2013 (9) TMI 241 - AT - Central Excise

Benefit of Notification No. 5/98 Clearance of Goods - The dispute relates to Clearance of Poly Carbonate Bottles falling under Chapter Heading No. 3923.90 of Central Excise Tariff - Revenue was of the view that the appellant was not entitled to exemption as they availed Modvat credit on duty paid on the inputs used in the manufacture of other products - Whether the clearance of Poly carbonate containers as reflected in the statutory documents in March, 1998, were infact cleared in June, 1998, by which time they attracted duty of excise - Held that - The appellants could not have anticipated that the exemption was going to be withdrawn with effect from 2-6-1998 - The records were being maintained in the normal course of business and the said entry in March, 1998 appears before the admitted clearance of 2855 pieces, supports their stand that the said 80,000 pieces were actually manufactured and cleared in the month of March 1998 itself - The appellants have taken a strong stand that the entry showing manufacture of 80,000 pieces in RG 1 register was prior to the entry of 2855 containers. Merely because the said letter and the inward register was not available in the office of the Assistant Commissioner in the year 2008 by itself cannot cast doubt on the letter - The inability of the department to trace its own inward register cannot result in an adverse inference against the appellants - the Revenue s stand that the letter was not locatable in the year 2008, cannot be appreciated - Apart from the visual examination of the said RT 12 return by the adjudicating authority himself, entertaining doubt about two handwritings on two different pages, there was no further evidence to support the said doubt entertained by the authority - The appellants had submitted the said report along with their reply filed in the year 2000, at which point of time the genuineness of the same was neither verified nor questioned by the authorities - The reasons for rejecting the RT 12 return by the adjudicating authority were not legal and valid reason. Non-denial of cross-examination amounts to violation of principles of natural justice or not depends upon the facts and circumstances of each case - If the reliance is placed solely on the statements of the appellants which stand rebutted by the assessee by production of documentary evidence, it becomes necessary to test the veracity of such statements by the tool of cross-examination - No prejudice would have been caused to the Revenue if the deponents of the statement would have been offered for the cross-examination except that the same would have marginally delayed the proceedings - Fair adjudication cannot be sacrificed at the cost of speedy disposal - order relating to the said demand on rejected and repaired goods and remand the matter to Commissioner for passing the fresh orders.

Summary

Issues Involved:
1. Clearance of 80,000 polycarbonate (PC) bottles and the corresponding duty liability.
2. Alleged clearance of fresh manufactured PC bottles under the guise of repaired/reprocessed bottles under Rule 173H of Central Excise Rules, 1944.
3. Imposition of penalties on various appellants.

Detailed Analysis:

1. Clearance of 80,000 Polycarbonate (PC) Bottles:

The primary dispute centers around whether the clearance of 80,000 PC bottles, reflected in statutory documents in March 1998, actually occurred in June 1998, when they became liable for excise duty. The appellant contended that the clearances were made in March 1998, supported by documentary evidence such as the RG 1 register, RT 12 returns, and financial statements. They argued that these documents should be given preference over the oral statements collected by the Revenue, especially since the deponents were not made available for cross-examination. The adjudicating authority rejected the appellant's claims based on various grounds, including the non-availability of the inward register and RT 12 returns, and discrepancies in the outward register maintained by the security staff.

The Tribunal found merit in the appellant's arguments, emphasizing the importance of documentary evidence over unverified oral statements. The Tribunal noted that the letter dated 6-2-1998, indicating the use of a new invoice book for exempted goods, bore the received stamp of the Division Office and was allotted an inward entry number. The inability of the department to trace its own inward register could not result in an adverse inference against the appellants. The Tribunal also found the rejection of the RT 12 returns by the adjudicating authority to be unjustified, as the reasons provided were not legally valid.

The Tribunal concluded that the entries in the RG 1 register, showing the manufacture of 80,000 pieces in March 1998, supported the appellant's claim. The Tribunal also found the appellant's financial statements and the Chartered Accountant's certificate to be credible evidence. The Tribunal held that the findings of the Commissioner that the 80,000 pieces were cleared in June 1998 could not be upheld and set aside the said findings.

2. Alleged Clearance of Fresh Manufactured PC Bottles Under the Guise of Repaired/Reprocessed Bottles:

The Commissioner held that the appellants were indulging in the clearance of fresh manufactured PC bottles under the guise of repaired/reprocessed bottles under Rule 173H of Central Excise Rules, 1944. This finding was based on various pieces of evidence, including the ledgers maintained by M/s. Atco Health Care Ltd., which indicated the purchase of 8364 PC bottles from M/s. Atco. The appellants contended that every time they received back rejected bottles, they filed an intimation under Rule 175H with the Revenue, duly accounted for in Form IV, and cleared the processed goods under invoices with cross-references to the earlier invoices. They argued that the ledger entries indicating fresh purchases were a mistake, rectified in the next year's accounts.

The Tribunal found that the Commissioner had not adequately addressed the detailed submissions and evidence provided by the appellants. The Tribunal set aside the impugned order relating to the demand on rejected and repaired goods and remanded the matter to the Commissioner for fresh consideration.

3. Imposition of Penalties:

The penalties on various persons were based on the findings related to the duty demand on 80,000 pieces of PC bottles and the alleged clearance of fresh manufactured goods under the guise of repaired goods. Since the Tribunal set aside the findings related to the 80,000 pieces and remanded the matter concerning the alleged clearance of fresh manufactured goods, it directed the Commissioner to reassess the penal liability on all appellants afresh, depending on the outcome of the remanded proceedings.

Conclusion:

The Tribunal concluded that the documentary evidence provided by the appellants outweighed the oral evidence relied upon by the adjudicating authority. It set aside the findings that the 80,000 pieces of PC bottles were cleared in June 1998 and remanded the matter concerning the alleged clearance of fresh manufactured goods under the guise of repaired goods for fresh consideration. The Tribunal also directed the Commissioner to reassess the penal liability on all appellants based on the outcome of the remanded proceedings.