2023 (11) TMI 227 - AT - Customs

Tribunal Orders Re-evaluation: Case Remanded for Comprehensive Duty Quantification and Detailed Documentation.

HARYANA SHEET GLASS LTD. Versus C.C.E. & S.T. -SURAT-II

HARYANA SHEET GLASS LTD. Versus C.C.E. & S.T. -SURAT-II - 2024 (388) E.L.T. 126 (Tri. - Ahmd.) ISSUES PRESENTED AND CONSIDERED 1. Whether the show cause notice and the adjudication proceedings complied with the requirement of furnishing a quantification and supporting documents necessary for the appellant to understand and contest the demand of duty. 2. Whether confirmation of demand in the absence of specific documentary basis for each component of the quantified demand is sustainable. 3. Whether remand to the adjudicating authority is required to enable fresh adjudication after furnishing of the basis of quantification and supporting documents. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Sufficiency of show cause notice: requirement to disclose basis of quantification Legal framework: Principles of natural justice and statutory adjudication require that a show cause notice disclose the case against the person with sufficient particulars so that the addressee can meaningfully answer; quantification of demand must be supported by materials or a clear method of calculation where figures are alleged. Precedent treatment: The record shows prior High Court relief quashing earlier demands on the ground that demand letters were issued without show cause notice and adjudication; the Supreme Court later permitted issuance of a fresh show cause notice and limited certain defences (e.g., limitation). The Tribunal examined the subsequently issued show cause notice dated 04.05.2009 for adequacy. Interpretation and reasoning: The Tribunal inspected the show cause notice and the impugned order's chart of sixteen heads with amounts. It found the show cause notice did not refer to or rely upon specific documents from which the demand could be quantified, nor did it explain the method of calculation for each head. The Tribunal held that broad descriptions and isolated amounts without documentary basis do not enable the respondent to know the case or to prepare an effective defence. Ratio vs. Obiter: Ratio - A show cause notice confirming a monetary demand must either identify the documentary basis for quantification or set out the precise method and material facts used to arrive at the figure; absence of such particulars renders subsequent adjudication infirm. Obiter - Observations about the historical conversion from EOU to EPCG and its potential impact on duty quantification are explanatory and not determinative of the procedural defect identified. Conclusions: The show cause notice was deficient for lack of disclosure of the basis of quantification and supporting documents, thereby impeding the appellant's ability to contest the demand. Issue 2 - Sustainability of adjudication and confirmed demand when quantification is unsupported Legal framework: Adjudication confirming a demand must be founded on the issues and materials pleaded in the show cause notice or otherwise placed on record and made known to the affected party; confirmation without reliance on or disclosure of underlying documents and computations offends fair adjudication. Precedent treatment: The Tribunal applied the principle underpinning the High Court's earlier decision (that demands issued without proper notice/adjudication are unsustainable) to the present adjudication, noting the Supreme Court's permission to issue a fresh show cause notice did not negate the requirement to disclose particulars thereafter. Interpretation and reasoning: The Tribunal reviewed the impugned order and the chart of items and concluded that individual head-wise demands (serial nos.1-16) were not supported by identifiable documents or disclosed computations; therefore, the Tribunal could not conclude the quantification was correct or that duty was payable as assessed. The Tribunal emphasized that without documentary support the adjudicating authority cannot legitimately confirm the asserted figures. Ratio vs. Obiter: Ratio - Confirmation of a monetary demand in adjudication is unsustainable where the adjudicator has not provided or relied upon documents or explanation that permit verification of the quantification by the affected party. Obiter - Comments about specific items (e.g., particulars of stock, consumables, capital goods) are factual observations supporting the procedural conclusion rather than independent legal holdings. Conclusions: The adjudicating authority's confirmation of the demand is not sustainable in the absence of disclosed documentary basis or computations for the quantified amounts. Issue 3 - Remedial course: necessity and scope of remand Legal framework: Where procedural infirmity prevents effective adjudication, appellate bodies may set aside the impugned order and remit the matter for fresh adjudication after curing the defect; remand should be directed to enable compliance with disclosure and opportunity to contest. Precedent treatment: The Tribunal applied the remedial principle implicit in prior judicial activity (High Court quashing for lack of notice; Supreme Court allowing re-issue subject to conditions) to require fresh adjudication consistent with procedural fairness. Interpretation and reasoning: Given the deficiency in the show cause notice and lack of documentary basis for quantification, the Tribunal found the correct remedy is to set aside the impugned order and remand the matter to the adjudicating authority to furnish the necessary documents and quantification details and to pass a fresh order after affording a meaningful opportunity to defend. Ratio vs. Obiter: Ratio - Remand is the appropriate remedy where the adjudication is vitiated by failure to disclose the basis of quantification; the adjudicating authority must provide the documents/ computations so the demand can be verified and contested. Obiter - The Tribunal's direction does not address merits of any specific head of demand, which must be decided afresh by the adjudicating authority. Conclusions: The impugned order is set aside and the matter remanded to the adjudicating authority for fresh adjudication after providing the basis of quantification and supporting documents, allowing the affected party to present its defence. Cross-references Issues 1 and 2 are interlinked: inadequacy of the show cause notice (Issue 1) directly renders the adjudication and confirmed demand unsustainable (Issue 2), thereby necessitating the remedy described in Issue 3 (remand for fresh adjudication).