2001 (12) TMI 485 - AT - Central Excise

Summary

Issues Involved:

1. Waiver of pre-deposit of duty and penalties.
2. Allegation of M/s. TTCL being a dummy company.
3. Clandestine clearance of cigarettes without payment of duty.
4. Violation of principles of natural justice due to non-supply of essential documents.
5. Adjudication process and procedural delays.

Detailed Analysis:

1. Waiver of Pre-Deposit of Duty and Penalties:

The tribunal waived the pre-deposit of duty confirmed against M/s. GTC Industries Ltd. and penalties imposed on the company, its Chairman, Directors, and Officers. This decision was made to proceed with the hearing and resolution of the appeals with the consent of both parties.

2. Allegation of M/s. TTCL Being a Dummy Company:

The Commissioner of Central Excise issued a show cause notice alleging that M/s. TTCL was a dummy company set up and controlled by M/s. GTC Industries Ltd. to evade the payment of duty. The notice claimed that the franchise agreement was a facade for illegal operations, and GTC Industries Ltd. was the real manufacturer of the cigarettes. This led to the charge of clandestine clearance of cigarettes without payment of duty and proper accounting in Central Excise statutory records.

3. Clandestine Clearance of Cigarettes Without Payment of Duty:

The notice alleged that cigarettes were cleared clandestinely without payment of duty, without issuing gate passes/invoices, and without correctly reflecting the receipt and consumption of raw materials. The extended period of limitation was applied, and the notice proposed confiscation and penal action against both companies and their senior officers.

4. Violation of Principles of Natural Justice Due to Non-Supply of Essential Documents:

The appellants challenged the order principally on the grounds of contravention of principles of natural justice. They argued that essential documents relied upon in the show cause notice were not supplied to them, which hindered their ability to prepare a defense. The tribunal noted that despite repeated requests and directions from the adjudicating authority, the department failed to supply complete copies of the relied-upon documents. This non-compliance with procedural fairness was a significant factor in the tribunal's decision to set aside the order.

5. Adjudication Process and Procedural Delays:

The adjudication process was marked by numerous delays and procedural issues. The appellants repeatedly requested copies of essential documents, and although some documents were supplied, many were either incomplete or illegible. The department's insistence on inspection rather than supplying photocopies further complicated the matter. The tribunal highlighted the importance of adhering to the principles laid out in the Supreme Court judgment in the case of Sanghi Textiles Processors Pvt. Ltd. v. CCE, which emphasized the need for a pragmatic approach in supplying essential documents.

Conclusion:

The tribunal set aside the impugned order and remanded the case to the jurisdictional Commissioner for a fresh decision. The Commissioner was directed to supply the appellants with copies of all relevant documents, afford the facility of inspection, and provide copies of other relied-upon documents. The Commissioner was also instructed to pass fresh orders after considering the appellants' reply and extending a reasonable opportunity of being heard. The appellants were granted the liberty to raise all pleas in their defense. The appeals were allowed by remand.