Circular No. 228/62/96-Central Excises

dated 8/7/96
F.No. 202/5/96-CX.6

Government of India

Ministry of Finance

Department of Revenue, New Delhi

Subject : Central Excise – Issue of show cause notice for raising demand at the time of assessment of RT-12

A doubt has arisen on account of conflicting views taken by various Hon”ble High Court and CEGAT on the issue whether a Demand -Cum-Show-Cause-Notice under Section 11A of Central Excises & Salt Act, 1944 is required to be issued once assessment of RT – 12 is finalised and the Superintendent of Central Excise indicates in the assessment memorandum the amount of duty debited less by the assesses. The ratio of judgements in the cases of M/s Rasoi Ltd.v.CCE-1993 (63) ELT 512 (Tribunal), Swan Mills Ltd.v.Union of India – 1989 (44) ELT 601 (Bombay) and M/s Devangere Cotton Mills Ltd.v. Union of India (Karnataka) is that no Show Cause Notice is required u/s 11A once the Assessment Order made under Rule 173-I of Central Excise Rules, 1944 had become final.

2. However, several conflicting decisions are available on this issue some of which are as follows:-

1. CCE v. Indian Iron & Steel Company 1989(39) ELT 617 (Tribunal)

2. Vipul Dyes Chemicals Pvt. Ltd. v.CCE 1989 (44) ELT 724 (Tribunal)

3. CCE v. Bombay- I v. New Great Eastern Spg. & Wvg. Mills Ltd. 1995 (75) ELT 613 (Tribunal)

4. M/s Hira Cable Works v. CCE Bhubaneshwar (vide Order No. 567/96A dated 23.1.96 arising out of appeal No. E. 1471/ 95-A)

5. CCE Bombay-II v.Leo Pharma (Vide Final Order) No 1020/96-A dated 6.3.96 arising out of appeal No. E. 2640/ 85A)

In all the above judgements, in has been held that demand raised on RT-12 without issue of show cause notice is not maintainable in the eye of lew.

3. In am directed to say that Board is examining the matter in consultation with the Ministry of Law, Keeping in view the decisions taken by the Hon”ble CEGAT, especially the latest decision dated 6.3.96, supra, it has been decided that till the issue is resolved, necessary steps to safeguard the revenue should be taken be immediately raising the Demand-Cum-Show-Cause-Notifice and making endorsement of the Show Cause Notice number & dated on the Assessment Memorandum of the RT-12 returns in which short levy/short payments found on assessment.

(P.K. Sinha)
Under Secretary (CX.6)

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