2015 (11) TMI 1248 - AT - Central Excise

Tribunal overturns order due to lack of natural justice, procedural compliance, and evidence

The Tribunal set aside the impugned order, allowing the appeals filed by M/s Mukesh Appliances Pvt. Ltd., due to the denial of natural justice, ... Denial of SSI exemption benefit under Notifications No.16/97-CE, dt.01.04.97, 8/98-CE, dt.02.06.1998, 8/99-CE, dt.28.02.1999 and 8/2000-CE, dt.01.03.2000 - Held that:- Central Excise officers visited the Appellant s factory on 22.08.2000 and resumed the files containing invoices, Note Books and also recorded the statements of the employees and Directors of the Appellant Company. The Central Excise officers also visited several transport companies and recovered the L.Rs. and Dispatch Registers and recorded the statements of the employees of the transport companies. The Appellants deposited the amount of ₹ 75,000.00 at the instance of the Central Excise officers. Subsequently, the Appellants filed refund claim of ₹ 75,000.00. - it appears that the Central Excise officers prepared the statements of the clearance of the goods on the basis of dispatch registers and the L.Rs. recovered from the office of Transport Companies and recorded the statements of the employees of the transport companies. The Appellants requested the Adjudicating authority to supply the copy of documents recovered from the premises of transporters as referred in the annexures to the Show Cause Notice and the cross examination of the employees of transporters, which was rejected. The Commissioner (Appeals), by earlier order dt.14.12.2005, remanded the matter to the Adjudicating authority for denovo Adjudication order. Despite the order of the Commissioner (Appeals) in 2005, the Adjudicating authority had not supplied the relied upon document as recovered from the premises of the third party and also denied the opportunity of cross examination. By the impugned order, Commissioner (Appeals) proceeded on the basis of the statements of the employees of the Appellant, who was maintaining Note Book. But, the said Note Book is not the basis of demand of duty. So, there is no material on record, on the basis of which, it could justify the clandestine removal of goods. So, the demand of duty alongwith interest and imposition of penalty cannot be sustained. - impugned order is set aside - Decided in favour of assessee. Issues Involved:1. Demand for Central Excise duty and imposition of penalties based on documents recovered from transporters.2. Denial of supply of relied upon documents and opportunity for cross-examination.3. Validity of the adjudication process and adherence to principles of natural justice.Issue-wise Detailed Analysis:1. Demand for Central Excise duty and imposition of penalties based on documents recovered from transporters:The Appellant, M/s Mukesh Appliances Pvt. Ltd., was engaged in manufacturing mixers and grinders, availing SSI exemption under various notifications. Central Excise officers seized sale invoices, notebooks, and recorded statements from the Appellant's employees and Director. They also collected lorry receipts and statements from transporters. A Show Cause Notice dated 09.11.2001 demanded Central Excise duty of Rs. 13,81,649.00 along with interest and imposed penalties. The Adjudicating authority confirmed the demand and penalties, which was upheld by the Commissioner (Appeals). The demand was primarily based on documents recovered from transporters, which were not provided to the Appellant.2. Denial of supply of relied upon documents and opportunity for cross-examination:The Appellant argued that the demand was based on documents from transporters and statements of their employees, without providing copies or allowing cross-examination. Despite an earlier order by the Commissioner (Appeals) to supply documents and allow cross-examination, the Adjudicating authority did not comply. The Commissioner (Appeals) also did not consider these submissions. The Tribunal found that the denial of documents and cross-examination was a serious lapse, violating principles of natural justice. The Supreme Court's decision in Andaman Timber Industries was cited, emphasizing the necessity of cross-examination to contest the truthfulness of statements.3. Validity of the adjudication process and adherence to principles of natural justice:The Tribunal noted that the Adjudicating authority did not comply with the Commissioner (Appeals)'s directions for fresh adjudication, which included providing documents and allowing cross-examination. The Commissioner (Appeals) proceeded based on statements of the Appellant's employees regarding notebooks, which were not the basis of the demand. The Tribunal found that the demand was based on unprovided documents from transporters, and the Appellant's request for cross-examination was unjustly denied. This amounted to a violation of natural justice, rendering the order null and void. The Tribunal referenced the Gujarat High Court's ruling in Commissioner of Central Excise Vs Saakeen Alloys Pvt. Ltd., emphasizing that confessional statements alone, without corroborative evidence, are insufficient for duty demand.Conclusion:The Tribunal set aside the impugned order, allowing the appeals filed by the Appellants, due to the denial of natural justice, non-compliance with procedural directions, and lack of substantial evidence for the demand. The decision was pronounced in court on 18.11.2015.