2011 (6) TMI 411 - AT - Central Excise

Alleged under valuation and mis-declaration in SCN - demand and penalty imposed - appellant contended violation of principles of natural justice since the order was passed without a final reply to Show Cause Notice from the Appellants - Held that - It is matter of delay in furnishing final reply to the SCN and adjudication without final reply to the SCN the Tribunal was of the view that there was some dilatory tactics adopted by the Appellant in furnishing reply to the SCN. At the same time the Appellant was not put to notice that adjudication of only a part of the allegations in SCN would be proceeded with in which case the Appellant might have given reply on such short point. So the responsibility for the flawed adjudication is shared by both sides. Now, appellants have furnished replies to the SCN. At this stage we consider it proper to remit the matter, to the adjudicating authority to decide the matter afresh.

Issues:
1. Alleged under valuation and mis-declaration of imported goods
2. Proposed demand of Customs duty and Central Excise duty
3. Delay in furnishing reply to Show Cause Notice
4. Adjudication without final reply to Show Cause Notice

Issue 1: Alleged under valuation and mis-declaration of imported goods
The Appellant, a 100% EOU, imported metal scrap under specific Notifications. The Show Cause Notice alleged under valuation and mis-declaration of imported goods, proposing a Customs duty demand of Rs.5,76,63,741 and a Central Excise duty demand of Rs.5,15,57,631. The Order-in-Original confirmed the Central Excise duty demand but deferred the Customs duty adjudication pending determination of positive Net Foreign Exchange Earning as a Percentage of Export (NFEP).

Issue 2: Proposed demand of Customs duty and Central Excise duty
The impugned Order-in-Original confirmed the Central Excise duty demand of Rs.5,15,57,631 with an equivalent penalty. However, the adjudication of the proposed Customs duty demand was deferred awaiting the Development Commissioner's decision on NFEP fulfillment. The Tribunal scrutinized the reasons for adjudicating without final replies to the Show Cause Notice and found dilatory tactics by the Appellant in furnishing the reply.

Issue 3: Delay in furnishing reply to Show Cause Notice
The Appellant cited delay in furnishing replies to the Show Cause Notice due to non-receipt of crucial documents and requested cross-examination of DRI officers involved in overseas investigations. Despite the Appellant's submissions, the Commissioner summarily rejected the request for cross-examination without providing reasons. The Appellant received documents in phases, leading to a delay in preparing a detailed reply, which was submitted close to the adjudication date.

Issue 4: Adjudication without final reply to Show Cause Notice
The Tribunal acknowledged flaws in the adjudication process, attributing responsibility to both sides for the flawed adjudication. The bench directed the Appellant to furnish a reply to the Show Cause Notice before the Tribunal in a sealed cover. Subsequently, the matter was remitted to the adjudicating authority for fresh consideration, allowing the Appellant proper opportunity for a personal hearing and emphasizing that observations on detailed submissions and cross-examination requests were to be decided afresh by the adjudicating authority.

This judgment sets aside the impugned order and remits the matter for denovo consideration by the adjudicating authority, with the Registry directed to forward the replies to the Show Cause Notice furnished by the Appellants for further proceedings.

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