2004 (4) TMI 412 - AT - Central Excise

Tribunal grants early hearing, waives pre-deposit, upholds legality, finds natural justice violation in stay petitions

V. MADHU @ CV. MAATHESH Versus COMMISSIONER OF C. EX., COIMBATORE

V. MADHU @ CV. MAATHESH Versus COMMISSIONER OF C. EX., COIMBATORE - 2004 (172) E.L.T. 249 (Tri. - Chennai) Issues Involved:1. Early hearing of stay petitions.2. Waiver of pre-deposit of duty demanded and penalty imposed.3. Legality of joint show cause notice issued to two entities.4. Violation of principles of natural justice due to denial of cross-examination.5. Invocation of the longer period of limitation.6. Contradictions in the adjudicating authority's findings and orders.Detailed Analysis:1. Early Hearing of Stay Petitions:The petitioners requested an early hearing of their stay petitions. After considering the arguments from both sides, the Tribunal allowed the request for an early hearing and proceeded to hear the stay petitions.2. Waiver of Pre-Deposit of Duty Demanded and Penalty Imposed:The stay applications sought a waiver of the pre-deposit of duty and penalties imposed by the Commissioner of Central Excise, Coimbatore, in Order-in-Original No. 6/2004. The adjudication order confirmed and demanded duties and imposed penalties on various parties, including M/s. Komalagoure Textiles and M/s. Selvaganapathy Textiles, under Section 11A(1) of the Central Excise Act, 1944, and other relevant provisions.3. Legality of Joint Show Cause Notice Issued to Two Entities:The appellants contended that a joint show cause notice demanding duty from two entities for the same period was improper. The Supreme Court had previously ruled that there was no necessity to split the show cause notice and that no prejudice was caused to the parties by issuing a joint notice. The Tribunal held that issuing a joint show cause notice was not improper, but the adjudicating authority should have provided a finding on this aspect.4. Violation of Principles of Natural Justice Due to Denial of Cross-Examination:The appellants argued that their request for cross-examination of individuals whose statements were relied upon by the adjudicating authority was denied, constituting a violation of natural justice. The Tribunal found merit in this contention, noting that denying cross-examination when specifically requested undermined the principles of natural justice. This alone rendered the impugned order unsustainable.5. Invocation of the Longer Period of Limitation:The appellants argued that the longer period of limitation under the proviso to Section 11A(1) could not be invoked as the Department was aware of their activities through regular audits and filed RT 12 returns. The Tribunal observed that the appellants had regularly filed returns and undergone audits, suggesting no intent to evade duty. Therefore, invoking the extended limitation period was questionable.6. Contradictions in the Adjudicating Authority's Findings and Orders:The Tribunal identified several contradictions in the adjudicating authority's findings. For instance, the Commissioner acknowledged that M/s. Selvaganapathy Textiles was the lessee of M/s. Komalagoure Textiles during 1999-2000 and should bear the duty liability for that period. Despite this, the Commissioner demanded duty jointly from both entities for 1999-2000 and imposed penalties inconsistently. The Tribunal found these contradictions problematic and indicative of a strong prima facie case for the appellants.Conclusion:The Tribunal concluded that the appellants had made out a strong prima facie case for waiver of the pre-deposit of duty and penalties. Accordingly, the Tribunal granted the waiver and stayed the recovery of the amounts until the final disposal of the appeals. Both parties were given the liberty to apply for an early hearing of the appeals due to the high revenue involved. The operative portion of the order was pronounced in open court on April 2, 2004.