Re-Issue of SCN Demanding Duty Which once dropped by Department is Not Valid: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Kolkata Bench has held that the re-issue of the Show Cause Notice ( SCN ) demanding duty which once dropped by the department is not valid.

M/s Steel Authority of India Limited, Rourkela Steel Plant is a Central Public Sector Enterprise under the Ministry of Steel, Government of India and is engaged in the manufacture of Iron and Steel products falling under Chapters 72 and 73 of the First Schedule to the Central Excise Tariff Act, 1985 (CETA). 

Two SCNs were issued challenging availment of credit of Rs.5,00,000/- by RSP. The said Show Cause Notices were replied to and were adjudicated vide order in Original No. dated 29.12.2005. Another SCN dated 19.11.2007 was issued alleging that the Appellant (RSP) had availed CENVAT Credit in October 2003, i.e., the remaining 50% unavailed credit in respect of capital goods which allegedly were not in possession and use of the manufacturer (RSP).

The said SCN was adjudicated vide Order-in-Original dated 28.04.2016 wherein the demand of duty was dropped. Detailed reasons for dropping such demand are recorded in the referred Order-in-Original dated 28.04.2016. 

The Appellant operates furnaces and coke ovens in its plant. The residue gas emanating from such furnaces and coke ovens is processed in the coal chemical division comprised of the Rourkela Fertiliser Plant ( ‘SAILRFP’/RFP’). The coke oven gas contains ammonia which cannot be let out into the atmosphere, which is hazardous in nature. The same is processed along with sulphuric acid to obtain ammonium sulphate, a fertiliser.

It was observed that Factory in terms of Section 2(e) of the Central Excise Act includes any number of inputs within the same premises irrespective of the number of Central Excise registrations. No distinction between the Rourkela Steel Plant (RSP) and Rourkela Fertilizer Plant (RFP) can be inferred as both are the same factory.

Further viewed that when facts were known to both parties, the omission by one to do what he might have done not that he must have done would not render it suppression.

The SCN given by the Department itself proceeds on the basis that the factory of the assessee consisted of different units (plants); that it was one single factory consisting of separate units; that sugar and molasses came under one of the units, paper and paper board came in the other unit and thatchemicals came in the third unit. In the circumstances, the assessee-respondent was entitled to the benefit of the exemption notification.

A Coram of Shri P K Choudhary, member(judicial) observed that in the case of Nizam Sugar Factory v. Collector of Central Excise, A.P it was held that ”the Show Cause Notice has been adjudicated in favour of the Appellant and has attained finality in the absence of any challenge by the Department, the subsequent notice cannot be issued beyond limitation.”

Relying on the abovesaid case the ITAT held that the impugned orders cannot be sustained and were set aside. The Appeal filed by the Appellant was allowed.

Shri Dipankar Majumdar & Shri Rahul Tangri, both appeared for the Appellant and Shri J. Chattopadhyay, Authorized Representative appeared for the Respondent.

To Read the full text of the Order CLICK HERE

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