2011 (4) TMI 1132 - AT - Central Excise

Demand of duty and penalty on the ground that Appellant manufactured and cleared goods without payment of duty - Appellants were clearing goods to the railways in respect of certain quantity of goods the Appellants were not paying duty. The demand is confirmed after taking into consideration such clearances - Contention is that the Appellants are manufacturing the goods in question as well as also got goods manufactured from various job-workers as the job-workers are independent manufacturers hence on such goods no duty is being paid by the Appellants. It is also submitted that Appellants were trading in respect of some goods which were duly reflected in their balance sheets - Revenue recorded the statement of five persons and as per the statements the goods were not manufactured on job-work basis however the same were manufactured as hired labourer. The Appellants asked for cross-examination of the witnesses whose statements were relied upon by the adjudicating authority and the same has been denied Held that - order passed without affording an opportunity of cross-examination is violation to the principles of natural justice, Appeals are disposed of by way of remand

Summary

Issues:
- Appeal against common impugned order confirming demand of duty and penalties
- Allegation of manufacturing and clearing goods without payment of duty
- Dispute regarding duty payment on goods manufactured by job-workers
- Rejection of trading activity claim by adjudicating authority
- Denial of opportunity for cross-examination
- Need for re-consideration by adjudicating authority

Analysis:
1. The Appeals were filed against a common impugned order confirming a demand of Rs.2,51,54,117/- due to alleged manufacturing and clearance of goods without paying duty, along with imposed penalties.

2. The Appellants contended that they manufactured goods themselves and also received goods from independent job-workers, asserting no duty liability on the latter. The Revenue, however, argued that goods were not manufactured on job-work basis, and railways procured goods only from actual manufacturers.

3. The adjudicating authority rejected the claim of trading activity by the Appellants, citing absence of traded goods mention in balance sheets. The Appellants provided evidence of trading activity in their balance sheet for the year 2004-05, but it was not considered in the impugned order.

4. The Appellants raised concerns over the denial of an opportunity for cross-examination of witnesses whose statements were relied upon by the Revenue. The Tribunal found this denial to be a violation of principles of natural justice, emphasizing the need for cross-examination in such circumstances.

5. The Tribunal concluded that the impugned order was passed without due consideration of evidence produced by the Appellants and without affording proper opportunities for cross-examination. Therefore, the matter was remanded to the adjudicating authority for de novo adjudication, with directions to allow cross-examination, hear both sides, and consider all evidence presented.