2005 (8) TMI 478 - AT - Central Excise

Summary

Issues:
1. Alleged unauthorized sale of duty-free molasses.
2. Violation of natural justice in the demand of duty.
3. Admissibility of statements as evidence.
4. Legality of Commissioner's order.

Analysis:

1. The case involved the alleged unauthorized sale of duty-free molasses by M/s. Sree Ramakrishna Cattle Feed Manufacturers (SRK) to M/s. Sakthi & Devi Oil Mills. The Central Excise department issued a show cause notice based on this allegation, demanding duty on the molasses procured duty-free from sugar mills. The Commissioner of Central Excise confirmed the duty demand and imposed a penalty on the proprietor. The appellants denied the allegations, claiming the demand was ill-founded and violative of natural justice.

2. The appellants argued that the demand of duty was unjust as it relied on an alleged admission by Sri Ramachandran, which was not supported by his recorded statements. The Commissioner's order upholding the allegations in the show cause notice was challenged on the grounds of lack of evidence and violation of natural justice. The appellants contended that the demand was not sustainable based on the available facts and statements.

3. The Tribunal examined the statements recorded from Sri Ramachandran on two different dates and found no admission of unauthorized sale of molasses. It was observed that the statements clearly indicated that the duty-free molasses were used for the intended purpose of manufacturing cattle fodder. Additionally, the statement of Sri Anandrajan, which was relied upon in the notice, was not provided to the appellants, leading to a clear denial of natural justice. The absence of crucial evidence and failure to supply relevant documents rendered the show cause notice flawed and irreparable at that stage.

4. Considering the lack of evidence supporting the allegations, the Tribunal set aside the impugned proceedings and allowed the appeals of M/s. SRK and the proprietor. The decision was based on the failure to establish unauthorized sale of molasses and the violation of natural justice in the proceedings. The order was pronounced in open court, overturning the Commissioner's decision and relieving the appellants of the duty demand and penalty imposed.