The two-member bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ), Kolkata, comprising Ashok Jindal (Judicial member) and K. Anbazhagan (Technical member), granted relief to National Aluminium Company Limited ( NALCO ) by setting aside the excise duty demand. They ruled that the Show Cause Notice ( SCN ) was unmaintainable without challenging the final assessment order.
The issue to be decided was whether in the absence of challenge of final assessment order, a show-cause notice issued to the appellant is maintainable or not.
The assessee being a Public Sector Undertaking, was engaged in the manufacture of Aluminium in its Smelter Plant located at Angul, Odisha. The main raw material used by the appellant is ‘Calcined Alumina’, which is manufactured at its refinery located at Damanjodi, Odisha. The ‘Calcined Alumina’ is manufactured from basic raw material, Bauxite Ore
Three Show cause notices were issued by invoking extended periods of limitation for the period August, 2000 to October, 2002 on the ground that the assessable value of the Calcined alumina cleared for captive consumption prior to the implementation of the Circular shall not be made as per CAS-4.
The said Show Cause Notices duly recorded that ‘major portion of calcined alumina manufactured at the factory of the assessee at Damanjodi is cleared/removed for export under bond or on payment of duty to be used in the manufacture of aluminium metal in their Smelter unit at Angul by way of Stock transfer. A small quantity consisting less than 1% is also offered for sale to other buyers at the factory gate’. However, no dispute with respect to the sale price adopted for the independent buyers was raised.
The assessee cleared the goods provisionally paying duty and all the provisional assessments have been made final and the said final assessments have been accepted by the Revenue. In that circumstances, without challenging the said final assessment, the revenue cannot proceed to issue of show cause notice to the assessee.
Therefore, the bench held that the show-cause notice was not required to be issued without challenging the order of final assessment of the provisional assessments, further holding that the demand of duty was not sustainable against the assessee consequently, no penalty was imposable on the assessee.
CESTAT set aside the impugned order and allow the appeal filed by the assessee.
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