TaxTMI 
TaxTMI 
TaxTMI 
2017 (6) TMI 895
X X X X Extracts X X X X
X X X X Extracts X X X X
....se Tariff Act and claimed exemption from duty under Notification No. 66/82 dated 28.2.1982 which exempted articles of paper falling under Tariff Item 17(4). 4. Show cause notice dated 18.12.1982 was issued to the appellant proposing to deny the exemption, which after adjudication, Order-in-Original6.4.1983 was passed denying exemption of the said Notification. It is pertinent to mention here that in this show cause notice, there was no proposal for demand of duty and the allegation confined to classification and denial of exemption benefit. The appellants challenged this order before the Collector (Appeals) who upheld the order of the original authority vide Order-in-Appeal No.303/1983 dated 1.9.1983. On further appeal before CESTAT, Special Bench, New Delhi, the appellant's appeal was clubbed along with 10 other appeals involving similar issue filed by other manufacturers. The Tribunal allowed appeals of the appellants therein as reported in 1994 (71) ELT 547. The Revenue carried the matter before the Hon'ble Apex Court in Civil Appeal Nos.12043 to 12054/1995. The Hon'ble Apex Court decided these appeals on 6.2.2003 as reported in 2003 (152) ELT 241 (SC), allowing the appeal ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llant filed appeal against the said letters which made suo moto adjustment against sanctioned rebate / refund claims. Commissioner (Appeals) vide Order-in-Appeal No.10/2004 dated 8.1.2004 set aside the decision passed by such letters and directed the lower authority to issue a show cause notice and decide the issue as per law. 9. Pursuant to the aforesaid order of the Commissioner (Appeals), show cause notice dated 13.5.2003 was issued to the appellant proposing to adjust the alleged duty liability of Rs. 9,34,624/- against the sanctioned rebate / refund amount of Rs. 14,16,906/- (Rs.11,41,377/- sanctioned in letter dated 14.11.2003 + Rs. 2,77,529/- sanctioned by letter dated 11.5.2004) and also proposed to adjust the interest on the rebate of Rs. 4,82,282/- towards alleged interest liability of Rs. 15,94,673/-. The appellant replied to the show cause notice vide letter dated 20.7.2004 contesting the validity of the duty demand raised as well as the adjustment of the sanctioned refund / rebate claims. This show cause notice was adjudicated by the original authority and vide Order-in-Original No. 17/2004 dated 10.9.2004, the entire duty demand as well as adjustment of the same agai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s fully capable of containing and packing cigarettes and that the inner frame was only a non-essential addition to the HLC for aesthetic purpose. That this was contrary to the concession made by the departmental representative before the Tribunal in the earlier round of litigation. As regards the plea that the adjustment of the rebate/refund was made against the uncrystalized duty liability for which no show cause notice as required under section 11A was issued to the appellant, the said plea was rejected. The appellant is now before the Tribunal against this order. 11. On behalf of the appellant, learned counsel Ms. Maithili argued in detail. The main contention put forward by her is that the issued show cause notice dated 18.12.1982 is only with regard to the classification dispute. This show cause notice only proposed to deny the benefit of exemption under Notification No. 66/82 dated 28.2.1982 without specifying the period of dispute, the value of clearances or the duty demand proposed. This show cause notice not being in the format prescribed under section 11A raising a duty demand and the same cannot be treated as a show cause notice for recovery of the demand of Rs. 4,61,26....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... adjustment of rebate / refund was proposed but also the demand for the respective period was also raised. The original authority passed Order-in-Original dated 10.9.2004 confirming the duty demand which was again challenged by the appellant before Commissioner (Appeals). Thus, the show cause notice dated 13.5.2004 having been issued which covered the duty demand pertaining to the respective period, which denied the benefit of notification, the appellant cannot now contend that no show cause notice was issued raising the demand of duty. The defect, if any, has been rectified by issuance of the show cause notice dated 13.5.2004. He therefore argued that the adjustment vide letter dated 14.11.2003 has been rightly done by the department and that the impugned order does not call for any interference. 13. We have heard the submissions made by both sides and perused the records. 14. The main contention put forward by the learned counsel for the appellant is that the department has suo moto adjusted the refund / rebate against duty demand which has never been adjudicated or crystalized by issuance of a show cause notice. That for the same reason, the amounts have not become payable / d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ated 18.12.1982. In our view, such a show cause notice issued belatedly after adjustment of the rebate / refund claim, and that too after much agitation of the issues, is not legal and proper. In Order-in-Appeal dated 8.1.2004, there is no such specific direction to issue a show cause notice for demanding duty. The appeal was filed by appellant alleging adjustment of refund without a show cause notice. The Commissioner (Appeals) in this order has directed only to issue a show cause notice. We do not find any provision in the law which allows the Commissioner (Appeals) to give such direction for rectifying a defect in the proceedings appealed before him. Sub-section (3) of Section35A states that Commissioner (Appeals) shall, after making such inquiry as may be necessary, pass such order, as he thinks just and proper, confirming, modifying or annulling the decision or order appealed against. Therefore such direction is beyond his powers. Even if the Commissioner (Appeals) has given such a direction, it has no legal sanctity since it intends not only to plug the lacunae in the decision adjusting the refund, but also rectifying a mistake of lower authority belatedly which is not provid....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... belatedly pursuant to Order-in-Appeal dated 8.1.2004 will not take the place of a show cause notice for the dispute relating to the show cause notice dated 18.12.1982. 18. Again, the issue whether the department can suo moto adjust from the sanction refund / rebate, has been discussed in the case of Stella Rubber Works (supra). The relevant portion of the order is reproduced as under:- "4. The learned counsel appearing for the revenue contended that by virtue of Section 11 of the Central Excise Act, 1944, the revenue was empowered to adjust the amounts due to the revenue by way of interest out of the amount due by the Department to the assessee by way of rebate. Therefore, the Tribunal committed a serious error in interfering with the said order of adjustment and therefore he submits that the impugned order requires to be interfered with. Section 11 of the Act would deal with the recovery of sums due to the Government reads as under :- ...... ...... ...... A perusal of the aforesaid provision makes it very clear that if any duty or other sums due to the Central Government under the Act and....