2011 (3) TMI 1209 - AT - Central Excise

Tribunal remands case for liability determination before penalties, stresses fair process

The Tribunal allowed the appeal by remanding the case to the original adjudicating authority for a comprehensive decision. It emphasized the necessity of ... Search and seizure - Clandestine removal - penalty imposed - Held that:- As it is clear from the records that the main issue relating to clandestine production of iron and steel products is yet to be decided by the competent authority. That being so, no conclusions could have been drawn regarding the cash recovered i.e., whether they are sale proceeds of goods clandestinely produced or removed. Similarly, without coming to a conclusion on the liability to confiscation of the goods no penalty can be imposed on anyone under Rule 26/27 of the Central Excise Rules. Thus grant stay of the recovery of the demands confirmed and penalty imposed against the three appellants - Appeal is allowed by way of remand Issues:1. Clandestine clearance of iron and steel products facilitated through brokers and transporters.2. Confiscation of cash amounting to Rs. 12 lakhs under Customs Act, 1962 applicable to Central Excise Act.3. Imposition of penalty under Rule 26/27 of the Central Excise Rules.4. Premature orders passed by lower adjudicating authority and appellate authority without a conclusion on liability to confiscation of goods.5. Stay of recovery of demands confirmed and penalty imposed.6. Disposal of appeal and remand to original adjudicating authority for a considered decision.Analysis:1. The case involves the clandestine clearance of iron and steel products through brokers and transporters based on intelligence received, leading to a simultaneous search at multiple premises. Cash amounting to Rs. 12 lakhs was seized, suspected to be the sale proceeds of goods cleared clandestinely without duty payment. Statements from involved individuals supported this conclusion.2. The jurisdictional Additional Commissioner confiscated the cash and imposed penalties on the relevant parties under Rule 26 of the Central Excise Rules. The Commissioner (Appeals) upheld this decision, prompting the appellants to appeal to the Tribunal.3. The appellants argued that the orders were premature as investigations were ongoing, and no final decision had been made regarding the liability to confiscate the goods. They contended that penalties cannot be imposed without a conclusion on the liability to confiscation.4. The Tribunal agreed with the appellants, noting that the main issue of clandestine production was pending a decision. As a result, the Tribunal granted a stay on the recovery of demands and penalties, highlighting the necessity of determining liability before imposing penalties under Rule 26/27 of the Central Excise Rules.5. The Tribunal remanded the case to the original adjudicating authority to consolidate the cases, including the main issue of clandestine production, and make a comprehensive decision after allowing all concerned parties a fair opportunity to present their submissions following the principles of natural justice.6. Ultimately, the appeal was allowed by way of remand, emphasizing the importance of resolving the main issue before making decisions on confiscation and penalties, ensuring a just and thorough adjudication process.