TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 1396
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....her, arising from the same set of facts, the Department is entitled to raise two Show Cause Notices, one within the period of limitation of one year and the other beyond the period of limitation on the allegations of clandestine removal and suppression by the appellant ? and iii. Whether the second respondent can render findings on technical aspects squarely contrary to expert reports (i.e.) according to the second respondent, cotton and other fabrics undergo shrinkage and do not elongate when reports from experts were filed by the appellant which categorically stated that such fabrics undergo elongation which is the subject matter of the present appeal? 3. The following facts would be necessary to consider as to what would be the correct answer for the substantial questions of law framed for consideration : There was, once upon a time, a very renowned textile factory called M/s.Ango French Textiles namely the appellant, which was engaged in the manufacture of cotton fabrics, man made fabrics, woven fabrics, apparels and articles falling under various headings under Chapters 52, 55, 58, 62 and 63. Based on Intelligence that there were differences in physical stock of goods whe....
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....ssee contravened the provisions of Rule 53 read with Rule 173G of the Rules, that the goods under seizure were liable to be confiscated under Rule 173Q of the Rules and that assessee was liable for penalty. 7. Based on the above statement of facts, the Assistant Commissioner of Central Excise, Central Excise Division, Pondicherry, who is answerable to the Commissioner of Central Excise, issued a show cause dated 14.8.2001. There were two proposals in the said show cause notice, which read as under: "i. The goods valued at Rs. 62,91,811/- under seizure at various units of the assessee should not be confiscated to the Government under Rule 173Q of the Central Excise Rules, 1944 and ii. A penalty under Rule 173Q of the Central Excise Rules, 1944 should not be imposed on them." 8. To the said show cause notice dated 14.8.2001, the assessee submitted their reply dated 31.12.2001, styled as written submissions denying the allegations against them stating that they never resorted to any clandestine activity, but duly accounted the stocks and also filed RT - 12 returns to the Range Officer and that there was no justification for imposing penalty. With regard to the seizure of goods,....
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.... show cause notice dated 27.3.2002. The preliminary objections taken by the assessee were that there could not be two show cause notices on the same cause of action and that it was against the principles of natural justice. Apart from that, an elaborate reply was given on the factual matrix. 13. We find the reply dated 28.5.2002 to be elaborate running to 16 pages. Subsequent to that, written submissions dated 24.7.2002 were filed wherein apart from clarification on facts, several decisions were relied upon in support of their stand. Thus, the written submissions also appear to have been elaborately drafted. We also find that personal hearing was fixed on 24.7.2002 and on that day, the written submissions dated 29.7.2002 were filed stating that pursuant to the directions issued by the Commissioner, the assessee was submitting their annual reports for the years from 1995-96 to 1999-2000. It was pointed out that in the annual reports, they had given only the physical stock after conducting physical verification on 31st March of every year. Thus, they reiterated that only true position of stock was recorded in the annual reports and that no facts were suppressed. 14. It was further ....
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....llant" 18. After we initially heard the learned counsel for the parties, we are of the view that though this question of law, as framed above, touches upon the question of limitation, essentially when the plea of the assessee is that two show cause notices could not have been issued on the same cause of action, with this modified submission, we proceed to decide the matter. 19. As pointed out in the preceding paragraphs, the first show cause notice dated 14.8.2001 was sequel to the inspection conducted by the Audit Department of the respondent on 05.9.2000. The Audit Department appeared to have submitted a report, which led to an order being issued under Rule 223A of the Rules for a special stock taking in all the four units of the assessee. Accordingly, the special stock taking commenced on 25.10.2000 and continued till 14.12.2000 in respect of all the four units. Based on the findings in the special stock taking as well as the report submitted by the Internal Audit Wing of the Department, the show cause notice dated 14.8.2001 came to be issued. The said show cause notice dated 14.8.2001 proposed confiscation of the goods and imposition of penalty as quoted in the preceding para....
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....per explanation was given at the time of seizure of the goods. One of the reasons given by them was that these were accumulated differences over a period of 15 years. It is not clear as to how the excess stock lying in the mill could not be entered in the records. To that extent, they had not maintained the stock register properly and there is a clear violation of the erstwhile Rule 53 read with Rule 173G of the Central Excise Rules, 1944. 13. They had submitted that this was a technical violation and therefore, the goods are not liable to confiscation and penalty was not required to be imposed. In their defence, they relied upon various decisions of the Hon'ble Tribunal as mentioned in paragraphs 9.2, 9.4 and 9.8 to 9.11 supra. The Hon'ble Tribunal in the case of Garden Silk Mills [(1991) 51 ELT 373] has held that if the goods are still within the factory premises and not attempted to be cleared clandestinely, confiscation under Rule 173Q is not sustainable. Similarly, in the case of Threads India Ltd. [(2000) 117 ELT 644], the Hon'ble Tribunal has held that excess stock is not a ground for confiscation of goods when no allegation is there about the clandestine remov....
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....nding Counsel appearing for the Revenue has vehemently contended that the first show cause notice dated 14.8.2001 was issued only for the purpose of confiscation whereas the second show cause notice dated 27.3.2002 was issued for recovery of central excise duty, penalty and interest. 27. We find, on facts, that the Authority was not justified in doing so in the absence of fresh materials for issuance of the second show cause notice dated 27.3.2002. That apart, in the statement of facts appended to the first show cause notice dated 14.8.2001, it is evidently clear that the entire material was available with the Commissioner and that the question of initiation of fresh proceedings on the same set of facts would amount to double jeopardy or in other words, the assessee cannot be vexed twice for the same set of allegations. If, in the opinion of the Assessing Officer, the facts only require a proposal to confiscate and impose penalty, later on, another Authority cannot turn around and state, on the same set of facts, that he would proceed to demand duty from the assessee on the ground of stock differences. It was well open to the Assessing Officer to issue a comprehensive show cause n....