2011 (2) TMI 655 - HC - Central Excise

Review of order by two member committee of commissioners - authorization of appeal - authorization in accordance with Section 35B(2)- Held that - formation of opinion, as contemplated in Section 35B(2) of the Act, is a mandatory requirement, which cannot be treated to be a procedural formality. - Tribunal has not even cared to consider the objection of the appellant with regard to maintainability of the Revenue s appeal - matter remanded back before tribunal to record a finding on the following limited question of law, after affording opportunity of hearing to the parties Whether the appeal filed by the Revenue was not maintainable as there was no proper review or authorization in accordance with Section 35B(2) of the Act. 1944?

Issues Involved:
1. Confirmation of duty demand on Sponge Iron without tangible evidence.
2. Presumption of clearance of Sponge Iron without payment of duty.
3. Entry of defective goods in RG-1 and failure to do so leading to confiscation and penalty.
4. Maintainability of the Department's appeal due to lack of proper review and authorization.

Issue 1:
The appellant challenged the confirmation of duty demand on 241.550 MT of Sponge Iron without tangible evidence, questioning the basis of the decision by the Ld. CESTAT. The appellant argued against the confirmation of duty demand merely on the basis of loose sheets and statements without substantial proof or confession of guilt. The Ld. CESTAT's decision was criticized for lacking concrete evidence and for not considering the absence of proper authorization for the duty demand.

Issue 2:
The Ld. CESTAT's decision to draw a presumption that 150.110 M.T. of Sponge Iron were cleared without payment of duty was contested. The appellant argued against the presumption based on the absence of invoices for captive consumption under Rule 11. The appellant questioned the validity of assuming clearance without payment solely due to the lack of specific documentation, emphasizing the need for concrete evidence to support such claims.

Issue 3:
The appellant challenged the decision regarding the entry of defective goods in the RG-1 register and the subsequent failure to do so leading to confiscation and penalty. The appellant contended that defective goods, which were not marketable and intended for inspection and recycling, should not have warranted confiscation and penalty under Rule 25 without mens rea. The argument focused on the interpretation of Rule 25 in conjunction with Section 11AC of the Act, emphasizing the need for a more nuanced approach in such cases.

Issue 4:
The maintainability of the Department's appeal was questioned by the appellant due to the lack of proper review and authorization in accordance with Section 35B(2) of the Act. The appellant raised objections regarding the validity of the review process conducted by the Committee of Commissioners, highlighting discrepancies in the review dates and the absence of a joint sitting as required by law. The appellant's contention was based on the procedural irregularities in the review process, emphasizing the importance of adherence to statutory requirements for appeal authorization.

In conclusion, the judgment highlighted significant legal issues concerning duty demand confirmation, presumption of clearance without payment, entry of defective goods, and the maintainability of the Department's appeal. The appellant's arguments revolved around the lack of concrete evidence, procedural irregularities, and misinterpretation of relevant rules and provisions. The judgment emphasized the need for a thorough review of the evidence and adherence to statutory requirements in legal proceedings to ensure fair and just outcomes.

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