2005 (7) TMI 502 - AT - Central Excise

Issues Involved:
1. Jurisdiction of the Commissioner of Central Excise, Delhi-I to issue a show cause notice to M/s. FEIL.
2. Validity of the demand of duty from M/s. MIE and M/s. FEIL.
3. Adequacy of evidence for confirming the duty demand.

Issue-Wise Detailed Analysis:

1. Jurisdiction of the Commissioner of Central Excise, Delhi-I to issue a show cause notice to M/s. FEIL:

The appellants contended that the show cause notice issued on 25-3-2003 by the Commissioner of Central Excise, Delhi-I to M/s. FEIL was void because M/s. FEIL was under the jurisdiction of Commissioner of Central Excise, Delhi-II as per Notification No. 14/2002-C.E.(N.T.), dated 8-3-2002. The appellants argued that the Commissioner of Central Excise, Delhi-I had no jurisdiction to issue the notice to M/s. FEIL, relying on the Tribunal's decision in the case of Godrej Soaps v. CCE.

The Revenue argued that the Commissioner of Central Excise, Delhi-I had jurisdiction when the investigation started and the combined show cause notice was issued. They further contended that the Board's Order No. 1/2004 authorized the Commissioner of Central Excise, Delhi-I to adjudicate the case.

The Tribunal found that the show cause notice was issued on 25-3-2003, after the territorial jurisdiction of the Commissioner of Central Excise, Delhi was bifurcated by Notification No. 14/2003, dated 8-3-2002. The Tribunal held that the Commissioner of Central Excise, Delhi-I had no jurisdiction to issue a show cause notice to M/s. FEIL, which was outside his jurisdiction on 25-3-2003.

2. Validity of the demand of duty from M/s. MIE and M/s. FEIL:

The appellants argued that the adjudicating authority did not identify the goods manufactured by M/s. MIE and M/s. FEIL separately. The duty was not quantified for each manufacturer individually in the show cause notice, and the adjudicating authority demanded duty without any cogent evidence. The appellants contended that the demand was based on assumptions and not on direct evidence.

The Revenue argued that the adjudicating authority had given several opportunities to the appellants to submit their volume of clearances separately, but they failed to provide the necessary information. The Commissioner of Central Excise, therefore, calculated the duty based on the percentage of earlier clearances by both units.

The Tribunal found that the Commissioner of Central Excise admitted that it was not possible to arrive at the value of clearances separately. The Tribunal held that the demand of duty from M/s. MIE and M/s. FEIL was not sustainable as the clearances were not identified separately, and the Revenue did not prove the manufacture and clearance of goods without payment of duty.

3. Adequacy of evidence for confirming the duty demand:

The appellants argued that the evidence relied upon by the adjudicating authority was insufficient. They contended that the demand was confirmed based on assumptions and not on direct evidence. The appellants cited various decisions of the Tribunal, which held that the charge of clandestine clearance of goods must be proved by the department with cogent, convincing, and tangible evidence.

The Tribunal concurred with the appellants, stating that the adjudicating authority failed to provide concrete evidence of the procurement of raw materials and the manufacture of excisable goods cleared without payment of duty. The Tribunal referred to previous decisions emphasizing that duty demands must be based on solid evidence and not assumptions.

Conclusion:

The Tribunal concluded that the Commissioner of Central Excise, Delhi-I had no jurisdiction to issue the show cause notice to M/s. FEIL. The demand of duty from M/s. MIE and M/s. FEIL was not sustainable due to the lack of separate identification of clearances and insufficient evidence. The Tribunal set aside the impugned order and allowed the appeals.

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