The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) quashed excise duty demand and observed that the allegation that noticee is not aware cannot be decided in adjudication order.
Prakash Shah, the Counsel with Mihir Mehta and Mohit Raval, Advocates who appeared on behalf of the appellant submits that the show cause notice proposed to demand an amount of Rs. 1,40,23,501/- being 10% of the value of the cleared exempted goods under Rule 6 (3) Cenvat Credit Rules, 2004 whereas the Adjudicating Authority has gone altogether on different ground and ordered the lapse of credit of Rs. 1, 20,80,589/- lying in balance as on 07.12.2008.
It was also submitted that it is a completely different issue which was not raised in the show cause notice, therefore, order which is travelled beyond the show cause notice, irrespective of any fact and legal issue, will not sustain on this ground alone.
The issue that arose for consideration is whether the fact that the show cause notice proposed the demand of 10% under Rule (3) of Cenvat Credit Rules and the order confirming the demand under Rule 11(3) of Cenvat Credit Rules, 2004 is beyond the charges made in the show cause notice and whether on that ground demand is sustainable or otherwise.
A Two-Member Bench comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “In the adjudication order the demand of Rs, 1,20,80,589/- was confirmed on the ground that the said amount was lying in the balance as on 07.12.2008 when the appellant have opted for the exemption and according to Rule 11 (3) of Cenvat Credit Rules, 2004, as the said amount has lapsed. Thus the adjudication order has clearly travelled beyond the scope of show cause notice. It is a settled law in various judgments that when with regard to any charge/allegation the noticee is not put to notice that issue cannot be decided in the adjudication order.”
“In view of the above judgments, it is a settled law that then adjudication order cannot travel beyond the scope of show cause notice, therefore, we hold that the demand is not sustainable on the ground that the adjudication order is beyond the scope of show cause notice” the Tribunal noted.
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