2016 (10) TMI 1172 - AT - Central Excise

Clandestine removal - assessee contested the SCN mainly on the basis that the details mentioned in FORM A were not the actual figures of import and consumption, which were prepared for getting higher import quota - principles of natural justice - Held that - the party has nothing in their defence and they are deliberately adopting delaying tactics by asking investigation report which has neither been relied upon by the department in fastening the duty liability nor it is available with the department. As far as the principles of natural justice are concerned, it would be seen that ample opportunities had already been given to the party and that matter cannot be continuously adjourned to suit their convenience. Anyone taking the plea of natural justice should come with clean hands. Unfortunately, that does not seem to be the case here. The entire case of department is made out on the basis of information found available in Form A, whereas the DGFT and even the Income Tax Appellate Authority has already concluded that there was no such improper import by the appellant. Further, on four occasions this Tribunal gave opportunity to the department to substantiate its case by bringing on record the investigation carried out by DGFT. The lower authority in the impugned order has shown total disrespect to the remand directions. At the same time, when said information was brought on record by the appellant, the lower authority has refused to go by the same, whereas once the DGFT had given clean chit to appellant, the lower authority was bound to drop the demand. Even otherwise the entire case of department is made out on mere surmises and presumptions - it is a settled legal position that the charge of clandestine removal cannot be made without there being corroborative evidences - demand set aside - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Validity of the demand of ?5,46,47,223/- based on FORM A.
2. Compliance with principles of natural justice.
3. Adequacy of evidence supporting the demand.
4. Relevance of findings by DGFT and Income Tax Authorities.

Detailed Analysis:

1. Validity of the demand of ?5,46,47,223/- based on FORM A:
The demand of ?5,46,47,223/- was primarily based on the details mentioned in FORM A, which was alleged to have been recovered during the investigation by DGCEI. However, the appellant contested that the figures in FORM A were inflated to obtain a higher import quota and did not reflect actual imports and consumption. The Commissioner initially reserved his decision on this demand pending verification of figures but later confirmed the demand without proper verification. The Tribunal noted that the entire case was based on FORM A, and subsequent proceedings were deemed illegal and void ab initio as the demand was based on unverified and unsupported figures.

2. Compliance with principles of natural justice:
The Tribunal observed that the Commissioner failed to comply with the principles of natural justice by not providing the appellant with an opportunity for a personal hearing before confirming the demand. The Tribunal had repeatedly remanded the matter for de novo adjudication, emphasizing the need for a fair hearing and proper investigation. Despite this, the Commissioner confirmed the demand without adhering to the Tribunal's directions, leading to a violation of natural justice principles.

3. Adequacy of evidence supporting the demand:
The Tribunal highlighted the lack of substantial evidence to support the demand. The department did not undertake necessary investigations to verify the correctness of the figures in FORM A. There was no corroborative evidence to show how the alleged excess quantity of imported material was transported, manufactured, and sold. The Tribunal emphasized that the charge of clandestine removal requires concrete evidence, which was absent in this case. The entire demand was based on assumptions and presumptions, making it unsustainable.

4. Relevance of findings by DGFT and Income Tax Authorities:
The Tribunal took into account the findings of the Additional Director General of Foreign Trade (DGFT) and the Income Tax Authorities, which concluded that there was no improper import or misutilization of imported material by the appellant. The DGFT had specifically stated that the appellant properly accounted for all imported materials, and the Income Tax Authorities dropped similar charges based on the same evidence. The Tribunal noted that these findings should have been considered by the Central Excise Department, and the demand should have been dropped accordingly.

Conclusion:
The Tribunal set aside the impugned order, concluding that the entire adjudication proceedings were vitiated due to non-compliance with the principles of natural justice, lack of substantial evidence, and the findings of other authorities exonerating the appellant. The appeal was allowed with consequential relief to the appellant.

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