Order date – 17 November 2022

 Facts –

• The appellant, M/s. Sanmar Foundries Limited, are manufactures steel castings. The principal raw material for the final product is metal scrap. The factory premises of the appellant were inspected by the Anti-Evasion Wing of the respondent and in pursuance of such an investigation, the appellant had paid a sum of Rs.7.53 Crores to the respondent on various dates.
• However, the appellant claimed that this payment was made under threat or duress and that, they were not obligated to pay the amount and hence, had filed a writ petition, seeking for refund of the amount of Rs.7.53 Crores. The same was disposed of the writ petition by issuing direction to the respondent to complete the investigation and thereafter issue a show-cause notice to the appellant.
• Further the appellant filed an appeal and the same was held in favour of the appellant.
• On the basis of the directions issued earlier, calling upon the appellant to show-cause as to why penalty should not be imposed on them under Rules 25 and 26 of the Central Excise Rules, 2002, for contravention of Rule 11 of Central Excise Rules, 2002 and Rule 9 of the Cenvat Credit Rules, 2004, inasmuch as they have fraudulently and deliberately issued fake Cenvat invoices to cover the supply of non-duty paid Iron scrap to the appellant without actually supplying the said materials that were described in the said invoices and thereby, facilitated the appellant to avail ineligible Cenvat Credit during the period from November 2008 to September 2012.

Issue –

• Whether the show-cause notice issued after the appeal is disposed of  is in order?

Order –

• The Hon’ble High Court find that there is a major flaw, which dispossess the jurisdiction of the respondent in proceeding further with the show-cause notice. As stated earlier, the impugned show-cause notice itself was on the strength of the directions issued by the learned Single Judge, wherein the Investigating Authority was called upon to complete the investigation and thereafter, the Commissioner of Central Excise was granted liberty to proceed further with the adjudication after granting sufficient opportunity to the appellant.
• The consequential action on the part of the Commissioner of Central Excise, to issue the show-cause notice on 29.11.2013, could be termed to be in accordance with the directions of the learned Single Judge as stated above. However, the appellant had also challenged the order passed in W.P(MD)No.2026 of 2013 in W.A(MD)No.339 of 2014, which came to be allowed on merits.
• Thus, when the order of the learned Single Judge in W.P(MD)No.2026 of 2013 itself has been set aside, the consequential action taken by the respondent pursuant to such directions made in W.P(MD)No.2026 of 2013, has to necessarily abate.
• Though the original issuance of the show-cause notice may be in terms of the directions of the writ Court, any further contemplation of proceeding with the show-cause notice, would be without any authority, in view of the subsequent order passed in W.A(MD)No.339 of 2014.
• The High Court relied on the decision of the Hon'ble Supreme Court in Vicco Laboratories's case wherein it was held that the consequential notice could be termed to be without any jurisdiction and would amount to an abuse of the process of law. Hence, the appellant would be entitled to succeed.
• Accordingly, the impugned show-cause notice dated 29.11.2013, is quashed. The writ appeal stands allowed.