to compliance of procedure prescribed under Cenvat Credit Rules, 2004. The petitioner has been maintaining correct records in respect of receipt, inventory and consumption of raw materials/inputs and the final products. 4. While so, the Anti-Evasion Wing of Central Excise inspected the premises of the petitioner on 18 September, 2012, and verified the input documents/Cenvat credit records for the period from 2008-2009 to 2012-2013. The Inspecting Team seized several documents and pressurized the petitioner to part with a sum of Rs. 7.53 Crores. The payment was made without there being an assessment order. It was made under compulsion. The petitioner filed a Writ Petition in W.P. (MD) No. 2026 of....
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....; The show cause notice contains a clear adjudication against the petitioner. The respondent very clearly stated that the petitioner violated the provisions of Cenvat Credit Rules, 2004 and as such, they are liable to pay huge amount by way of penalty and interest. (iii) The respondent filed a counter-affidavit in this Writ Petition. In the said counter-affidavit, the respondent justified the action and indicated that the statements contained in the show cause notices are all correct. (iv) The show cause notice proceeds as if the respondent detected the violations committed by the petitioner. The respondent has pre-determined the issue. (v) The respondent was forced to refund the money. The attempt, therefore, would be to justify the action somehow or the other. It is, therefore, not wise to submit to the jurisdiction of the said authority. (vi) There would be no hearing on merits and the enquiry would be an empty formality. 9. The learned Standing Counsel for the respondent contended that the petitioner has already submitted to the jurisdiction of the respondent by submitting its reply. The findings given ....
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....hat the case pleaded by the petitioner is not correct, it could be said that the authority has taken a decision to pass an order against the petitioner by confirming the tentative findings. 16. The petitioner was called upon to submit its explanation. The petitioner must know the charges levelled against it so as to enable it to submit an effective reply. In case the basis for taking action is not disclosed in the show cause notice, it would not be possible for the assessee, like the petitioner to submit an effective reply. The Courts have, time and again, while considering the legality of charge memos issued to the employees, made it very clear that the charges should not be vague. It should be specific and the delinquent should be in a position to submit a reply after understanding the nature of charges. Here is an assessee who is finding fault with the department for furnishing materials in advance which were collected during the time of investigation. 17. The show cause notice in this case cannot be termed as an expression of opinion on the merits of the matter. The fact that the respondent failed to indicate that these are all tentative findings would not go to sho....
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....The respondent, in the counter-affidavit, very clearly stated that the preliminary investigation conducted by the department prima facie revealed that the petitioner availed Cenvat credit, without actually using the materials shown in the purchase invoices. 21. The show cause notice contained various details. It starts from verification at factory premises and evidence collected. The respondent, in the show cause notice dated 29 November, 2013, categorized the background facts, materials collected and the prima facie findings in the following words : "(i) verification at factory premises and evidences found; (ii) verification at the major suppliers (II stage dealer) to Sanmar; (iii) deposition of company officials; (iv) deposition of first stage dealers/manufacturers; (v) depositions of Custom House Agents involved in the clearance of the alleged imported materials; (vi) depositions of the major suppliers to the petitioner (second stage dealer); (vii) further documentary evidences; (viii) payment by Sanmar towards liability; (ix)&n....
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....hat in case the authorities have determined the liability and only question which remains for its consideration is quantification thereof, the same does not remain in the realm of show cause notice. 25. In Siemens's case, the Supreme Court found that the statutory authority has already determined the liability and the only question which remains for further consideration was its quantification. It was only under the said factual context, the Supreme Court observed that the show cause notice does not remain in the realm of a show cause notice. However, that is not the case here. The respondent has not determined the liability so far. The materials collected by the respondent to fix the liability are disclosed in the show cause notice. Those materials were disclosed only with a view to enable the petitioner to submit its reply. The decision in Siemens's case, therefore, would not apply to the facts of the case. Similarly, in the judgments of the Division Bench of the High Court of Jharkhand at Ranchi and the High Court of Judicature for Andhra Pradesh at Hyderabad, it was found that the authority has already pre-determined the issue. However, no such pre-determination was made ....