2008 (5) TMI 225 - AT - Central Excise

Clearance of Flush Doors , without payment of duty by mis-declaring the same as Panel Doors & Baton Door revenue contend that assessee never manufactured Panel/Bator Doors - Appellants pleaded that while the Appellant company during the period of dispute has sold Panel doors, Baton doors and flush doors to hundreds of customers, inquiry has been made by the investigating officers with just 15 customers held that duty demand is not sustainable in respect of all the parties

Issues Involved:
1. Legitimacy of the duty demand of Rs. 3.5 lakhs for the year 1992-93.
2. Validity of the duty demand of Rs. 88,72,686/- based on the mis-declaration of 'Flush Doors' as 'Panel Doors' and 'Baton Doors'.
3. Burden of proof and the credibility of evidence provided by the Revenue.
4. Entitlement to cross-examination of witnesses.
5. Reassessment of duty demand and penalties.

Detailed Analysis:

1. Legitimacy of the duty demand of Rs. 3.5 lakhs for the year 1992-93:
The duty demand of Rs. 3.5 lakhs was on account of a calculation error during the year 1992-93, where the appellants availed full duty exemption for clearances up to Rs. 30 lakhs instead of the eligible Rs. 20 lakhs under notification No. 175/86-CE. The tribunal found that this demand was not raised in the Show Cause Notice dated 24/2/96 and was also not adjudicated in the initial order dated 14/1/98. It was brought up for the first time during the de-novo adjudication proceedings. Consequently, the tribunal held that the demand could not be confirmed and was time-barred under Section 11A (1). Hence, the duty demand of Rs. 3.5 lakhs for the 1992-93 period was set aside.

2. Validity of the duty demand of Rs. 88,72,686/- based on the mis-declaration of 'Flush Doors':
The demand was based on evidence such as the interception of a tempo loaded with flush doors covered by an invoice for 'Panel doors', inquiries with various customers, and the non-existence of a declared godown. The tribunal noted that the Revenue's case was supported by statements from customers and supply orders indicating orders for flush doors only. The tribunal concluded that the sales to specific builders mentioned in the order should be treated as sales of flush doors and duty should be charged accordingly. However, the tribunal did not find sufficient evidence to extend this conclusion to all other customers of the appellants.

3. Burden of proof and the credibility of evidence provided by the Revenue:
The tribunal emphasized that the burden of proving the allegation that the appellants never manufactured 'Panel doors' or 'Baton doors' but only 'Flush doors' was on the Revenue. This burden shifted to the appellants only when confronted with specific evidence from customers. The tribunal found that the Revenue did not conduct sufficient inquiries with other customers, the Housing Board, or the DDA, and did not provide evidence from factory workers or jurisdictional officers. Therefore, the tribunal concluded that the Revenue failed to prove the allegations for all customers.

4. Entitlement to cross-examination of witnesses:
The appellants argued that the statements from customers were not reliable as some were not countersigned, and cross-examination was not allowed. The tribunal found that the denial of cross-examination did not result in a denial of natural justice because the Revenue's case was also based on written supply orders. Therefore, the request for cross-examination was deemed irrelevant.

5. Reassessment of duty demand and penalties:
The tribunal set aside the impugned order and remanded the matter to the adjudicating authority for quantification of the duty demand based on the tribunal's directions. The authority was also directed to re-determine the quantum of personal penalties in light of the revised duty liability. The adjudicating authority was instructed to complete this exercise within three months from the date of the order.

Conclusion:
The tribunal's judgment provided a detailed analysis of the issues, emphasizing the importance of proper evidence and adherence to procedural requirements. The duty demand of Rs. 3.5 lakhs was set aside, while the duty demand of Rs. 88,72,686/- was partially upheld for specific customers. The matter was remanded for reassessment and quantification of duty and penalties.

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