Page 85 - GSTL_23rd April 2020_Vol 35_Part 4

2020 ] MACKINTOSH BURN LTD. v. COMMISSIONER OF SERVICE TAX, KOLKATA 411
credit in the Adjudication Order. In fact, the appellants themselves have joined
the issue in the proceedings by way of their reply to the show cause notice and
therefore, the Ld. Commissioner was within his rights to discuss the issue and
give his findings on the same. Ld. AR submits that Hon’ble Supreme Court in the
case of Jajmau Dyeing & Proofing Co. v. Collector of C. Ex., Kanpur reported in 1998
(97) E.L.T. 217 (S.C.), has held that when the appellants submit an issue which is
not raised in the show cause notice, the Appellate Authority is entitled to give
findings as the same. Regarding the applicability of cum-duty benefit, Ld. AR
submits that the case being built on suppression of fact by the appellants, Com-
missioner has rightly denied the cum-duty benefit.
4. At this juncture, Ld. Counsel for the appellants submits that since the
liability of Service Tax has been slapped on them, they have submitted that a part
of the demand has been paid. Further, they have reflected the same in the returns
to submit that without going into the correctness or otherwise of the Cenvat
credit availed by initiating a proper enquiry at the relevant time, the Commis-
sioner could not have passed a judgment on the availment and utilization of
Cenvat credit. More so, when the show cause notice does not raise any such issue
and no other show cause notice has been issued disputing either the credit
availed by them or the credit utilized by them.
5. Heard both sides and perused the records of the case.
6. We find that the brief issues that require our consideration in this
case are (i) as to whether the Commissioner has traversed beyond the scope of
the show cause notice, and (ii) as to whether the Commissioner was right in
denying cum-duty benefit as requested by the appellants. Coming to the first
issue, Ld. Counsel for the appellants submits that Hon’ble Supreme Court in the
case of Ballarpur Indust. Ltd. (supra) has held that -
Before concluding, we may mention that, in the present case, the second
and the third show cause notices are alone remitted. The first show cause
notice dated 21-5-1999 is set aside as time-barred. However, it is made clear
that Rule 7 of the Valuation Rules, 1975 will not be invoked and applied to
the facts of this case as it has not been mentioned in the second and the
third show cause notices. It is well settled that the show cause notice is the
foundation in the matter of levy and recovery of duty, penalty and interest.
If there is no invocation of Rule 7 of the Valuation Rules, 1975 in the show
cause notice, it would not be open to the Commissioner to invoke the said
rule.
Supreme Court also held in the case of Shital International that -
19. As regards the process of electrifying polish, now pressed into service
by the Revenue, it is trite law that unless the foundation of the case is laid
in the show cause notice, the Revenue cannot be permitted to build up a
new case against the assessee. (See Commr. of Customs v. Toyo Engg. India
Ltd., CCE. v. Ballarpur Industries Ltd. and CCE v. Champdany Industries Ltd.)
Admittedly, in the instant case, no such objection was raised by the adjudi-
cating authority in the show cause notice dated 22-6-2001 relating to as-
sessment years 1988-1989 to 2000-2001. However, in the show cause notice
dated 12-12-2000, the process of electrifying polish finds a brief mention.
Therefore, in the light of the settled legal position, the plea of the Learned
Counsel for the Revenue in that behalf cannot be entertained as the Reve-
nue cannot be allowed to raise a fresh plea, which has not been raised in the
show cause notice nor can it be allowed to take contradictory stands in rela-
tion to the same assessee.
20. In the light of the foregoing discussion, we are in agreement with the
Tribunal that the said processes do not amount to “manufacture” in terms
of Note 4 to Chapter 60 of the Tariff Act, and hence the fabric in question is
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