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2008 (6) TMI 220

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....ssionerate, Hyderabad (2nd respondent) and to the Superintendent of Central Excise, Nacharam-I Range, Hyderabad (3rd respondent) and their subordinates not to take any coercive steps for realization of the amount demanded under Notice in OC. No. 1093 of 2007 dated 26-11-2007 issued by the 3rd respondent asking the Company to clear the central excise dues to a tune of Rs. 4,27,23,256/-. 3. The undisputed facts in these cases are the Company, which is registered as a small scale industry, is carrying on business in manufacture and sale of Synthetic Enamel/Acrylic Emulsions/Oil bound distemper paints, Cement Primers and Varnishes, had availed lower rate of excise duty benefit as a small scale industry under the relevant notifications issued by the relevant authorities during the assessment years 1999-2000 to 2002-2003. Suspecting evasion of excise duty by the Company, the excise authorities had on 4-10-2002 conducted surprise raids on the factory premises of the Company and also the residence of its Managing Director and the business premises of M/s. Vandana Enterprises, Hyderabad, the sole selling agent of the products manufactured by the Company, and seized the excess of stock, raw....

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....s liable to pay additional duty of Rs. 6,39,955/- and as to why penalties etc. mentioned therein should not be imposed. To those show cause notices the Company and the other appellants sent detailed replies indicating as to how they cannot be subjected to any of the actions proposed and sought an opportunity of being heard. After considering the replies to the show cause notices and the contentions of the appellants, the Commissioner of Customs & Central Excise vide his order dated 22-9-2004 in OR No. 170/2003/Hyd.III/Adjn and OR No. 13/2004/Hyd.III/Adjn, passed an order denying the benefits of concessional rate of excise duty applicable to small scale industries as per the Notification Nos. 9/2000-C.E dated 1-3-2000, 9/2001-C.E., dated 1-3-2001, 9/2002-C.E., dated 1-3-2002 and 9/2003-C.E., dated 1-3-2003 to the Company, as the value of clearances made by it crossed the limit of Rs. 300 lakhs prescribed in the said notifications during the years 1999-2000, 2000-01, 2001-02 and 2002-03 and demanded an amount of Rs. 2,83,04,863/- towards the Central Excise Duty evaded through clandestine clearances and also the differential duty during the period from 1-4-1999 to 4-10-2002 by mis-uti....

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....cause notice OR No. 13/2004 dated 31-3-2004, he directed payment of Rs. 6,39,955/- short paid by mis-utilizing the concessional rate of duty under Notification No. 9/2003 dated 1-3-2003 for the period of April 2003 to September 2003, under Section 11A of the Act and interest thereon under Section 11AB equivalent to the duty was demanded and imposed penalty of Rs. 2,00,000/- under Rule 27 of the Central Excise Rules, 2002. Questioning the said order, the Company, Sri Rudra Sridhar, Sri V. Radha Krishna, Sri Rudra Shankar and Sri K.B. Vijay Kumar preferred Appeal Nos. E/1342-1346/2004 to CESTAT. By the common order under appeal in CEA Nos. 2 to 4 and 6 of 2006 CESTAT confirmed the main order of the adjudicating authority but limited the penalty amount ordered to be paid by the adjudicating authority to 50% of the duty liability, and as the appellants pleaded before the Adjudicating Authority that the Modvat credit benefit should be given to them, as several inputs have suffered duty it remanded the case to the Adjudicating Authority on the ground that he did not consider that contention, with a direction to re-calculate the liability on the basis of the documentary evidence available....

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.... Customs v. Indian Oil Corpn. Ltd. - 2004 (165) E.L.T. 257 (S.C.) = (2004) 3 SSC 488 at 497 where in it was held :- "(1)      Although a circular is not binding on a court or an assessee, it is not open to the Revenue to raise a contention that is contrary to a binding circular by the Board. When a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid nor that it is contrary to the terms of the statute. (2)        Despite the decision of this Court, the Department cannot be permitted to take a stand contrary to the instructions issued by the Board. (3)        A show-cause notice and demand contrary to the existing circulars of the Board are ab initio bad. (4)        It is not open to the Revenue to advance an argument or file an appeal contrary to the circulars." and the observations in para-7 of Collector of Central Excise v. Maruti Foam (P) Ltd. 2004 (164) E.L.T. 394 (S.C.) = (2004) 6 SCC 722 at 725 reading : "It is not in dispute that during the period in question in all these appeals there....

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....l Excise - 2005 (181) E.L.T. 339 (S.C.) = (2005) 2 SCC 720, S.L. Srinivasa Jute Twine Mills (P) Ltd. v. Union of India - (2006) 2 SCC 740, Gammon India Ltd. v. Special Chief Secretary - (2006) 3 SCC 354, Commissioner of Income Tax v. Dhadi Sahu - 1994 Supp (1) SCC 257, Commissioner of Income Tax v. R. Sharadamma - (1996) 8 SCC 388, Kolhapur Canesugar Works Ltd. v. Union of India - 2000 AIR SCW 364 and Bhuna Coop. Sugar Mills Ltd. v. Commissioner of Income Tax - (2005) 2 SCC 728 in support of his contention that in spite of deletion of the second and third provisos to Section 11A of the Act, as the assessment relates to the period during which those provisos were in the statute book the show cause notices can be issued only with the prior approval of the Chief Commissioner of Central Excise. His next contention is that inasmuch as excise duty is leviable only on the goods which are 'manufactured', if there is no evidence relating to 'manufacture' of goods, question of levying of excise duty on any goods does not arise. It is his contention that had the Tribunal gone into the documents relied on by the noticees properly it would not have failed to notice that there was no excess stoc....

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.... v. Commissioner of Central Excise, Chennai - 2004 (165) E.L.T. 291 (Tri. - Chennai), Commissioner of Central Excise v. Supreme Fire Works Factory - 2004 (163) E.L.T. 510 (Tri. - Chennai), Commissioner of Central Excise v. Murugan Enterprises - 2003 (162) E.L.T. 233 (Tri. - Chennai), Thiruchengode Velavar Spinning Mills Pvt. Ltd. v. C.C.E., Coimbatore - 2003 (155) E.L.T. 159 (Tri. - Chennai) and Beaver Engineering Corpn. v. Commissioner of Central Excise - 2002 (148) E.L.T. 1102 (Tri. - Chennai) in support of the said contention. His next contention is that the failure of the adjudicating authority to adhere to the principles of natural justice and give an opportunity to the appellants to cross-examine the witnesses and the investigating officers resulted in grave injustice to the appellants, as truth would come out only during cross-examination of witnesses, and for that reason also the order under appeal is liable to be set aside relied on Swadeshi Polytex Ltd. v. Collector of Central Excise - 2000 (122) E.L.T. 641 (S.C.) and Haroom Haji Abdulla v. State of Maharashtra - AIR 1968 SC 832 in support of that contention and contended that inasmuch as imposition of penalties and order....

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....(2005) 5 SCC 337 at 345 reading : "The principles of natural justice, it is trite, is no unruly horse. When facts are admitted, an enquiry would be an empty formality. Even the principle of estoppel will apply, (see Gurjeewan Garewal (Dr.) v. Dr. Sumitra Dash [(2004) 5 SCC 263]) The principles of natural justice are required to be complied with having regard to the fact situation obtaining therein. It cannot be put in a straitjacket formula. It cannot be applied in a vacuum without reference to the relevant facts and circumstances of the case. (see State of Punjab v. Jagir Singh [(2004) 8 SCC 129] and Karnataka SRTC v. S.G. Kotturappa [(2005) 3 SCC 409])" he contended that since the Managing Director and other Directors admitted the mal practices indulged in by them, question of violation of principles of natural justice does not arise. 7. Inasmuch as second and third provisos to Section 11A of the Act, which were introduced into the Act as per Act 10 of 2000 (with effect from 12-5-2000) reading : "Provided further that where the amount of duty which has not been levied or paid or has been short-levied or short-paid or erroneously refunded is one crore of rupees or less a notic....

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....s merits. Questioning that order, further appeal was preferred to the Supreme Court. As no stay was granted by the apex Court, the Commissioner (Appeals) adjudicated the case on 17-10-2002 and confirmed the demand. The appellants therein questioned that order in CEGAT taking a plea that the Superintendent had no jurisdiction to issue show-cause notices and the Deputy Commissioner had no jurisdiction to adjudicate. By its order dated 25-6-2003 CEGAT dismissed the said appeal. Questioning the said order of CEGAT an appeal was preferred to the apex Court. The apex Court, which heard both the appeals together, held that inasmuch as Section 11A of the Act was amended and the word "Collector" was deleted and in its place the words "Central Excise Officer" were incorporated, any Central Excise Officer and not necessarily a 'Collector' has the power and jurisdiction to issue the show cause notice and adjudicate the matter, and also repelled the contention of the appellants therein that inasmuch as the circulars issued by the Board state that the show cause notices could only be issued by a Collector, other officers in the excise department have no jurisdiction to issue such show cause noti....

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....t Section. The first show cause notice in this case, which is dated 25-9-2003, was issued by the Commissioner of Customs and Central Excise, Hyderabad-III Commissionerate, Hyderabad. Section 2(b) of the Act defines, "Central Excise Officer" as "the Chief Commissioner of Central Excise, Commissioner of Central Excise, Commissioner of Central Excise (Appeals), Additional Commissioner of Central Excise, Joint Commissioner of Central Excise, Deputy Commissioner of Central Excise, Assistant Commissioner of Central Excise or any other officer of the Central Excise Department, or any person (including an officer of the State Government) invested by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963, with any of the powers of a Central Excise Officer under this Act." So, Commissioner of Central Excise would also be a 'Central Excise Officer' in whom powers are conferred by Section 11A of the Act. Therefore, the show cause notices issued by the Commissioner of Central Excise without the approval of the Chief Commissioner of Central Excise are not infirm and are perfectly valid. 9. S.L. Srinivasa Jute Twine Mills (P) Ltd. case (supra) arising....

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....sp;   The benefits of exemption/concessional rate of duty under SSI Notification Nos. 9/2000-C.E., dated 1-3-2000, 9/2001-C.E., dated 1-3-2001, 9/2002-C.E., dated 1-3-2002, should not be denied to them inasmuch as their value of clearances has cross the limit of Rs. 300 lakhs prescribed under the said notifications during the years 1999-2000, 2000-01, 2001-02, 2002-03. (ii)        An amount of Rs. 2,83,04,863.00 (Rupees two crores eighty three lakhs four thousand eight hundred sixty three only) being the Central Excise duty evaded by them on the clandestine clearances and the differential duty arisen out the mis-utilisation of SSI Notifications mentioned supra for the period from 1-4-1999 to 4-10-2002 should not be paid by them under proviso to Section 11A(1) of the Central Excise Act, 1944, and why the bond and the guarantee executed by them should not be enforced for realizing the above duty and the amount of Rs. 3,04,425/- deposited by SPCPL vide TR 6 Challan, dated 19-10-2002 towards Central Excise duty payable on the goods seized at the business premises of M/s. Vandana Enterprises on 4-10-2002 and SPCPL should not be adjusted towa....