2011 (10) TMI 427 - AT - Central Excise

Arbitrary adjudication - capacity estimated at 4 MT tonne against 3 MT - Held That - Revenue failed to bring on record the evidence suggesting that the quantum of production alleged was due to suppression of purchase of input or there existed evidence of clandestine removal and also corroborative evidence to show enhancement of capacity by necessary electrical installation and evidence of electricity consumption or any communication of evidenciary value from electricity authority to plead higher plant capacity. There is nothing on record to show that high power connection supported by evidence was made on a particular date and that resulted in higher amount of production. Reliance placed on R.A. Casting (2010 -TMI - 205214 - ALLAHABAD HIGH COURT)

Issues:
1. Allegations of arbitrary adjudication and coercion in recording statements.
2. Failure to provide copies of essential documents to the appellant.
3. Lack of evidence supporting allegations of higher production and capacity enhancement.
4. Unlawful intervention and lack of respect for natural justice principles.
5. Inadequate evidence of clandestine activities and suppression of input purchases.
6. Precedent cases supporting the appellant's arguments.

Issue 1 - Allegations of Arbitrary Adjudication and Coercion:
The appellant argued that the adjudication was arbitrary, claiming that the investigating team did not follow due process when intervening in the production process. They alleged that statements were coerced and not recorded lawfully. The appellant highlighted instances where statements were written by others and signed under pressure. Additionally, the appellant emphasized the lack of legal sanctity in the evidence provided by the investigating team, as no copy of the panchnama was provided despite repeated requests. The appellant's retraction of statements further undermined the evidence presented against them.

Issue 2 - Failure to Provide Essential Documents:
The appellant contended that the authorities failed to provide copies of necessary evidence, despite requests, which hindered their ability to defend against the allegations. The appellant's repeated requests for copies of the panchnama were denied by the authorities, leading to a lack of transparency in the adjudication process.

Issue 3 - Lack of Evidence Supporting Allegations:
The tribunal noted the absence of evidence supporting the allegations of higher production and capacity enhancement. The lack of evidence indicating an increase in plant capacity or electricity consumption to justify the production levels alleged in the show cause notice weakened the revenue's case. The tribunal emphasized the importance of corroborative evidence to substantiate such claims.

Issue 4 - Unlawful Intervention and Lack of Natural Justice:
The tribunal criticized the authorities for unlawful intervention and a lack of respect for natural justice principles. The failure to provide copies of essential documents and the absence of trial production or technical reports to support the allegations raised questions about the fairness of the adjudication process. The tribunal highlighted the need for lawful interventions and proper documentation to ensure a just adjudication.

Issue 5 - Inadequate Evidence of Clandestine Activities:
The tribunal highlighted the lack of cogent evidence demonstrating clandestine activities such as suppression of input purchases or clandestine removal of goods. The absence of concrete evidence to prove these allegations, combined with the failure to follow legal procedures in recording statements, weakened the revenue's case and rendered the adjudication unsustainable.

Issue 6 - Precedent Cases Supporting Appellant's Arguments:
The tribunal referenced a precedent case where it was established that electricity consumption alone is not sufficient to determine output levels. The tribunal found that the lack of cogent evidence and procedural irregularities in the present case aligned with the principles upheld in the precedent case. Ultimately, both appeals were allowed in favor of the appellant due to the lack of substantial evidence and procedural flaws in the adjudication process.

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