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of <h1>Tribunal overturns duty demand order due to procedural flaws and lack of reasoning.</h1> The Tribunal set aside the order confirming duty demand and penalties for alleged clandestine removal and undervaluation of Shampoo products. Serious ... Clandestine removal of evidence - Natural justice - Adjudication Issues Involved:1. Charge of clandestine removal.2. Charge of undervaluation.Summary:Charge of Clandestine Removal:The appeals challenge the demand for duty confirmed in OIO No. 2/90, dated 31-5-1990, by CCE, which included penalties u/r 173Q. The charges were based on alleged clandestine removal of Shampoo under the brand name 'Velvette' and undervaluation for the period from 1-4-1982 to 31-3-1985. The show cause notice was dated 3-7-1988. The charge of fragmentation to fraudulently avail SSI concession was dropped.The main evidence relied upon was certain code numbers in private books, with statements from Shri Ambikapathy, which were later retracted. The appellants argued that there was no evidence of excess raw material purchase to justify the alleged excess production and clandestine removal. The Tribunal noted that statements recorded under Customs Act/Central Excise Act are good evidence unless shown to be recorded under threat or coercion. The Tribunal found a preponderance of probability that goods were clandestinely removed based on coded documents and corroborative statements.However, the Tribunal identified serious lacunae in the order impugned:1. The codes could not be applied to clearances relating to Fragrance (India) as they were for Andhra Pradesh, not Tamil Nadu.2. The methodology of estimating illicit clearances and apportioning them unit-wise was illogical.3. The duty liabilities computed differed from the show-cause notice, violating natural justice.4. The codes did not tally with pages recovered from Dr. C.K. Rajkumar.5. Reliance on Sales Tax check evidence beyond the period of dispute was incorrect.Charge of Undervaluation:The appellants argued that the ultimate selling price of marketing units was adopted without justification. The ex-factory price was Rs. 3.60 for regular shampoo and Rs. 4.20 for egg shampoo, while the marketing company sold them at Rs. 7.20 and Rs. 8.40 respectively. The Tribunal found the following shortcomings in the order impugned:1. The order adopted the higher value of egg shampoos for the entire demand without logic or objective basis.2. There was no clear discussion on abatements from the cum-duty price to arrive at a fair wholesale price at the factory gate.Conclusion:The Tribunal found that the order impugned suffered from violations of natural justice and non-application of mind in an objective and logical manner. Therefore, the order was set aside, and the matter was remanded to the jurisdictional Commissioner for de novo consideration, allowing the appeals by way of remand.
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