Failure to Verify Excise Duty Paid Before SCN: CESTAT Orders De Novo Adjudication [Read Order]

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that failure to verify excise duty payments allegedly made before the issuance of a show cause notice (SCN) necessitated a de novo adjudication.

Sri Venkateswara Sago Products and several other sago and starch manufacturers, the appellants, challenged orders passed by the Commissioner of Central Excise (Appeals). The appeals were dismissed at the first appellate stage for non-compliance with the mandatory pre-deposit requirement under the Central Excise Act.

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The appellants' counsel argued that they had already paid the excise duty amounts in question even before the issuance of the SCNs. They argued that the appellate authority failed to consider these payments and rejected their appeals purely on technical grounds without proper verification. They sought remand of the matter to enable verification of their payments and adjudication on merits.

The revenue countered that the appellants did not cooperate during the proceedings and failed to produce documentary evidence in support of their claims. The revenue submitted that non-compliance with the pre-deposit requirement was clear and that there was no procedural irregularity in dismissing the appeals.

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The two-member bench comprising P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) observed that the appellants claimed to have made payments before the SCNs, but they had not effectively assisted the lower authorities by providing necessary documentation.

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The tribunal pointed out that the proper course was to verify the appellants’ payment claims before proceeding to decide the appeals. It directed the first appellate authority to call for a report from the adjudicating authority regarding the alleged excise duty payments. The tribunal ordered a fresh de novo adjudication after verification, setting aside the earlier dismissal orders.

The tribunal instructed that the de novo order must be passed within 90 days from receipt of this order. The appellants were directed to fully cooperate with the authorities during this process. The appeals were allowed by way of remand for fresh verification.

To Read the full text of the Order CLICK HERE

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