The Kolkata Bench of the Customs, Excise &Service Tax Appellate Tribunal (CESTAT) has held that demand duty is not sustainable when the reason was not mentioned in the show cause notice.
The assessee, M/s. Ronix Polymer Private Limited, challenged the Orderby the Commissioner (Appeals)which upheld the disallowance of Modvat credit of Rs.17,56,079.43 and the imposition of the penalty of Rs.15,00,000/-.
The Appellant obtained registration with Central Excise Department on 17.06.1994 and filed a declaration on 20.12.1994 under Rule 57G of the Central Excise Rules, 1944 indicating their intention to avail of transitional Modvat credit benefit. They submitted the central excise quarterly return for Financial Year 1994-95 belatedly on 28.08.1995 which was alleged to be in contravention of Rule 173G of the Central Excise Rules, 1944.
A Show Cause Notice (SCN) dated 02.04.1996 was issued by invoking the extended period of limitation to deny Modvat credit for contravention of provisions of Rules 57H(1)(b), 57G, 173G and 173B of the Central Excise Rules, 1944. The said SCN confirmed the demand as proposed in the SCN, including the issuance of notice beyond the prescribed period of six months, by invoking the extended period of limitation.
The Appeal filed by the assessee was dismissed vide Order-in-Appeal dated 22.12.2000, since not maintainable for non-compliance with the requirement of pre-deposit in terms of the provisions of Section 35F of the Central Excise Act, 1944.
The disallowance of the credit was that the Appellant has availed the aforesaid SSI exemption which was never alleged in the SCN. The Department was aware of the fact about the availment of the above exemption since that has been duly disclosed in the quarterly excise returns, though belatedly filed.
It was a settled legal position that when the assessee was not put to notice aboutthe basis of the reasonsfor which the demand was being sought to be made, the proceedings cannot be legally sustained.
A Single member bench of Shri P K Choudhary, member(judicial) observed that invocation of an extended period of limitation cannot be sustained when no such allegation was ever made in the SCN. The Tribunal set aside the duty demand and allowed the appeal with consequential relief as per law.
Shri S.P.Siddhanta appeared for the Appellant and Shri A.Roy appeared for the Respondent.
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