2003 (12) TMI 373 - AT - Central Excise

Demand on the basis of printouts taken out from 108 floppies - Clandestine removal - Non-imposition of penalty u/s 11AC - Compliance with principles of natural justice - HELD THAT - In the absence of the most important relied upon documents having not been supplied lo the appellants, it cannot be said that department has proved the case of appellant having allegedly manufactured and cleared cassette ribbons in the matter. They have also taken a ground that the details in the 108 floppies pertained only to sales made by them which does not deal with use of imported fabric for the purpose of manufacture of the final product said to have been cleared clandestinely. There is merit in this submission. In the written submissions also, revenue contend that they have relied on the sales register and invoices for the purpose of proving clandestine manufacture and removal. Revenue is also expected to produce evidence of use of raw material which is imported fabric in the matter and all other related persons to show that the invoices have been used for manufacture of the final product which are cleared. The appellants have been stating that what they have cleared is only re-inked ribbons and not virgin ribbons. It is stated by them that the customers had been sending the ribbons for re-inking and the appellants have only done the said activity of re-inking the ribbons and the registers which have been relied on pertained only to this portion of the activity. There is no clear cut finding on this aspect of the matter and it cannot be said that appellants have not carried out the process of re-inking and had have utilized the imported fabric for the purpose of re-inking and thus have cleared therein the computer ribbons as new goods. Revenue ought to have examined the registers pertaining to import of the ribbons to say as to whether the said ribbons had been utilized for the purpose of re-inking on the customer s ribbons. The benefit of doubt has to be given to the appellants. The Commissioner has violated the terms of the remand order of the Tribunal and for that reason alone, the impugned order is required to be set aside. In that view of the matter the impugned order is set aside and the appeal of the assessee is allowed. Revenue s appeal is pertaining to non-imposition of penalty u/s 11AC of the Act for the period prior to the promulgation of the said section. The Commissioner was not justified in not examining the penalty u/s 11AC as the said section had not been promulgated during the period. Revenue s appeal is, therefore, rejected. Party s appeal is allowed by setting aside the impugned order. Ordered accordingly.

Issues Involved:
1. Compliance with principles of natural justice.
2. Validity of evidence from 108 floppies.
3. Allegations of clandestine removal of goods.
4. Non-imposition of penalty u/s 11AC.

Summary:

1. Compliance with principles of natural justice:
The Tribunal noted that the remand order had not been complied with, emphasizing the need for a "speaking order" that addresses all aspects of the matter, including the evidence on which the department is proceeding and the defense taken by the appellants. The Commissioner was directed to provide the appellants with copies of 108 floppies seized and to observe the principles of natural justice. The Tribunal highlighted that the appellants were denied access to information contained in the floppies, which was crucial for their defense.

2. Validity of evidence from 108 floppies:
The Commissioner discarded the evidence from the 108 floppies due to their corruption by viruses, yet proceeded to decide the case based on information allegedly culled from these floppies. The Tribunal found that the printouts from the floppies were not authenticated and lacked proper signatures, making them unreliable. The Tribunal emphasized that the appellants should have been given copies of the documents or floppies to prepare their defense, and the failure to do so constituted a denial of natural justice.

3. Allegations of clandestine removal of goods:
The Tribunal observed that the Commissioner confirmed the demands based on unauthenticated printouts from the floppies, which were not reliable evidence. The Tribunal noted that the appellants had maintained detailed records and filed necessary returns, and there was no clear evidence of suppression or clandestine removal of goods. The Tribunal concluded that the Revenue had not proven the case of clandestine manufacture and clearance due to the lack of reliable evidence and violation of the principles of natural justice.

4. Non-imposition of penalty u/s 11AC:
The Tribunal rejected the Revenue's appeal for non-imposition of penalty u/s 11AC, noting that the section had not been promulgated during the relevant period. The Commissioner was not justified in examining the penalty under this section for the period prior to its promulgation.

Conclusion:
The Tribunal set aside the impugned order due to non-compliance with the remand order and violation of natural justice principles. The appeal of the assessee was allowed, and the Revenue's appeal was rejected.

← Previous Next →