2007 (4) TMI 557 - AT - Central Excise

Summary

Issues involved: Duty demand, disallowed Modvat credit, penalties, shortages of raw materials, clandestine production and clearance of finished goods, violation of principles of natural justice.

Duty demand, disallowed Modvat credit, penalties:
The Commissioner of Central Excise confirmed duty demand, disallowed Modvat credit, and imposed penalties against two companies. The duty demand was for Rs. 19,88,776/- with interest, disallowed Modvat credit of Rs. 8,15,042/- with interest, and penalties equal to the amounts mentioned. Another company faced a confirmed demand of Rs. 6,92,530/- with interest, penalties, and disallowed Modvat credit of Rs. 97,594/-. A penalty of Rs. 10,00,000/- was imposed on the managing director of both companies.

Shortages of raw materials, clandestine production and clearance of finished goods:
The demands were based on shortages of raw materials like sponge iron, pig iron, blooms, billets, MS ingots, and clandestine production and clearance of finished goods such as MS non-alloy steel, runners, risers, angles, and flat bars.

Violation of principles of natural justice:
The appellants argued that the order was passed without following the principles of natural justice. They claimed that they were not provided with copies of documents necessary for their defense, and the time given to prepare their reply was insufficient. The Tribunal found that although copies of relied upon documents were provided earlier, documents not relied upon were not made available to the appellants. Citing a High Court decision, the Tribunal held that the request for such documents was not frivolous and set aside the impugned order. The case was remitted to the Commissioner for a fresh decision after providing the necessary documents and allowing the appellants to file a reply and be heard in their defense.

Conclusion:
The appeals were allowed by remand, emphasizing the importance of adhering to the principles of natural justice in legal proceedings.