2011 (2) TMI 543 - AT - Central Excise

Demand - Confiscation - SSI exemption - whether SSI units located in the rural areas are really dummy units of M/s. Kores India Ltd - the settled law that duty of excise can be demanded in relation to the manufacturing activity and, therefore, before confirming the demand, the adjudicating authority has to identify the manufacturer or manufacturers as the case may be in relation to relevant product or products and thereafter assess duty liability, we find that no such exercise has been done by the adjudicating authority in the matter in hand - It is also to be noted that the adjudicating authority has also to deal with other statements and cross-examination. Undoubtedly, if the same are unreliable, nothing prohibits the authority from rejecting the same - The order of the adjudication is appealable order and therefore, it is the duty of the adjudicating authority to pass a reasoned order which should disclose the reasons for every such decision including the decision to reject the materials on record. - Appeals are disposed of

Summary

Issues:
Appeal against duty demand, penalty, and confiscation order due to non-application of mind by the Commissioner.

Analysis:
The appeals arose from a common order confirming duty demand against M/s. Kores India Ltd. and other appellants, along with penalties and confiscation of seized materials. The main challenge was the non-application of mind by the Commissioner in deciding the cases. The appellants argued that the order showed a lack of consideration of facts by the adjudicating authority.

The case involved M/s. Kores India Ltd., which stopped manufacturing staple pins due to a government decision reserving it for small-scale industries. The Department alleged that M/s. Kores India Ltd. continued manufacturing through ex-employees in independent units, evading duty and misusing SSI exemption. The impugned order highlighted discrepancies in manufacturing activities between rural and urban units linked to M/s. Kores India Ltd.

The adjudicating authority confirmed duty demand against M/s. Kores India Ltd. and certain noticees, despite inconsistencies in findings regarding manufacturing activities. The authority failed to justify its conclusions with proper analysis of materials, selectively referencing statements without adequate consideration of cross-examination.

Referring to a Supreme Court decision, the Tribunal emphasized the need to identify the actual manufacturer before imposing duty. It criticized the adjudicating authority for holding certain noticees liable for duty without proving them as dummy units of M/s. Kores India Ltd. The Tribunal stressed the importance of providing reasoned orders, especially when rejecting materials on record.

Consequently, the Tribunal set aside the impugned order and remanded the case to the adjudicating authority for a fresh decision. The authority was instructed to consider all materials on record and apply relevant legal provisions properly, ensuring both parties have a fair hearing before a new decision is made.

In conclusion, the appeals were disposed of by setting aside the original order and remanding the case for a fresh adjudication considering all evidence and legal aspects, emphasizing the importance of providing reasoned decisions and fair hearings to the parties involved.