Supreme Court held issuance of show-cause notice was not mandatory

1. Union of India unveiled a new industrial policy for the North-Eastern region, giving central excise exemption for industries.

2. On December 31, 1999, the exemption of central excise was withdrawn in respect pan masala, tobacco and tobacco substitutes etc.

3. By Section 154 of the Finance Act, 2003 withdrawal of the benefit was effected from retrospective effect.

4. Subsequently the Revenue passed a recovery order for recovery from M/s Satayapal Dharampal.

5. Commissioner (Appeals) held that issuance of show-cause notice was mandatory before a valid recovery of demand could be made from the appellant and, thus, remitted the matter to the adjudicating authority.

6. CESTAT reversed the Commissioner’s order.

On appeal, the Supreme Court held as under:

7. In the present case Section 154(4) specifically and expressly allows amounts to be recovered within a period of thirty days from the day Finance Bill, 2003 received the assent of the President.

8. It cannot but be held therefore that the period of six months provided under Section 11-A would not apply.

9. In the aforesaid scenario, when the Court was conscious of the principle laid down in J.K. Cotton (supra) and explained the same in a particular manner while deciding the appeal in R.C. Tobacco (supra), it cannot be argued that the judgment in R.C. Tobacco (supra) runs contrary to J.K. Cotton (supra).

10. For all these reasons, the appeals are dismissed.

Case Reference - M/S Dharampal Satyapal Ltd vs Dy.Commr.Of Cen.Exc.& Ors

Supreme Court of India