Customs, Excise and Gold Tribunal - Tamil Nadu
M/S. Hiflo Systems And M/S. Rhino Pipes vs Commissioner Of Central Excise, ... on 19 April, 2001
Equivalent citations: 2001(76)ECC315, 2001ECR115(TRI.-CHENNAI)
ORDER
S.L. Peeran, Member (Judicial)
1. In both the Appeals, common question of law and facts are involved and hence both the appeals are taken up together for disposal as per law with the consent of both the sides.
2. E/13/97/MAS The issue arises from the order in original No. 169/96 dt. 23.10.96 passed by the Commissioner of Central Excise, Coimbatore by which the Commissioner has confirmed the duty demand of Rs. 4,91,689/- under Rule 9(2) of the Central Excise Act read with proviso to section 11 A of the CEA Act and imposing like sum as penalty under Section 11 AC of the CE Act besides penalty on other persons on the ground that the Appellants had manufactured and cleared rigid PVC pipes to various branches and agencies in their brand name viz. "T & M" 'SICAL', 'HIFLO', affixed on them and hence they are not eligible for SSI exemption.
2.1 E/14/97/MAS The Commissioner has, by his order in original No. 170/96 dt. 23.10.96, confirmed the duty demand of Rs. 1,86,758/- besides confirming like sum as penalty under section 11 AC read with other Rules of CEA Rules.
2.2. The allegations in this case is similar to the one in the above case. The Ld. Consultant contends that the demands are not substantiated for the simple reason that the department has failed to issue a show cause notice in terms of Rule 9(2) read with proviso to Section 11 A of the Act. They have proceeded to issue order in original merely because the appellants had admitted the removal of the goods by affixing brands names which, according to him, are not trade names; but only the name of the appellants company. He submits that even if the party had admitted the liability and paid the duty that by itself will not prevent the adjudicating authority to issue demand cum show cause notice as required under the said provision of law. He submits that this issue is well settled by the Apex court judgement and Tribunal decisions wherein it has been held that confirmation of duty demands without issue of show cause notice is bad in law. He submits the following judgements:
1. CCE vs. Kosan Metal Products Ltd.
1988 (38) ELT 573 (SC)
2. Universal Electronics vs. CCE 1998 (99) ELT 134 (T)
3. Ekam Chemicals vs. CCE, 1998 (98) ELT 46
4. CCE vs. Asfer Engineers 1998 (100) ELT 157 (T) He further submits that the demands were for the period prior to September, 1996 while Section 11 AC was introduced on 28.9.96. He submits that penalty under Section 11 AC cannot be confirmed as held by the Apex Court in the case of CCE VS. LG Electronics Ltd. 2000 (128) ELT 52 (SC).
3. The Ld. DR. submits that show cause notice was not issued as party had voluntarily deposited the duty. Therefore, in these circumstances the Commissioner had not issued show cause notice and proceeded to decide the case by giving personal hearing.
4. On a careful consideration of the submissions made by both the sides, we notice that, notwithstanding the fact that the assessee had waived the show cause notice and paid the duty that by itself will not be a ground for the adjudication authority to pass an order in original without issue of show cause notice. The issue of show cause notice to raise the demand under Rule 9(2) read with the proviso to section 11 AC of the Act is mandatory and it has to be statutorily discharged, as held by the Apex Court in the case of CCE VS. Kosan Metal Products (supra) and Madhumittan Syntex's case 1988 (35) ECT 349 (SC). These judgements have since been followed in a larger number of cases. In view of the ratio of the judgement and the issue being settled one and as in the present case, there is a fundamental error committed by not issuing a show cause notice for raising demands, and therefor passing of an order in original, is not sustainable. Further the confirmation of penalty prior to the enactment of section 11 AC is also not sustainable in law, in view of the Apex Court judgement cited. The preliminary objection raised by the Consultant that demands are unsustainable without issue of show cause notice is required to be accepted in both the cases. In view of the above findings and respectfully following the ration of the citations referred to above, the impugned orders are set aside and the appeals are allowed with consequential relief if any as per law.
(order dictated and pronounced in the open court)