2004 (3) TMI 199 - AT - Central Excise

Show cause notice - Whether a second show cause notice for demanding Central Excise duty can be issued to an assessee on gathering additional information/material/documents etc - HELD THAT - The show cause notice has been issued to the Respondents even after conducting the search and investigation as the period covered by the show cause notices is up to 14-3-1999 and last two show cause notices were issued on 6-7-1999 and 2-9-1999 whereas the officers had checked the records of the Respondents on 4-12-1998 and recorded statement in December 1998 February to April 1999. We also observe that the first adjudication Order was passed by the Assistant Commissioner on 29-1-1999 when the Revenue has already started the investigation again against the Respondents and second adjudication order was issued much afterwards i.e. 28-1-2000. In both the proceedings what is being denied is the deduction on account of post removal expenses on the ground that these were charged separately over and above the post removal expenses (in the first proceedings) and in the second proceeding on the ground that PRE were nothing but the differential amount charged from the customers on account of difference in the varieties. As the matter stand adjudicated (in respect of 4 show cause notices) two more show cause notices are pending adjudication no new show cause notice for demanding duty can be issued by the Revenue. We therefore reject the appeal filed by the Revenue.

Summary

Issues involved: Whether a second show cause notice for demanding Central Excise duty can be issued to an assessee on gathering additional information/material/documents, etc.

Summary:
The appeal filed by Revenue questioned the issuance of a second show cause notice for demanding Central Excise duty from the assessee. The case involved M/s. Siddharth Tubes Ltd. and their claim for deductions on post removal expenses (PRE) and permission for provisional assessment under Rule 9B of the Central Excise Rules. Multiple show cause notices were issued, leading to adjudication by the Assistant Commissioner and subsequent appeals. The Revenue alleged that the Respondents undervalued their products to evade duty, leading to a demand for short-paid duty, penalty, and interest. The Tribunal remanded the matter to examine if res judicata applied. The Commissioner held that res judicata applied, as the grounds of adjudication in both proceedings were similar. The Revenue contended that new facts warranted further adjudication, citing a precedent where res judicata did not apply when new facts emerged.

The Commissioner's decision was challenged by the Revenue, arguing that the proceedings were not bound by res judicata as new facts had come to light, expanding the scope of the enquiry. The Respondents countered that the matter had already been adjudicated and could not be reissued in a second show cause notice. The Tribunal considered both arguments, noting that while the grounds for recovery of duty were different, the issue and period involved were the same. It was concluded that a show cause notice cannot be issued twice for the same issue and period on different grounds, as it would lead to endless notices based on new material. The Tribunal rejected the Revenue's appeal, emphasizing that since the matter had already been adjudicated, no new show cause notice for demanding duty could be issued.

In conclusion, the Tribunal upheld that res judicata applied in this case, preventing the Revenue from issuing a second show cause notice for demanding Central Excise duty based on new grounds for the same issue and period.