1998 (9) TMI 565 - AT - Central Excise

CEGAT Cancels Duty Demand & Penalties Due to Procedural Unfairness

The Appellate Tribunal CEGAT, New Delhi, set aside the duty demand and penalties imposed on the appellant company, M/s. Crescent Computers, due to ... Natural justice - Remand - Penalty Issues: Duty demand and penalty imposition on the appellant company and its director, contravention of principles of natural justice, non-supply of documents, imposition of penalty on the director without proper notice.Duty Demand and Penalty Imposition on the Appellant Company:The judgment involves a duty demand of Rs. 47,84,216/- on the appellant company, M/s. Crescent Computers, along with penalties imposed under Section 11-AC of the Act and Rule 173Q of the Central Excise Rules, 1944. The demand was based on various grounds, including undervaluation of computers, trading activities, manufacturing of computer parts, and inclusion of warranty charges in the assessable value. The appellant contested the order, arguing violations of natural justice due to non-supply of crucial documents by the department. The duty demand was challenged on multiple fronts, requiring the appellant to establish the nature of transactions, valuation, and differentiation between manufactured goods and trading activities.Contravention of Principles of Natural Justice and Non-Supply of Documents:The appellant raised concerns regarding the violation of natural justice principles due to the non-supply of essential documents by the department. The appellant company requested copies of orders, invoices, and other documents crucial for their defense, but these were not provided before the passing of the impugned order. The absence of necessary documents hindered the appellant's ability to substantiate their defense against the charges of under-valuation, upgradation of computers, and manufacturing activities. The failure to supply critical documents impacted the appellant's right to a fair hearing and defense, leading to the judgment's decision to set aside the impugned order on grounds of contravention of natural justice.Imposition of Penalty on the Director without Proper Notice:The judgment also addressed the imposition of a penalty on the director of the appellant company, Shri Rajiv Aggarwal. The director contested the penalty, highlighting that the show cause notice did not specifically propose penalties against him, and he was not served with the notice. The tribunal acknowledged the lack of clarity in the show cause notice, which only mentioned M/s. Crescent Computers without explicitly including the director. As the department failed to refute this argument, the penalty imposed on the director was set aside, emphasizing the importance of proper notice and procedural fairness in penalty imposition.In conclusion, the judgment by the Appellate Tribunal CEGAT, New Delhi, addressed the duty demand and penalty imposition on the appellant company, highlighted the contravention of principles of natural justice due to non-supply of essential documents, and set aside the penalty imposed on the director for lack of proper notice. The decision emphasized the significance of procedural fairness, access to relevant documents, and the right to a fair hearing in adjudicating matters related to duty demands and penalties in excise cases.