At, High Court of Gujarat At Ahmedabad
By, THE HONOURABLE MR. JUSTICE AKIL KURESHI & THE HONOURABLE MR. JUSTICE A.Y. KOGJE
For the Appellant: Paresh M. Dave, Paritosh Gupta, Advocates. For the Respondent: Varun K. Patel, Advocate.
Published In:- Published In 2016 (337) ELT 332
Akil Kureshi, J. (Oral)
1. Appellant is allowed to correct appeal number in the cause title.
2. This tax appeal was admitted for consideration of following substantial questions of law :-
"(A) Whether the Appellate Tribunal was justified in directing the Excise Authorities to serve a show cause notice to a person though the period of limitation as prescribed under Section 11A of the Act was over?
(B) Whether the Appellate Tribunal can direct the original adjudicating authority to serve a show cause notice on another party to whom no such show cause notice was issued thereby expanding the scope of adjudication while remanding an appeal of another appellant?"
3. Brief facts are as under :-
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r />3.1 The appellant - M/s. Premier Heavy Engineering Corporation (hereinafter to be referred as "the appellant-company") has challenged an order dated 29-12-2004 passed by the Customs, Excise and Service Tax Appellate Tribunal ("CESTAT" for short), by which the Tribunal directed the excise authorities to serve a copy of show cause notice to the appellant company and further directed that all parties to the proceedings be re-heard by the original authority and thereafter, the issues liability, duty and penalty, etc., may be determined.3.2 The Excise Department had issued show cause notice dated 29-2-2000 to one Foundry Agriculture & Mining Equipment Pvt. Ltd. (hereinafter to be referred as "the noticee"). In such notice, the Department alleged that there was intelligence received by the Excise Department that the appellant-company is a dummy unit of the noticee and no manufacturing facilities are available at the site of the appellant-company. Upon visit by the officers of the Excise Department at the site of the appellant-company, it was noticed that the unit came into existence in the year 1992 and skeleton machinery was installed at the site. There was commonality of directors between the two companies. On the basis of investigation carried out by the Excise Department, the noticee was called upon to show cause why excise duty of Rs. 4,97,348/- already paid should not be recovered and confirmed under the Central Excise Act and why interest and penalty should not be levied.3.3 Importantly, without any notice to the appellant-company, the proceedings were conducted, which culminated into confirmation of duty, interest and penalty demands.3.4 The appellant-company filed claims for refund for a sum of Rs. 4,97,348/- recovered by the Department from the appellant. Such refund claim was rejected by the competent authority by an order dated 8-3-2002 on the ground that the appellant-company and the noticee were both one and the same company and the adjudicating authority had already appropriated the said sum of Rs. 4,97,348/- towards excise duty liability. Against this order, the appellant approached the Tribunal after unsuccessfully filing appeal before the Commissioner (Appeals). The Tribunal by the impugned judgment passed following directions :-"3. In view of the finding we set aside the orders impugned and allow this appeals No. E/527 with direction that M/s. Premier Heavy Engineering Corporation should be served with the copy of the notice and all the parties to be re-heard by the original authority and thereafter the issues of liabilities of duty, penalty, interest, etc., are to be determined. After such a determination is arrived the question of refund of the amount paid towards duty by M/s. Premier Heavy Engineering Corporation should be determined. Consequently the other appeals also allowed as remand to the original authority. In view of the findings the order of appropriation of the amount is set aside and the matter also remanded back to the appropriate authority for re-determination if required."3.5 In short, the Tribunal directed that the copy of the show cause notice to the noticee be supplied also to the appellant-company. The Tribunal directed that all parties would be heard afresh by the competent authority regarding issues of duty, penalty and interest liabilities. Once these liabilities are decided, the question of refund to the appellant-company would arise. It is this order that the appellant-company has challenged in this appeal.4. Learned Counsel Shri Gupta for the appellant submitted that the Tribunal committed a grave error in expanding the scope of the appeal. The Department never served copy of the show cause notice to the appellant-company. There was no proposal under the show cause notice of any tax or penalty against the appellant. The Tribunal could not have expanded the scope of the show cause notice by including the appellant-company within the sweep of such proceedings.5. On the other hand, learned Counsel Shri Varun Patel for the Department submitted that the appellant-company and the noticee were one and the same entities and the appellant-company is dummy of the noticee company. It was therefore, not necessary to hear the appellant separately before taking final decision of appropriation of the duty amount.6. As can be seen from the record, the question relates to the appellant-company being dummy of the noticee company. It is not even the case of the Department that before declaring the appellant-company as a dummy, hearing was necessary. Merely because the notice was issued on the so-called parent company, requirement of hearing the appellant-company would not be done away with. It was on this basis that the Tribunal found that the Department had committed an error and had therefore, directed service of copy of the notice to the appellant-company. These findings of the Tribunal and the ultimate directions have not been challenged by the Department. The conclusion that the order of recovery of tax, interest and penalty could not have been passed without hearing the appellant, thus becomes final. If that be so, the question is mere supply of copy of the show cause notice to the company be sufficient? The show cause notice, we may recall, was issued against the original noticee company and there was neither any proposal against the appellant-company nor a copy was served to the appellant. Under the circumstances, by supplying a mere copy thereof, the Department cannot initiate proceedings against the appellant. In any case, it was neither the duty nor the authority of the Tribunal to direct so. If, after the Tribunal found that no order adverse to the appellant-company could have been passed without a hearing, the Department was inclined to initiate the proceedings against the appellant, it had to take its own decision and issue notice, if even otherwise permissible in law, particularly having regard to the period of limitation prescribed. At any rate, the Tribunal could not have directed the Tribunal to do so and further, such requirement would not be fulfilled by mere supply of a copy of notice in case of another entity.7. The contention that the appellant, being the dummy of the original noticee, no such separate notice or hearing was needed, simply begs the question. Whether the appellant was dummy or not is a central question and cannot be decided without full participation of the alleged dummy.8. In the result, the questions are answered in favour of the appellant. Appeal is allowed. Judgment of the Tribunal dated 29-12-2004 is reversed. Resultantly, the competent authority shall decide the appellant's refund claim preferably before 30-9-2016. Civil application is also disposed of.
"2016 (337) ELT 332,"