2025 (9) TMI 994 - HC - Central Excise

Order held non-speaking and unsupported; impugned order set aside and matter remitted for fresh adjudication within three months

The Principal Commissioner Central Tax And Central Excise Raipur, Chhattisgarh. Versus M/s. Mahamaya Ispat, Shri Mukesh Agrawal Director M/s Mahamaya Ispat.

The HC held the Tribunal's order to be non-speaking and unsupported by evaluation of evidence, noted a related Tribunal order had already been set aside ... Proceedings against related party stands already set aside by the tribunal, without going into the merits - no tangible evidence has been gathered by the department, without appreciating the facts - passing a non-speaking order without considering and discussing the evidence put forth by the department - HELD THAT:- It is not in dispute that the order passed by the Tribunal in favour of M/s Devi Iron and Power Pvt. Ltd. has already been set aside by this Court in DEVI IRON AND POWER PVT. LTD. [2025 (9) TMI 931 - CHHATTISGARH HIGH COURT] by holding that 'we are of the considered opinion that the Tribunal, being the first Appellate Authority, ought to have recorded points for determination and after consideration and a detailed discussion on each of the points so framed, ought to have recorded its findings supported by reasons thereof, which has not been done. As such, the impugned order dated 20/04/2018 (Annexure A/1) is hereby set aside and the substantial questions of law are answered in favour of the appellant and against the respondent Firm.' Since the order passed by the Tribunal in favour of M/s Devi Iron and Power Pvt. Ltd. has already been set aside by this Court and since the impugned order is based on order passed by the Tribunal in the case of M/s Devi Iron and Power Pvt. Ltd., the impugned order passed by the Tribunal is set aside and the matter remitted to the Tribunal for considering the appeal afresh on merits and to decide it in accordance with law after hearing the parties and considering the material available on record within a period of three months from the date of receipt of a copy of this order. Appeal allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether the Tribunal was correct in holding that the case against the respondents could not be sustained because proceedings against a related entity had been set aside by the Tribunal, without going into merits of the adjudicating authority's order. 2. Whether the Tribunal was legally correct in concluding that no tangible evidence had been gathered by the department to prove clandestine removal, having regard to the material and case law discussed in the adjudicating authority's order. 3. Whether the Tribunal erred in deciding the appeal in favour of the respondents and passing a non-speaking order without considering and discussing the evidence produced by the department. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Reliance on setting aside of proceedings against a related entity to sustain dismissal of proceedings against the respondents Legal framework: Appellate review by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) requires independent consideration of appeals and formulation of reasons; remittal to Tribunal permitted where Tribunal's order is non-speaking or fails to decide points for determination. Principles of adjudication and appellate scrutiny govern whether findings against one entity can operate to dispose of proceedings against another. Precedent Treatment: The Court refers to its own earlier conclusion setting aside the Tribunal's order in the related entity's case on grounds of failure to record points for determination and absence of reasoned findings; that order remitted the matter for fresh consideration. The present impugned order was founded on the now-set-aside Tribunal order. Interpretation and reasoning: The Court notes it is 'not in dispute' that the Tribunal's order in the related entity's case was set aside by the High Court for being non-speaking and for failing to record and decide points for determination. Because the impugned order under challenge in the present appeal was based upon and followed the reasoning of that now-set-aside order, the Court concluded that the impugned order could not stand. The Court reasons that where a foundational appellate order has been set aside and remitted for fresh consideration, any subsequent order that depends on the former must likewise be set aside and the matter remitted for fresh adjudication. Ratio vs. Obiter: Ratio - A Tribunal's decision that is founded upon and follows a prior appellate order subsequently set aside cannot be sustained; remittal is required where the Tribunal has not independently addressed issues with reasoned findings. Obiter - No wider pronouncement on when findings against one party necessarily bind another beyond the factual reliance on the set-aside order. Conclusions: The impugned Tribunal order, being founded on the now-set-aside order in the related entity's case, is set aside and the matter is remitted to the Tribunal for fresh consideration on merits with directions to hear the parties and consider material on record. Issue 2 - Sufficiency of tangible evidence gathered by the department to prove clandestine removal Legal framework: The assessment of clandestine removal requires tangible evidence and an adjudicative process considering seized documents, statements, and corroborative material; burden lies on the department to establish duty liability and clandestine clearance under the Central Excise Act and rules thereunder; Tribunal and Adjudicating Authority must examine evidence and record reasoned findings. Precedent Treatment: The Tribunal had held that the department's case was premised largely on a confessional statement recorded against a named individual (Senior Manager Sales) and that no detailed investigation or tangible evidence had been gathered. The High Court's prior order in the related entity's Tax Case emphasized the Tribunal's duty to frame points for determination and record reasoned findings; that order did not express views on merits or on sufficiency of evidence. Interpretation and reasoning: The Court observed that the Tribunal's conclusion regarding lack of tangible evidence was derived from an order that did not satisfy requirements of a speaking decision. Given the foundational infirmity in the Tribunal's earlier order, the Court declined to adjudicate afresh on the sufficiency of evidence. Instead, the Court remitted the matter for the Tribunal to independently examine the material, appreciate evidence including seized documents and statements, and decide the issue on merits with reasons. Ratio vs. Obiter: Ratio - The Court did not decide the substantive question of whether tangible evidence existed; rather, it held that that question must be re-examined by the Tribunal on merits because the impugned order's basis is invalidated. Obiter - Observations that reliance solely on a confessional statement may be insufficient are recorded as part of the Tribunal's reasoning but are not accepted or rejected by the Court on merits. Conclusions: No appellate determination is made on the substantive sufficiency of evidence; the matter is remitted to the Tribunal to evaluate tangibility of evidence and decide in accordance with law with reasoned findings. Issue 3 - Validity of a non-speaking order and requirement to consider and discuss evidence Legal framework: Appellate orders must be speaking orders, record points for determination, consider relevant evidence and legal submissions, and provide reasons for conclusions; absence of such requirements vitiates appellate decisions and warrants remittal for fresh consideration. Precedent Treatment: The Court's prior order in the related entity's Tax Case specifically set aside the Tribunal's order on the ground that it failed to record points for determination and did not provide detailed discussion and reasoned findings - establishing the controlling principle that non-speaking appellate orders cannot sustain adjudicatory outcomes. Interpretation and reasoning: Applying that principle to the impugned order, which mirrored the earlier non-speaking order, the Court concluded that the impugned order lacked independent reasoned consideration of evidence and thus could not be sustained. The Court emphasized that the Tribunal must record points for determination and address each point with a detailed discussion and reasons, and that the present Tribunal should re-hear the appeal and consider the material on record within a prescribed timeframe. Ratio vs. Obiter: Ratio - Tribunal orders that do not frame points for determination and fail to address evidence and reasons are non-speaking and liable to be set aside; remittal for fresh adjudication is the appropriate remedy. Obiter - The Court expressly refrains from expressing any opinion on the merits of the evidence or the departmental case. Conclusions: The impugned non-speaking order is set aside. The Tribunal is directed to consider the appeal afresh, frame points for determination, consider and discuss evidence and legal submissions, record reasoned findings on each point, and decide the appeal within three months from receipt of the High Court's order. Cross-references 1. Issue 1 and Issue 3 are interlinked: the setting aside of the foundational Tribunal order (Issue 1) is premised on the Tribunal's failure to produce a speaking order and frame points for determination (Issue 3), and both led to remittal. 2. Issue 2 is consequential: substantive questions concerning sufficiency of evidence are remitted to the Tribunal because the impugned order's infirmity precludes appellate resolution on merits.