2016 (4) TMI 1070 - HC - Central Excise

Job Work - Removal of drums without payment of duty - Held that - the Company was undertaking a job work. M/s. HPCL and will not allow its raw material to be utilized for the manufacture of drums for others or to allow to dispose of the production of drums in any manner other than to supply them. That is how the allegations in the show-cause notice regarding deliveries of drums to undisclosed parties was denied and termed as imaginary. Once the job work was the activity undertaken and there was a denial of the liability to pay duty, so also on the above material that the least that is expected of a last fact finding authority, viz., the Customs, Excise & Service Tax Appellate Tribunal is to consider this aspect in detail. That it is factual but necessarily requires and merits its consideration goes without saying, else, a party like the Appellant has no opportunity to satisfy any authority that the adjudication is not in accordance with law and that there is a perversity in the order-in-original. If as an Appellate Authority, the Tribunal does not wish to examine this, then, its refusal raises a substantial question of law. The last fact finding authority, viz., the Tribunal should have gone by the record. By not considering the record in its entirety and referring to some isolated event that too in an incomplete manner leads us to the only conclusion that the Tribunal has failed to perform its duty and in accordance with law. - Matter remanded back - Appeal restored before the tribunal.

Summary

Issues:
Challenging order of Customs, Excise & Service Tax Appellate Tribunal regarding demand of duty, interest, and penalty. Admissibility of retracted statement during investigation. Failure of Tribunal to consider all materials before passing order.

Analysis:
The judgment by the High Court of Bombay pertains to two appeals challenging the order passed by the Customs, Excise & Service Tax Appellate Tribunal. The central issue revolves around the demand of duty, interest, and penalty amounting to a significant sum. The Court focused on the facts of Central Excise Appeal No. 299 of 2014, treating it as a substantial question of law common to Central Excise Appeal No. 286 of 2014. The key questions raised include the correctness of the Tribunal's order upholding the duty demand and penalty, as well as the validity of relying on a retracted statement made during the investigation.

The case involves a company manufacturing Mild Steel Drums on a job work basis for Hindustan Petroleum Corporation Limited. The investigation revealed non-payment of excise duty as per a purchase order, leading to the initiation of proceedings. The statement of the Deputy Managing Director was recorded during the investigation, forming a crucial part of the allegations made in the show-cause notice. The company contested the allegations, claiming the statement was made under duress and later retracted. The Tribunal's order confirming the duty demand, interest, and penalty was challenged on the grounds of reliance on the retracted statement.

The High Court scrutinized the Tribunal's order and highlighted the failure to consider all relevant materials, particularly the retraction of the statement in a letter dated 11th August 1997. The Court emphasized the importance of a detailed examination by the Tribunal to ensure a fair adjudication. It noted that the Tribunal's incomplete consideration of the record led to a failure in performing its duty in accordance with the law. Consequently, the Court allowed the appeals, setting aside the Tribunal's order, and remanded the case back to the Tribunal for a fresh decision based on merits and in compliance with the law.

In conclusion, the High Court's judgment underscores the significance of a thorough review of all evidence and the need for a comprehensive consideration of facts before reaching a decision. The Court's decision to remand the case back to the Tribunal aims to provide both parties with a fair opportunity to present their case and ensures a just outcome based on a complete assessment of the facts and legal aspects involved.