2015 (12) TMI 1265 - HC - Central Excise

Search and Seizure of goods - Discrepancy in RG-1 Register - clandestine manufacture and clearance of fabrics - Held that - Assessee s dyeing master Shri Harbans Lal during the course of adjudication had accepted that the entries made in the diary belonged to him and were relating to his business transactions. The Tribunal further observed that the Commissioner (Appeals) also took into consideration the retraction made by the appellant by way of sending telegram and that the appellants have no capacity to manufacture such a huge quantity of poly fabrics. The Tribunal by merely observing that the learned Advocate for the assessee had placed on record the number of decisions laying down that entries made in the private note book read with statement cannot be held to be evidence to conclude against the assessee, rejected the appeal of the revenue. The charges of clandestine activities are required to be adjudicated by appreciating the factual matrix and by giving sufficient and cogent reasons. A perusal of the order of the Tribunal more particularly para 7 thereof shows that no legally justified reasons have been recorded for rejecting the appeal of the revenue. The Tribunal being a final fact finding authority was required to deal with all aspects of facts and also law and then record its conclusions based thereon. - Decided in favour of Revenue.

Summary

Issues:
Appeal under Section 35G of the Central Excise Act, 1944 against Tribunal's order - Rejection of appeal without discussion of arguments - Expectation of mathematical precision in proving clandestine removal.

Analysis:
The appeal was filed by the revenue under Section 35G of the Central Excise Act, 1944 against the order of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi. The substantial questions of law raised included the justification of the Tribunal's rejection of the appeal without discussing the arguments put forth by the Department and the expectation of proving clandestine removal with mathematical precision despite having gathered primary evidence. The case involved the assessee's alleged involvement in clandestine removal of polyster knitted fabrics without payment of duty and without maintaining statutory records. The initial search revealed excess stock of dyed fabrics, unaccounted transactions evidenced by a diary, and voluntary admissions by the appellant and others involved. A show cause notice was issued, and the Adjudicating Authority confirmed the demand for excise duty, interest, and penalty. The Commissioner (Appeals) later set aside the order, leading to the revenue's appeal before the Tribunal, which ultimately rejected it without providing sufficient legal justification.

The Tribunal's decision was challenged on the grounds that it failed to adequately consider the evidence and legal arguments presented by the revenue. The Tribunal's observation regarding the lack of evidence of clandestine removal was disputed, emphasizing the admissions made and evidence collected during the investigation. The Tribunal's reliance on the private diary entries and statements without sufficient reasoning was criticized. It was argued that the charges of clandestine activities should have been adjudicated based on a thorough analysis of facts and with legally justified reasons. The High Court found the Tribunal's decision lacking in a well-reasoned approach and ordered a remand for a fresh consideration, emphasizing the need for a comprehensive and legally sound decision-making process.

In conclusion, the High Court allowed the appeal, setting aside the Tribunal's order and remitting the matter back for a reevaluation. The Court stressed the importance of providing a well-reasoned decision after considering all aspects of the case and giving due opportunity to the parties involved in accordance with the law.