Customs, Excise and Gold Tribunal - Mumbai
Extrusion Processes Ltd. vs Collector Of Central Excise on 30 September, 1993
Equivalent citations: 1993(44)ECC231, 1994(69)ELT144(TRI-MUMBAI)
ORDER P.K. Desai, Member (J)
1. This appeal is directed against the Order-in-Appeal No. SKM-178/89-B-II dated 17-2-1989 of the Collector of Central Excise (Appeals), Bombay, passed in relation to Order-in-Original No. V-Adj(EP)4-71/ 87 /5264 dt. 12-9-1987 of the Assistant Collector of Central Excise, Division-VII, Bombay-II.
2. By issuance of Show Cause Notice dt. 24-2-1987, it was alleged that the appellants had wrongly availed of the Modvat Credit in relation to the duty paid on gummed/adhesive tapes in rolls, as they could not be considered as inputs or goods used in relation to manufacture of final product namely Aluminium Collapsible Tubes, adjudication proceedings were conducted, but vide order-in-original dt. 12-9-1987, of the Assistant Collector, the demand was withdrawn, on the ground that the assessee had declared the said item as input in their declaration vide Rule 57G of the Rules, and had correctly availed of the Modvat Credit during the period in question. In exercise of the powers Under Section 35E of the CESA, 1944, the Collector, however, ordered filing of an appeal against the said order, on the plea that as per Explanation in to Rule 57A of the Rules, the duty paid on the inputs, the value of which was not included in the assessable value during the preceding financial year, was not eligible for such credit, and that the appellants had not included the value of the subject input in their assessable value for the previous year and hence demand made was correct. The Collector of Central Excise (Appeals), vide his impugned order, upheld the contention of the department and set aside the order of the Assistant Collector and confirmed the demand.
3. Heard Mr. S.P. Sheth, the Ld. Advocate for the appellants and Mr. Mondal, the Ld. SDR.
4. The only point urged for determination is that, in view of the Show Cause Notice and the Order-in-Original based thereon, alleging nonavailability of Modvat Credit only on the ground that the item, namely gummed/adhesive tapes were not the inputs for the final product aluminium printed collapsible tubes, whether it is open to the Department, to exercise their powers Under Section 35E of CESA and order filing of an appeal before the Collector (Appeals) on the entirely new ground namely, non-inclusion of the value thereof, in the assessable value of the previous year, and whether the Collector (Appeals), is justified in adjudicating upon the same and confirm the demand raised under the Show Cause Notice dt. 24-4-1987.
5. Mr. S.P. Sheth, the Ld. Advocate for the appellant has pleaded that, the order of the Collector (Appeals) is not sustainable, as going beyond the periphery of the Show Cause Notice. Mr. Mondal, the Ld. SDR, has, however, submitted that it is open to the department to order review vide Sec. 35E of the Act, on the point raised, as the Show Cause Notice principally alleges non-availment of Modvat Credit. In his submission, if, however, the assessee feels that no proper opportunity is given to explain on the ground raised in the appeal, the matter could stand remanded for de novo consideration, by giving opportunity to the assessee to have their say thereon.
6. It is clear from the averments in the Show Cause Notice dt. 24-4-1987, that the only ground raised for the disallowance of Modvat Credit and demand the repayment of the amount, is that gummed/adhesive tapes in rolls are not the inputs for their final products. There is no whisper therein that credit is not allowable also on the ground of non-inclusion of its value in the assessable value for the previous year. Thus, Explanation III to Rule 57A of the Rules, has not been referred to in the Show Cause Notice for disallowance of the credit.
7. Section 35E(2) of the CESA, 1944, empowers the Collector to call for and examine the record of any proceedings in which the adjudicating authority subordinate to him has passed any order, and to satisfy himself of the legality and propriety of such order or decision, and has also powers to order filing of application before Collector (Appeals) for determination of such points arising out of the order or decision of such adjudicating authority, and vide Sub-sec. (4) of Section 35E such an application has to be treated as an appeal, and all the provisions applicable to appeals would stand attracted.
8. No authentication is required to the settled proposition of law that the Notice for demand and to Show Cause why demand should not be confirmed, has to specify the duty demand as also the cause for raising the demand. No demand can be confirmed on the ground not raised in the Show Cause Notice.
9. As is evident from the wordings of Section 35E(2) of the Act, the Collector can order filing of an appeal before the Collector (Appeals), "for determination of such points arising out of the decision or order". This clearly indicates that it is not open to the Collector to traverse beyond the scope or periphery of the Show Cause Notice, and order filing of an appeal, pleading a ground which is not specified as a ground for raising demand in the Show Cause Notice.
10. It is true that certain issues of law could be raised even at the appellate stage, even though the same were not raised at the adjudication stage. Such issues however should be pure questions of law, and which could be determined on the set of facts already available on record. Even if the issue is one of law, but if it calls for adducing additional evidence, and requires examination of factual position, other than the one examined at the adjudicating stage, the same cannot be raised at the appellate stage.
11. In the instant case, the Collector while exercising his powers Under Sec. 35E(2) of the Act, has ordered filing of an appeal on the ground entirely novice to the Show Cause Notice issued, and calls for examination of factual aspect, which could not have been brought on record in adjudication under the subject Show Cause Notice.
12. The submission that even now the appellant may be given opportunity to adduce evidence and for that purpose, the matter may stand remanded back for de novo consideration, could also not be endorsed, as that would tantamount to directing adjudication on the issues not even raised in the Show Cause Notice. Such an approach is not envisaged under the law. The Show Cause Notice is the foundation for all the proceedings, and any proceedings conducted under a Show Cause Notice has to adhere to the basic allegations contained therein.
13. It is also not possible to accept the submissions, that basically the Show Cause Notice raises demand/disallowance of the Modvat Credit, because the Show Cause Notice, as already indicated hereinabove, must specifically contain the ground for raising the demand.
14. With the Show Cause Notice issued, containing specific allegation for raising the demand and with the Assistant Collector passing the Order-in-Original in relation to the averments made in the Show Cause Notice, it is beyond the powers of the Collector to exercise his powers Under Section 35E(2) to order filing of the appeal on the ground not raised in the Show Cause Notice, and the finding given by the Collector (Appeals) thereon, overlooking the fact that the same was not the ground raised in the Show Cause Notice, and also was not the issue of law which could be determined on the set of facts brought on record, in the adjudication proceedings, could not be sustained and has to be set aside.
15. The appeal is, therefore, allowed. The order of the Collector (Appeals) is set aside, with consequential relief. It is however observed that it would be open for the Department to issue fresh Show Cause Notice, if the same is otherwise permissible under the law, on the issue sought to be raised before the Collector (Appeals).