2022 (2) TMI 452 - HC - Central Excise

High Court condones 1031-day appeal delay, upholds Tribunal decision on excise duty evasion

Commissioner Of Central Excise, Bolpur Versus M/s. Steel Authority Of India Limited

The High Court condoned a delay of 1031 days in filing the appeal, emphasizing the need to consider questions of law under Section 35(G) of the Central ... Demand of central excise duty along with interest and penalty - Annual Dispatch Summary being an authorized Official record prepared by the respondent company for the purpose of management information and accounting purpose not appreciated - respondent failed to produce any document that M/s. ACC, DCSL is a subsidiary to the respondent Company then inclusion of clearance figures of an independent central Excise assessee i.e. M/s. ACC, DCSL, in the official Annual Dispatch summary maintained by the respondent company/assessee - provisions of Rules 4, 6 and 8 of the Central Excise Rules, 2002 or not - HELD THAT:- The order passed by the appellant impugned before the Tribunal is a non-speaking order. Substantial portion of the order has been devoted by the appellant to reject the contention of the respondent that they are bona fide assessee and Government of India Enterprise. The reply given by the assessee that there is nothing to indicate to establish the allegation that the ‘ new plant’ belongs to the respondent and they were the manufacturer of the granulated slag and without rendering any finding on the same, the proposal in show cause notice has been confirmed. The Tribunal noted that the Central Excise Duty has been demanded by the appellant on the sole ground of difference between the quantity of the granulated slag shown in the Annual Operational Statistical Report and the quantity shown in the monthly ER-1 return filed for the period July 2004 to March, 2008. Apart from that there is no evidence of removal of goods from the factory. Thus the Tribunal noted that the show cause notice came to be issued solely based upon the difference in the two statements - The respondent explained that during the relevant period, respondent had one granulation plant which was called old plant, one plant was set up by M/s. ACC, DCSL which is in the factory premises of the respondent which was shown as ‘new plant’ in certain records and that the granulated slag emerging from this plant were cleared on payment of duty. Thus noting these facts, the Tribunal was satisfied with the explanation offered and also took note of an important fact that duty has been paid by M/s. ACC, DCSL with granulated slag, which has been recorded in the order passed by the Commissioner and there is no dispute with the said fact. The Tribunal rightly granted relief to the respondent considering the factual position and we find that no question of law arises for consideration in this appeal - the appeal fails and dismissed. Issues:1. Delay in filing the appeal.2. Questions of law raised by the revenue.3. Allegations against the respondent.4. Tribunal's decision and reasoning.Issue 1: Delay in filing the appeal:The High Court noted a delay of 1031 days in filing the appeal and scrutinized the affidavit filed for condoning the delay. The Court expressed dissatisfaction with the drafting of the affidavit, shifting blame to the erstwhile panel counsel. Despite the shortcomings, the Court decided to proceed with hearing the application on its merits under Section 35(G) of the Central Excise Act, 1944, emphasizing the need to consider if any question of law arises for consideration. The Court ultimately exercised discretion to condone the delay, urging against similar drafting errors in the future.Issue 2: Questions of law raised by the revenue:The revenue raised several questions of law for consideration, including the justification of allowing the appeal of the assessee, the acceptance of clearance figures, compliance with Central Excise Rules, and the applicability of certain legal precedents. The Court thoroughly examined these questions during the hearing, considering the arguments presented by the appellant's counsel and the facts of the case.Issue 3: Allegations against the respondent:The appellant department issued a show cause notice to the respondent, alleging evasion of excise duty by misrepresenting the quantity of granulated slag cleared by another entity, M/s. ACC DCSL. The respondent refuted these allegations, claiming to be a bona fide assessee and a Central Government Enterprise. The adjudicating authority rejected the respondent's reply, leading to an appeal before the Tribunal, which subsequently granted relief to the respondent based on factual submissions and explanations provided.Issue 4: Tribunal's decision and reasoning:The Tribunal's decision to grant relief to the respondent was supported by the High Court after a detailed analysis of the facts presented. The Court highlighted the non-speaking nature of the appellant's order, the lack of conclusive proof regarding the ownership of the 'new plant,' and the absence of evidence supporting the demand for excise duty. The Court endorsed the Tribunal's findings that the demand was solely based on discrepancies in statements and not on actual evidence of goods removal. The Tribunal's consideration of the agreement between the parties and the exemption granted to molten slag cleared by M/s. ACC DCSL further strengthened the decision to dismiss the appeal, as no question of law was found to arise for consideration.In conclusion, the High Court's judgment addressed the delay in filing the appeal, thoroughly examined the questions of law raised by the revenue, analyzed the allegations against the respondent, and upheld the Tribunal's decision based on factual findings and legal reasoning. The detailed analysis of each issue provided a comprehensive understanding of the case and the grounds for dismissing the appeal.