2013 (9) TMI 575 - AT - Central Excise

Duty demand - demand in respect of grey fabrics allegedly woven in the applicants 100% EOU for 14 different merchant manufacturers on job work basis and demand of woven in the applicants 100% EOU these were required to be examined along with assesses claim of having made payments to these weavers through cheque - It gets established that the job work were actually done by these weavers - generalized and vague findings arrived at by the adjudicating authority regarding some discrepancies and incompleteness in some bills was not sufficient to dis-credit the evidentiary value of the seized documents - Commissioner had shown non-application of mind - he agrees that the evidence produced by the assesse to prove that the fabric which was alleged to had been clandestinely removed was woven in the applicants 100% EOU unit, and is supplied by the third party - he had not dropped the demand and mixed up the issue with the first demand - and confirmed the demands without giving any acceptable reasoning. Validity of order - Held that - Order was non-speaking and had been passed without proper appreciation of evidences, fact and not following the direction of the Tribunal in remand proceedings - set aside the order and remand the matter back to the adjudicating authority to reconsider the issue afresh after following the principles of natural justice findings recorded by the adjudicating authority go beyond the scope of show cause notice as there was no such allegation - Commissioner had not dealt with the assesses submission that the duty demand was highly exaggerated and incorrect rate of duty had been applied for arriving at the demand of duty that needs to be confirmed matter remanded back - decided in favor of assesse.

Issues:
1. Confirmation of demand under Central Excise Act, 1944
2. Imposition of redemption fine and penalty
3. Non-compliance with Tribunal's directions by adjudicating authority
4. Discrepancies in adjudication order
5. Failure to consider evidence and submissions
6. Non-application of mind by adjudicating authority
7. Non-speaking order passed without proper appreciation of evidence
8. Remand of the matter for fresh consideration

Analysis:
1. The judgment pertains to the confirmation of a demand amounting to approximately Rs. 3.58 crores under the Central Excise Act, 1944, along with the imposition of a redemption fine and penalties for the period between June 2001 to April 2002. The issues involve two main components of the demand related to grey fabrics woven in the appellant's 100% EOU for merchant manufacturers on job work basis and fabrics woven in the EOU and sold through specific entities.

2. The Tribunal noted that the adjudicating authority failed to comply with the directions given in the previous round of litigation. The appellant's counsel argued that the adjudication order exceeded the scope of the show cause notice, lacked proper application of mind, and contained contradictions. The authority's approach in establishing clandestine removal was questioned, highlighting discrepancies in the duty rate considered for the demand.

3. The Tribunal observed that the adjudicating authority did not appropriately consider crucial evidence such as bills of job work, bank statements, and other documents. The authority's rejection of these documents based on procedural grounds was deemed improper, as the Tribunal's directions were to assess whether the evidence rebutted the allegations of clandestine removal.

4. Regarding the second demand component, the Tribunal found that the adjudicating authority displayed a lack of application of mind by not dropping the demand despite acknowledging evidence supporting the appellant's claims. The authority's failure to consider the evidence presented by the appellant in various aspects was highlighted as a significant flaw.

5. In conclusion, the Tribunal held that the impugned order was non-speaking, lacked proper appreciation of evidence, and did not adhere to the Tribunal's directions. Consequently, the order was set aside, and the matter was remanded back to the adjudicating authority for a fresh consideration following the principles of natural justice and due process of law.

6. The judgment underscores the importance of adjudicating authorities following tribunal directions, considering all evidence presented by parties, and ensuring a thorough and reasoned decision-making process in line with legal principles and procedural fairness.

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