2014 (4) TMI 97 - AT - Central Excise

Duty demand - Clandestine removal of goods - removal of fresh fans in the guise of repaired one - Whether the fans which were purportedly cleared by the Applicant Firm as a repaired/re-conditioned one, show any correlation with the defective fans received at the service centre or not, and whether the conditions of Rule 16 in the event of repairing/re-conditioning are satisfied in this case or not - Held that - Applicant s plea that the defective fans received at the service centre, were duly reflected in their record and the movement of component spares etc. to the factory, after dismantling of the defective fans took place under proper challans, need further examination. According to the Applicant, the fact they were eligible to credit, is also not discussed by the ld. Commissioner. Regarding demand raised on shortage of bearings (in Annexure-C-4), the ld. Commissioner has not considered the fact that rejection is bound to take place during manufacture and the evidences adduced by the Applicant/Appellant before him, were discarded. The Applicant/Appellant has categorically stated that even the stock-taking report refers to rejection of the bearings and therefore, such rejection reflected in their books of accounts, should be considered before arriving at their shortage. In case of duty demanded (in Annexure-C-5) on spares shown to be removed under private challans, the ld. Advocate submitted that it was only a financial adjustment. The invoice-cum-challan clearly shows such short receipts to take care of financial accountal of such short receipts, the Applicant firm used to issue invoice-cum-challan specifying the components and their value for debiting from the accounts of the concerned branches. The ld. Commissioner observed that no audited certificate could be produced to this extent. It is the contention of the Appellant that they were never asked to give any such certificate. The ld. Advocate stated that all the documents including challans and invoices have been seized by the Department and they are in the possession of the Department and that they could explain satisfactorily from the said document that there were no duty evasion on any counts. In view of the above facts, we find that Order of the ld. Commissioner has not considered in detail, all the issues raised by the Appellant. In these circumstances, we are of the view that the case may be remitted back to the ld. Adjudicating Commissioner for fresh decision, after considering all the issues raised by the Applicant/Appellant firm - Decided in favour of assessee.

Summary

Issues:
1. Dismissal of Applications for waiver of predeposit of duty, interest, and penalties.
2. Filing of Miscellaneous Application for recall/modify Tribunal's Orders.
3. Allegations of non-compliance and financial instability.
4. Restoration of Stay Petitions and Appeals.
5. Detailed analysis of demands raised against the Applicant Firm.

Issue 1: Dismissal of Applications for waiver of predeposit of duty, interest, and penalties
The Tribunal dismissed the Applicants' requests for waiver of predeposit, leading to subsequent dismissal of Appeals for non-compliance with the Predeposit Order. The Applicant firm filed a Miscellaneous Application seeking to recall/modify the Tribunal's Orders, citing reasons such as delayed receipt of the initial Order and financial instability due to being under B.I.F.R.

Issue 2: Filing of Miscellaneous Application for recall/modify Tribunal's Orders
The Applicant firm filed a Writ Petition before the High Court, which directed the Tribunal to reconsider the Miscellaneous Application. The Tribunal, after considering the specific direction of the High Court, allowed the Miscellaneous Application, restoring the Stay Petitions and Appeals for further review.

Issue 3: Allegations of non-compliance and financial instability
The Applicant contended that they did not receive the initial Order in time, leading to non-compliance with the predeposit requirement. They also highlighted their financial instability, being under B.I.F.R. with a negative net worth, as factors affecting their ability to meet the obligations.

Issue 4: Restoration of Stay Petitions and Appeals
The Tribunal, in light of the Applicant's submissions and the High Court's direction, allowed the Miscellaneous Application, restoring the Stay Petitions and Appeals. The Tribunal waived the predeposit requirement and proceeded to take up the Appeals for disposal at the same stage.

Issue 5: Detailed analysis of demands raised against the Applicant Firm
The demands raised against the Applicant Firm included allegations related to fans cleared after repair/re-conditioning, shortage of finished goods, shortage of ball bearings, and removal of spares under private challans without duty payment. The Applicant Firm provided detailed explanations and defenses for each demand, citing procedural lapses, stock discrepancies, and financial adjustments to counter the allegations.

In conclusion, the Tribunal found discrepancies in the Adjudicating Commissioner's findings and ordered a remand of the case for fresh decision after considering all issues raised by the Applicant Firm. The Tribunal emphasized the need for a detailed examination of the facts, provision of relied-upon documents to the Applicant Firm, and a fair opportunity for a hearing before reaching a new decision. The Appeals were allowed by way of remand, and Stay Petitions were disposed of accordingly.