TaxTMI 
TaxTMI 
TaxTMI 
2018 (11) TMI 1141
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....recorded from the employees of the appellants as well as from certain buyers, who purchased scrap. It appeared that the Motor Division of the appellants sold scrap and realized additional consideration over and above the invoice value by suppressing the actual value of scrap and thus evaded duty to the tune of Rs. 6,20,650/-. It was also noticed that the appellants cleared parts of Electric Motors without payment of duty and that the duty of Rs. 2,05,077/- is due to under-valuation of scraps removed from the Pump Division. Show-cause notice was issued and the original authority confirmed the demand of Rs. 8,42,869/- and Rs. 2,05,077/- from the Motor and Pumps Division of the appellants. Against this order, the appellants filed an appeal bef....
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....ade by these persons, the department ought to have granted an opportunity to cross-examine these persons. He relied upon the decision in the case of M/s. Andaman Timber Industries Vs Commissioner of Central Excise, Kolkata-II reported in 2015 (324) E.L.T.641 (S.C.) and also the decision in the case of M/s. J & K Cigarettes Ltd., Vs Collector of Central Excise reported in 2009 (242) E.L.T.189 (Del.). Another ground raised by the appellants with regard to the said allegation of under-valuing of scrap is that the scrap not being a marketable commodity, the duty demand on the scrap itself cannot sustain. The appellants do not manufacture the scrap; that the scrap arises in the course of manufacture of finished goods, which are pumps and motors.....
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....is only erroneous. He, therefore, prayed that the demand cannot sustain and requested to set aside the same. 5. The learned Authorised Representative Shri R. Subramaniyan supported the findings in the impugned order. He submitted that the claim of the appellants that the scrap is not a manufactured product, is not acceptable as the appellants have been paying duty on the scrap. Department has rightly calculated the value on the basis of the statements of the employee as well as the scrap dealer. It was brought out from their statements that the scrap is valued 20% below the price and, therefore, the demand has been raised in such a manner. Since the appellants through his employee have accepted the under-valuation, there is no necessity fo....
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....basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not eve....
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....e Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 8. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the show cause notice." 7. Similar, view has been taken by the Hon'ble Delhi High Court in the case of M/s. J & K Cigarettes Ltd., (supra). 8. Taking the facts into consideration, we find that the denial of cross-examination tantamount to violation of natural justice. The demand has wholly been raised, on the basis of the statements recorded. I....