Case Note & Summary
The petitioner, Supermax Personal Care Pvt. Ltd., a company engaged in manufacturing excisable goods such as safety razors, blades, and shaving systems, filed a writ petition under Article 226 of the Constitution of India seeking quashing of a show cause-cum-demand notice dated 26.05.2020 issued by the Commissioner of CGST & CEX, Audit-Thane. The petitioner had availed CENVAT credit on inputs and input services and utilized it for payment of excise duty. The assessable value for excise duty on final products was determined under Section 4A of the Central Excise Act, 1944 based on maximum retail price. The petitioner had entered into job work agreements with Tigaksha Metallics Pvt. Ltd. for processing of goods, including packaging for retail sale. The petitioner transferred intermediate/semi-finished goods on payment of excise duty at 110% of cost of production under Rule 8 of the Central Excise Rules, 2002. The show cause notice alleged irregular availment of CENVAT credit and demanded recovery. The petitioner contended that the notice was issued without supplying copies of documents relied upon and without granting an opportunity to cross-examine the author of statements, violating principles of natural justice. The respondents argued that the notice was valid and the petitioner had adequate opportunity. The court, after hearing both sides, held that the failure to supply documents and deny cross-examination amounted to a violation of natural justice, rendering the notice unsustainable. The court quashed the show cause notice but granted liberty to the respondents to issue a fresh notice after complying with natural justice. The decision was in favor of the petitioner.
Headnote
A) Constitutional Law - Article 226 - Quashing of Show Cause Notice - Violation of Natural Justice - Show cause notice challenged on ground of non-supply of documents and denial of cross-examination - Court held that failure to supply documents relied upon and denial of opportunity to cross-examine vitiates the notice - Held that principles of natural justice are integral to fair adjudication (Paras 2, 10-12). B) Central Excise - CENVAT Credit - Job Work - Rule 8 of Central Excise Rules, 2002 - Valuation - Dispute pertained to alleged irregular availment of CENVAT credit on inputs used in job work and valuation of intermediate goods - Court did not delve into merits but quashed notice on procedural grounds - Held that natural justice must be complied with before adjudication (Paras 4-6, 10-12).
Issue of Consideration
Whether the show cause notice dated 26.05.2020 is liable to be quashed for violation of principles of natural justice on account of non-supply of documents relied upon and denial of opportunity to cross-examine the author of the statements.
Final Decision
The court quashed the show cause notice dated 26.05.2020 but granted liberty to the respondents to issue a fresh notice after complying with principles of natural justice.
Law Points
- Natural justice
- right to cross-examination
- supply of documents
- show cause notice
- CENVAT credit
- Central Excise Act
- 1944
- Central Excise Rules
- 2002
