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M/s Indian Oil Corporation Ltd. Versus CCE, Chennai

2016 (5) TMI 1066 - CESTAT CHENNAI

Demand of duty alongwith interest - Re-classification of certain mis-classified lubricating oils and denial of exemption notification - No SCN issued for demanding excise duty under Section 11 A of Central Excise Act - Held that:- the SCN is vague and issued for re-classification of the goods and no demand was raised. Whereas, under Section 11 A, it is mandatory for any recovery of duty not paid or short paid. There shall be a SCN demanding the recovery of duty under Section 11 A. Here, under no .....

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ity after re-classifying the goods and denying exemption, straightaway confirmed the demand under Section 11 A. Therefore, by respectfully, following the Apex Court decisions in the case of Metal Forgings Vs. UOI [2002 (11) TMI 90 - SUPREME COURT OF INDIA] and in the case of Gujarat Machinery Manufactures Ltd. Vs. CCE, Baroda [1996 (9) TMI 121 - SUPREME COURT OF INDIA], we find there is no demand in the SCN issued under Section 11 A for recovery or any short levy of duty on account of re-classif .....

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acture of various lubricating oils falling under chapter 27 and 34 of the CETA, 1985. They have filed classification list in the year 1992 for various products and claimed exemption under Notifications No. 287/1986 as amended by No. 8/1992 dated 01.03.1992 and No. 120/1984 as amended by Notification No. 94/89-CE dated 01.03.1989. On verification of the classification list, it was noticed that the appellants have mis-classified certain lubricating oils and also claimed wrong availment of exemptio .....

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ith interest. Against the said order both the assessee and the Revenue preferred appeals before the Commissioner (Appeals). The Commissioner (Appeals) in his impugned order dated 31.07.2007 allowed the revenue appeal and rejected the assessee's appeal. Consequently, he modified the duty demand to ₹ 1,25,90,015/- as against the original demand of ₹ 1,16,88,203/- (BED + SED) along with interest. Hence the present appeal. 3. The Ld. Advocate raised a preliminary objection and submit .....

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classification should not be rejected and duty collected as per Rules. He also submits that the said SCN does not even proposes under what heading the goods are to be re-classified and only stated that "why it should not be classified under different chapter headings". Whereas, the adjudicating authority in his denovo order not only reclassified and denied the exemption but also confirmed the demand by invoking under Section 11 A of CEA,1944. No SCN was issued for recovery of demand un .....

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on 11A. He relies on the decision of the Hon'ble Supreme Court in the case of Metal Forgings Vs. UOI - 2002 (146) ELT 241 (S.C.) and submits that the Hon'ble Supreme Court clearly laid down the principles and held that SCN is a mandatory requirement for raising any demand. He relied on the following decisions: 1. Balaji Vegetble products Pvt. Ltd. Vs. CCE, Kanpur - 1999 (108) ELT 802 (Tri.) 2. Bharati Shipyard Pvt. Ltd. Vs. CCE, Pune 1998 (101) ELT 33 (Tri.) 3. Total Security System Vs. .....

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s of the case, he reiterated the grounds of appeal para -2 (a, b, c, d). He further submitted that the SCN was issued on December, 1992, whereas, the adjudicating authority confirmed the demand for the period upto 1994, which is beyond the scope of the SCN. He submits that they contested before the Commissioner (Appeals) and in their reply to the SCN, but the same was not considered. He pleads to set aside the demands on the ground that no SCN was issued under Section 11A of the CEA, 1944. 5. On .....

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demanded duty from the year 1992-1994 as the classification list was not finalized. He submits that once there is a SCN alleging for denial of exemption, the amount need not be quantified in the SCN, he relies on the following case law:- 1. Bihari Silk & Rayon Processing Mills (P) Ltd. 2000 (121) ELT 617 (Tri.-LB) 2. NGP Industries Ltd. Vs. CCE, JSR 2003 (152) ELT 414 (Tri.-Kol.) 6. We have carefully considered the submissions by both the sides and perused the records. Before going to the m .....

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ng authority issued the SCN mainly for reclassifying the products ie. Servo 40, Servo RP150, Servo SM85/175/260 under TSH 3403 of CETA, 1985, and also proposed to deny the exemption benefits claimed by the appellants in their classification list filed with the department as per the procedure existed during the relevant period. We find that the adjudicating authority neither brought out any allegation in the said SCN for demanding duty. All that the said notice says is that "why the classifi .....

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Forgings Vs. UOI (supra). The Apex Court had clearly held that SCN is mandatory for recovering the duty not paid/short paid or erroneously refunded. The relevant paragraph of the Apex Court decision is reproduced as under:- "10. It is an admitted fact that a show cause notice as required in law has not been issued by the Revenue. The first contention of the Revenue in this regard is that since the necessary information required to be given in the show cause notice was made available to the .....

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ces contemplated under Rule 10 of the Rules or Section 11A of the Act. Even the Judicial Member in his order has taken almost a similar view by holding that letters either in the form of suggestion or advice or deemed notice issued prior to the finalisation of the classification cannot be taken note of as show cause notices for the recovery of demand, and we are in agreement with the said findings of the two Members of the Tribunal. This is because of the fact that issuance of a show cause notic .....

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ntend that each and every communication or order could be construed as a show cause notice. For this reason the above argument of the Revenue must fail." The ratio of the above Apex Court decision is clearly applicable in the present case as no SCN issued for demanding excise duty under Section 11 A. Further, the Hon'ble Supreme Court in the case of Gujarat Machinery Manufactures Ltd. (supra), clearly held that the issue of SCN for recovery of duty short levied is mandatory requirement. .....

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m (not being a decision or order passed on appeal under Section 35) for the purpose of satisfying himself as to the correctness, legality or propriety of such decision or order and may pass such order thereon as he thinks fit. 3(a) No decision or order under this section shall be varied so as to prejudicially affect any person unless such person is given a reasonable opportunity of making a representation and, if he so desires, of being heard in his defence. (b) Where the Board or, as the case m .....

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rwise, to revise any decision or order made by a Central Excise officer subordinate to him. If he is satisfied as to its incorrectness, illegality or impropriety, he may pass such order thereon as he thinks fit. By reason of clause (a) of sub-section (3), no decision or order may be so varied as to prejudicially affect any person unless that person has been given a reasonable opportunity of making a representation and, if so desired, of being heard. Clause (b) of sub-section (3) applies when dut .....

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uld require them to pay the duty which might be found to have been short-levied if the frit was found to be classifiable under Item 23A(4). The orders of the Collector and of the Tribunal, insofar as they required the appellants to pay the short-levied duty, even though limited to the period of six months prior to the date of the notice by the Tribunal, are bad in law. 7. In the result, the appeal is allowed. The order of the Tribunal is set aside insofar as it directs the Central Excise authori .....

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viat Health Care Pvt. Ltd. (supra), on identical issue allowed the appeal and held that SCN is required to be issued bringing out specific allegations, exact amount of duty demand which is proposed to be recovered under Section 11A. In the present case, we find that the SCN is vague and issued for re-classification of the goods and no demand was raised. Whereas, under Section 11 A, it is mandatory for any recovery of duty not paid or short paid. There shall be a SCN demanding the recovery of dut .....

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