In case of composite Show cause Notice in respect of two Assessees, There is no rule or principle that authorizes the apportionment of liability based upon past figures
Modern Industrial Enterprises (MIE) and Florida Electrical Industries Ltd. (FIEL) (collectively referred to as ‘the Assessees’ were subject to independent search operations by the Central Excise Authorities on September 22, 2001, wherein Clandestine removal of excisable goods was ascertained and some material was seized. Therefore, the Revenue vide Show Cause Notice (the SCN) dated March 25, 2003 sought duty on such clandestine removal and also imposed penalty.
The Assessees contended that the SCN issued by the Ld. Commissioner lacked the jurisdiction. Further, without attributing
the extent of clandestine removal alleged in respect of each unit specifically, duty liability could not be imposed. However, the Ld. Commissioner vide Order dated June 30, 2004 confirmed the demand raised in the SCN.
Being aggrieved, the Assessees preferred an appeal before the Hon’ble Tribunal. The Hon’ble Tribunal upheld the contentions of the Assessees and set aside the demand raised in the Order of the Ld. Commissioner. It was held by the Hon’ble Tribunal that the Commissioner of Central Excise, Delhi-I could not issue the SCN against FEIL as FEIL falls within the jurisdiction of the Central Excise Commissioner, Delhi-II. Further, without attributing the actual removals and working out the duty liability on the basis of the past production of goods is untenable. In other words, since it was not possible to arrive at the value of clearances separately between MIE and FEIL, duty demanded could not be confirmed.
Being aggrieved, the Revenue preferred an appeal before Hon’ble High Court of Delhi. The Hon’ble High Court allowed the appeal in favour of the Respondents in regard to the duty demanded on clandestine removal by remanding the same on merits and decided the jurisdiction issue involved in favour of the Revenue along with the following observations:
Accordingly, the Hon’ble High Court held that the matter requires to be re-examined on the merits of the clandestine removal and directed that the Tribunal may, depending upon the submissions made and the extent of materials available with it, take such course, as is available in law, for this purpose, after giving due opportunity to both the parties.