Mumbai tribunal remands central excise case due to insufficient evidence and lack of proper participation in proceedings

CESTAT Mumbai allowed the appeal by remand, finding that the central excise order was passed without proper participation of the noticee and lacked corroborative evidence. The tribunal noted that authorities failed to establish links between raw material procurement and finished product channelization with the appellant. Statements relied upon were not tested under section 9D of Central Excise Act, 1944, and their relevancy under section 19 was not established. The duty liability and penalties could not be sustained due to insufficient evidence meeting preponderance of probability standard, requiring fresh appreciation of the matter.

---

---

Issues Involved:
1. Whether the appellant was involved in the manufacture of goods.
2. Whether the appellant's premises were used for manufacturing activities.
3. Whether the appellant is liable for duty under the Central Excise Act, 1944.
4. Whether the denial of cross-examination was justified.
5. Whether the evidence used to determine duty liability was valid.

Summary:

1. Involvement in Manufacture:
The appellant contended that no goods manufactured by him were concerned in the dispute, nor were any plant and machinery belonging to him involved. Despite this, the Commissioner of Central Goods and GST, Kolhapur, imposed a duty liability of Rs. 59,60,53,224/- for the period from March 2015 to August 2015 under section 11A of the Central Excise Act, 1944, along with interest and penalties.

2. Use of Premises:
The adjudicating authority relied on Rule 17(2) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, to deem production from 1st April of the year based on electricity usage at the premises. The premises at Old Chandur Marg and Shahpur were deemed operational from 1st April 2015 and 1st April 2014, respectively, leading to the quantification of duty liability.

3. Liability for Duty:
The adjudicating authority determined the duty liability based on the number of packing machines and the highest maximum retail price printed on the pouches. The appellant's premises were found to be operational from March 2013, as evidenced by electricity bills, and the duty was calculated accordingly.

4. Denial of Cross-Examination:
The appellant's request for cross-examination of witnesses, including Food Safety officers and police officers, was denied by the adjudicating authority. The authority cited case laws and concluded that no specific reasons were provided by the appellant to justify the need for cross-examination.

5. Validity of Evidence:
The adjudicating authority relied on the appellant's statements and corroborative evidence such as panchnamas, bank information, and electricity bills to establish clandestine manufacture and clearance of gutkha. The appellant's non-cooperation and delay tactics were noted, and the adjudication proceeded ex parte.

Conclusion:
The Tribunal found that the impugned order was passed without adequate participation from the appellant and that the requests for cross-examination were summarily denied without justification. The central excise officers did not conduct their investigation, and the evidence relied upon was not corroborated. The Tribunal expressed concern over the central excise authorities' approach towards prohibited goods and set aside the impugned order, allowing the appeal by way of remand for fresh appreciation of the evidence.

Order Pronounced:
The order was pronounced in the open court on 22/11/2023.

---