2010 (11) TMI 104 - HC - Central Excise

Demand and penalty Shortage of scrap CESTAT set aside demand and penalty on ground that Managing Director had explained reasons of shortage but authorities below had not considered reasons explained statement recorded sought to be explained by the deponent, both the statement as well as the correctness of the explanation would have to be considered - none of the authorities below have considered the explanation given by the respondent - orders passed by the adjudicating authority as well as the impugned order passed by the CESTAT are quashed and set aside and the matter is remanded back to the adjudicating authority to pass a fresh order in accordance with law and after considering the explanation given by the respondent

Summary

Issues:
1. Whether the Tribunal correctly applied their mind in deciding that duty and penalty were not required to be paid by the respondents.

Analysis:
1. The case involved a search action at the business premises of the respondents where shortages of M.S. Scrap were found. A show cause notice was issued, and after appeals, the CESTAT set aside the previous orders due to authorities not considering the explanations provided by the respondents.

2. The High Court noted that the authorities failed to consider the explanation given by the respondent No. 1 regarding the shortages found during the search. The court emphasized that both the statement and the correctness of the explanation should be evaluated. Without assessing the explanation, the demand and penalty could not be deleted by the Tribunal.

3. Consequently, the High Court quashed the orders passed by the adjudicating authority and the CESTAT. The matter was remanded back to the adjudicating authority to pass a fresh order after considering the explanation provided by the respondent No. 1 on its own merits. The court clarified that it did not express any opinion on the correctness of the explanation given by the respondent.

4. The appeal was disposed of with no order as to costs, indicating that the High Court's decision was to set aside the previous orders and allow for a reevaluation based on the respondent's explanation.