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2013 (3) TMI 207 - AT - Central ExciseAllegation of clandestine removal of their finished goods and availment of inadmissible CENVAT Credit on the inputs - relied upon documents are traceable - held that - in absence of relied upon documents, the case cannot be proceeded against the appellants. - In the case of Kellogg s India Ltd. (2005 (10) TMI 98 - HIGH COURT OF JUDICATURE AT BOMBAY), the Hon ble High Court of Bombay has observed that where the petitioner has been denied the opportunity to have contents of test reports relied upon by the department before the adjudicating authority. The natural justice principle requires the Revenue to supply all the documents on which reliance is going to be placed by them for establishing case against the assessee. Therefore, we hold that by not supplying of relied upon documents amounts to violation of principle of natural justice and accordingly, we hold that in this case there is a violation of principle of natural justice. On merits, the fact that only buyers of conductors manufactured by the appellants are the State Electricity Boards is not in dispute. - It is also admitted position that the State Electricity Boards/PSUs received the goods against the duty paid invoices and made the payment through A/c payee cheques. - the allegation of clandestine removal is not sustainable as discussed above and denial of Modvat Credit is not sustainable in view of the decision of this Tribunal in the case of M/s. Pooja Enterprises (2006 (10) TMI 36 - CESTAT, MUMBAI) - Demand set aside - Decided in favor of assessee.
Issues Involved:
1. Clandestine removal of finished goods 2. Availment of inadmissible CENVAT Credit 3. Violation of principles of natural justice 4. Imposition of penalties Detailed Analysis: 1. Clandestine Removal of Finished Goods The primary allegation against the appellant, M/s. Western India Metal Industries (WIMI), was the clandestine removal of their finished goods, specifically overhead power transmission conductors, to various State Electricity Boards without payment of excise duty. The Tribunal noted that the buyers of these conductors were exclusively State Electricity Boards, which are Public Sector Undertakings (PSUs). It was argued that these conductors could not have been sold to other parties without proper documentation and inspection by the Electricity Boards. The Tribunal found no evidence that the State Electricity Boards received goods without proper duty-paying documents. Additionally, no investigation was conducted with the State Electricity Boards to confirm the alleged clandestine removal. Therefore, the Tribunal concluded that the allegation of clandestine removal was not sustainable. 2. Availment of Inadmissible CENVAT Credit The appellant was also accused of availing inadmissible CENVAT Credit on inputs allegedly not received. The Tribunal noted that the department alleged that inputs were never received by M/s. WIMI, yet it was also alleged that finished goods were cleared clandestinely. The Tribunal emphasized that the charge of clandestine removal is serious and must be proved beyond doubt. The Tribunal found no corroborative evidence to support the department's claim and noted that the clearances made by M/s. Pooja Enterprises were upheld in a previous Tribunal decision, thus validating the credits taken by the appellant. Consequently, the denial of Modvat Credit was deemed unsustainable. 3. Violation of Principles of Natural Justice The Tribunal highlighted a significant violation of the principles of natural justice due to the non-supply of relied-upon documents to the appellants. Despite multiple requests and Tribunal directions, the department failed to provide these documents, which were crucial for the appellants to defend themselves adequately. The Tribunal cited several precedents emphasizing the necessity of supplying relied-upon documents to ensure a fair defense. Given the department's admission that these documents were not traceable, the Tribunal held that proceeding against the appellants without these documents constituted a violation of natural justice. 4. Imposition of Penalties Penalties were imposed under various rules and sections, including Rule 52A and Section 173Q of the Central Excise Rules, 1944, and Section 209A of the Central Excise Act, 1944. The Tribunal found that in the earlier round of litigation, lower penalties were imposed, and the significant increase in penalties in the remand proceedings was not justified. The Tribunal referred to the Supreme Court's decision in Tata Iron & Steel Co. Ltd. v. Commissioner, which emphasized the need for consistency in penalty imposition. Consequently, the Tribunal found the penalties imposed in the remand proceedings to be unsustainable. Conclusion: The Tribunal concluded that the principles of natural justice were violated due to the non-supply of relied-upon documents, making it impossible for the appellants to defend themselves adequately. On merits, the Tribunal found no corroborative evidence to support the allegations of clandestine removal and inadmissible CENVAT Credit. Therefore, the Tribunal set aside the impugned order and allowed the appeals with consequential relief.
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