Customs, Excise and Gold Tribunal - Tamil Nadu
Malt And Allied Products Co. Ltd. And ... vs Cce on 31 May, 1999
Equivalent citations: 2000(89)ECR562(TRI.-CHENNAI)
ORDER V.K. Ashtana, Member (T)
1. These appeals are against Order-in-Original No. 2/99 dated 13.1.1999 passed by Commissioner, Central Excise, Chennai.
2. Heard Shri V. Lakshmikumaran, Ld. Advocate for the appellants and Ms. Aruna Gupta, JDR for the department.
3. Ld. Advocate submits that the Order-in-Original impugned suffers from fatal infirmity as it pronounces the decision which is much beyond the scope of the Show Cause Notice. He submits that as is evident from page 41 onwards of the show cause notice, the department has proposed to the demand for duty on the ground that the sale price of M/s. ISPL was the correct assessable value on which the duty would be payable by M/s. MAPCO after allowing exemptions from the first 30 lakhs clearances under Notification No. 1/93-CE for the financial year 1994-95. Ld. Advocate takes us to the internal page 28 of the Order-in-Original impugned wherein he submits that the Ld. Commissioner has revised the demand for differential duty. Ld. Advocate submits that while doing so for the year 1994-95 (Para 12 of the Order), the Ld. Commissioner has combined the value of clearances of M/s. ISPL and M/s. MAPCO and found that this combined value of clearances is Rs. 2,32,18,122/- and since it exceeds Rs. 2,00,00,000/-, therefore the said duty exemption under SSI notification would not be available for the year 1995-96. Similarly, the value of clearances have also been combined for the year 1995-96 and the SSI exemption denied for 1996-97 and so on. Ld. Advocate submits that nowhere in the show cause notice did the department propose such clubbing of value of clearances of M/s. ISPL and M/s. MAPCO. Secondly, in the show cause notice, as submitted earlier, the duty calculation has clearly set off the first Rs. 30 lakhs under the SSI exemption notification. Ld. Advocate therefore submits that clearly on this count, the Order-in-Original impugned goes much beyond the scope of the Show cause notice and that they were never brought to notice with respect to this revised workings for demand of differential duty. Therefore, the principles of natural justice have been grossly violated. Ld. Advocate also submits that the demand for duty in the order impugned at page 30 thereof, Rs. 41,09,175/- have been demanded jointly from M/s. ISPL as well as MAPCO. Similarly, penalty of Rs. 6,25,149/- has been jointly imposed on both the companies under Section 11 AC of the Central Excise Act. Ld. Advocate submits that how this quantum of penalty came to be worked about was not made known to them at any stage of the original proceedings as the show cause notice had not proposed imposition of this amount of penalty on both the parties. Therefore, on this count too, there is violation of principles of natural justice by the said order impugned.
4. Ld. D.R. submitted that the Order-in-Original impugned has in detail analysed the question of relationship between M/s. ISPL and M/s. MAPCO and has clearly held for the reasons noted therein that the two are clearly related persons and have interest in the business of each other. Therefore, clearly the prices of M/s. ISPL would be the correct assessable value. This aspect has also been mentioned in the show cause notice. She submits that the show cause notice has also mentioned the relationship between the two.
5. On a careful perusal, prima facie, we find that the Order-in-Original impugned has gone beyond the scope of the show cause notice and that the issue lies on a short compass. Therefore, we order waiver of duty and penalty and stay thereof and proceed to consider the appeals themselves with the consent of both sides.
6. On a careful consideration of the rival submissions and records of the case, we find that the show cause notice has demanded differential duty solely on the ground that the assessable value needed to be revised in view of the relationship between M/s. MAPCO and M/s. ISPL. The notice clearly proposes that the price on which the goods were sold by ISPL would be the assessable value and not that of M/s. MAPCO. We have also seen that in this duty calculation, the show cause notice has clearly proposed a set off upto Rs. 30 lakhs in consideration of duty exemption under SSI Notification No. 1/93. We have perused the show cause notice and find that there is no proposal in the show cause notice specifically proposing that the value of clearance of these two companies should be clubbed. As against this, perusal of the Order-in-original impugned shows that in para 12 thereof, the Ld. Commissioner has revised the very basis of the duty demand. If such a revision was within the ambit of the proposals of the show cause notice, we would have had no quarrel with it. However, from the chart appended in that para, we find that the Ld. Commissioner has combined the value of clearances for succeeding financial years of both these companies and then on concluding that these value of clearances has exceeded the cut off upper limit in the SSI notification, has denied the duty exemption on this count for the subsequent financial years. Nowhere in the show cause notice we have find this proposal specifically given. We, therefore, clearly find that the Order-in-Original impugned confirmed the duty demand therein on grounds which were not a part of the show cause notice at all. The records also do not show that during the original proceedings, the appellants were placed on notice with respect to this revised workings of the demands. Therefore, clearly the Order-in-Original is containing infirmity of violation of principles of natural justice. We also find that both the duty as well as the penalty imposed by the Ld. Commissioner has been jointly imposed upon the two appellants. Even if it is the case of department that the two are related, it is also a fact that the two are independent legal entities having their own business. Therefore, the Ld. Commissioner should have indicated as to what percentage of this amount each of this two independent legal entities under other civil laws would have to pay. We, therefore, find that the order as it is worded is not capable of being also implemented in a clear and transparent manner.
7. In view of the foregoing findings and analysis, we find that the Order-in-Original impugned suffers from being a non speaking order as well as an order which has violated the principles of natural justice. Therefore, we set aside the Order-in-Original impugned and remand the matter for de novo consideration to the original authority. We direct the Ld. Commissioner to re-hear all the parties and give full consideration to their submissions in the de novo proceedings. The appeals are allowed by way of remand.
(Pronounced and dictated in open Court).