VEE KAY AR PAINTS Vs. UNION OF INDIA

JUDGEMENT

(1.) THE Order of the Court is as follows :- THEre was a search in the premises of the petitioner on 16-3-1997 at which large quantity of undisclosed manufactured goods were seized. THE goods were paint which is the item manufactured, by the assessee. THE value of the goods found to have been manufactured from September 1996 to March 1997 was Rs. 1, 18, 16, 859. THE assessee shortly thereafter paid a sum of Rs. 50, 000/- described as 'deposit' for past clearances. That deposit was made without any demand having been raised therefor. On 16-9-1997, a show cause notice was issued to the assessee alleging contravention of various provisions of the Central Excise Rules. It was also stated therein that the assessee had manufactured goods for in excess of the S.S.I. exemption limit of Rs. 30 lakhs and; that even after the ceiling having been crossed, had continued to remove the goods without payment of duty. It was further stated in the notice that the goods of the value of Rs. 4, 29, 620/- was seized from the premises of one of the factories and goods of the value of Rs. 2, 31, 634/- from another factory belonging to the assessee. That show cause notice did not quantify the amount of duty payable on the goods cleared without payment of duty and the goods which had been manufactured and were awaiting clearance.

(2.) SUBSEQUENTLY, another show cause notice was issued to the assessee on 29-7-1998 in which the quantification was made an enquiry having been conducted in between the dates of the two show cause notices. The amount of duty demanded in the second show cause notice was Rs. 33, 41, 740/-.

(3.) AS is clear from the perusal of that definition, where a show cause notice has been issued to a declarant in respect of a seizure of goods and demand of duties, the tax arrear shall not include the duties on such seized goods where such duties on the seized goods have not been quantified. It is also a requirement of the scheme that the show cause notice must have been issued on or before 31-3-1998. These conditions have been satisfied in the case of the declarant assessee. The second show cause notice on which the assessee relied was issued subsequent to 31-3-1998, which the first show cause notice, though issued prior to that date, did not quantify the amount. The second show cause notice was not of any relevance so far as the scheme was concerned. What was material was, the show cause notice that has been issued in September 1997 which did not quantify the duty.