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Shree Steel Castings Pvt Ltd & Another v/s Commissioner of Central Excise & Customs, Nagpur & Another

    Appeal Nos. ST/142 of 2009 and ST/177 of 2009

    Decided On, 23 February 2010

    At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Mumbai

    By, THE HONOURABLE MR. P.G. CHACKO
    By, MEMBER (JUDICIAL)

    Shri P.V. Sadavarte, Advocate, for Assessee. Dr T. Tiju, S.D.R, for Commissioner.



Judgment Text

1. In adjudication of a show-cause notice dated 27.2.2007, the original authority demanded service tax and education cess totaling to Rs 2,70,352/- and interest thereon from the assessee. The amounts already paid by the assessee were appropriated towards this demand. The adjudicating authority also imposed penalty on the assessee under Sections 76, 77 and 78 of the Finance Act, 1994. In an appeal filed by the assessee, the Commissioner (Appeals) vacated the penalties and sustained the rest of the Order-in-Original. Today, the department is in appeal against the dropping of penalties, while the assessee has come up against the demand of service tax.


2. After examining the records and hearing both sides, I find that, though the assessee had filed a reply to the show-cause notice, the same was not considered by the adjudicating authority. The reply was filed on 18.4.07 and the same was duly acknowledged by the Divisional Office of Central Excise, Nagpur. However, the adjudicating authority observed, in its order, that the noticee did not file reply to the show-cause notice and further that they were not interested in filing reply to the show-cause notice and availing chances of personal hearing. That authority proceeded to decide the case on the basis of available records. These facts are not in dispute.


3. The learned Counsel for the assessee submits that the entire demand of service tax is liable to be set aside. He submits that the demand of service tax on Business auxiliary Services, (which became taxable with effect from 1.7.03) is for a period prior to 1.7.03 and hence liable to be set aside. It is similarly submitted that the demand of service on Cargo Handling Service, (which became taxable with effect from 16.8.02) is for a period prior to 16.8.02 and hence unsustainable in law. The learned Counsel submits that, though this plea was not specifically raised in their reply to the show-cause notice, it was raised before the appellate authority and considered by that authority. Given an opportunity, the plea could be raised specifically in a supplementary reply to the show-cause notice.


4. I have heard the learned SDR also.


5. It is evident from the records that the assessee had submitted their reply to the show-cause notice on 18.4.07 but the same was not considered by the original authority, which proceeded on the premise that no reply had been filed by the party. In other words, natural justice was denied to the party by not considering their reply to the show-cause notice. The above grievance was raised before the lower appellate authority. The appellate authority considered the submission and observed that there is nothing in the file with the department. No reply to the show cause notice is found in the department file. As I have already noticed, the reply filed by the party was acknowledged by an officer of Central Excise in the Divisional Office of Central Excise at Nagpur, as evident from the relevant endorsement on the facing page of the reply filed by the party. I am at a loss to understand as to how both the lower authorities failed to take into account the reply filed by the party, which must be a part of the departmental file. If that document is missing, the original authority can require the assessee to supply another copy of their reply to the show-cause notice.


6. In the above scenario, I set aside the orders of the lower authorities on the ground of negation of natural justice and allow the appeal of the assessee by way of remand to the original authority.


7. The department?s appeal before me is against dropping of penalties imposed by the original authority. The lower appellate authority, in an apparently lenient approach set aside the penalties imposed on the assessee under Sections 76, 77 and 78 of the Finance Act, 1994. In the present appeal, the department has questioned this part of the order of the Commissioner (Appeals) on a few grounds. Their grievance also will get redressed when the original authority takes up

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the case for de novo adjudication. Accordingly, this appeal of the department is also allowed by way of remand. 8. For the ends of justice, the original authority shall give the assessee a reasonable opportunity of filing supplementary reply to the show-cause notice. It goes without saying that they should also be given a reasonable opportunity of being heard. A speaking order on all issues shall be passed by the adjudicating authority.
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