Natural justice breached by non-supply of relied-upon working paper; demand and penalty were set aside and remanded.

Demand and penalty under the Central Excise Act could not be sustained where the adjudication was based on a working paper referred to as Annexure-A in the show cause notice, but the record did not show that the document had been supplied despite a prior remand direction. The non-supply deprived the assessee of an effective opportunity to meet the material relied upon by the department, amounting to breach of natural justice. The orders sustaining the demand and penalty were set aside, and the matter was remanded to the adjudicating authority for fresh decision after furnishing Annexure-A and allowing a response.

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Issues: Whether the demand and penalty orders were liable to be set aside for non-supply of the working paper Annexure-A referred to in the show cause notice, resulting in breach of natural justice.

Analysis: The notice proposed demand and penalty under Section 11A of the Central Excise Act, 1944 and Section 11AC of the Central Excise Act, 1944 on the basis of a working paper stated to be Annexure-A. A prior appellate order had specifically directed supply of the working sheet and a fresh decision thereafter. The record of the adjudicating order did not show that Annexure-A had been supplied, and the appellate authority also did not record any finding that the document had been furnished. Since the remand direction was not complied with, the appellant was deprived of an effective opportunity to answer the demand on the basis of the very material relied upon by the department.

Conclusion: The orders sustaining the demand and penalty could not be upheld and were set aside for breach of natural justice.

Final Conclusion: The matter was restored to the adjudicating authority for a fresh decision after supplying Annexure-A and permitting the appellant to respond, and the appeal succeeded to that extent.

Ratio Decidendi: An order founded on a document relied upon in the show cause notice cannot be sustained where that document was not supplied despite a specific remand direction, as such non-compliance violates natural justice and vitiates the adjudication.

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