2016 (10) TMI 29 - AT - Central Excise

Clandestine removal of goods - Demand raised unjustly - processed fabrics dispatched in the name of M/s/Jayalakshmi Printing Mills were entered in the Central Excise Record on payment of duty, the processed fabrics dispatched in the name of M/s/Bharath Printing Mills - material facts and evidence not examined - Held that - the order of the Adjudicating Commissioner shows that he has not applied his mind when he writes without going too much into the identity of M/s.Jayalakshmi Printing Mills, Erode and M/s.Bharath Printing Mills, Erode he shall try to evaluate whether the quantities of processed fabrics specified in the show cause notice were manufactured and removed without payment of duty or not , that demonstrates that he had prejudged mind to reach to his decision without testing the evidence on record. The order has been passed superficially. The Authority records status of two noticees i.e. Jayalakshmi Printing Mills and Bharath Printing Mills as partnership firms and there was proximity between the two. But, he suddenly came to the conclusion that he has no difficulty to hold that M/s. Jayalakshmi Printing Mills was engaged in illicit manufacture of processed fabrics in the premises of M/s.Bharath Printing Mills and removed that without payment of duty also. He has brushed aside the documents gathered by investigation and failed to test evidentiary value thereof. It was the duty of the Adjudicating Authority to ascertain whether there were two distinct and independent units existed and what was their liability on the basis of investigation result and evidence on record. It is necessity of law that an assessee should not be unjustly be dealt under law. There should be cogent and credible evidence in support of each material fact and decision. But that was not tested by the Commissioner. It is relevant to mention that in the SCN, the notice issuing authority noticed that M/s.Jayalakshmi Printing Mills had processed and cleared cotton fabrics to M/s.Bharath Printing Mills directly and through M/s.Senthilandavar Calendering Mills and M/s.Sri Devi Felt Calender without accounting the transactions in the statutory records and without payment of Central Excise duty. But all such facts were not tested. Therefore, the manner in which the impugned order has been passed, that calls for direction to the Adjudicating Authority to redo the adjudication examining the controversy in the SCN and considering the material facts, evidence, law and previous directions of Tribunal as well as the defence plea, granting fair opportunity of hearing to the appellant. It is made clear to him that his order should confine to the allegations in SCN without any superficial approach to pass order since the impugned order has been passed superficially wasting public time and public money. - Appeal allowed by way of remand

Summary

Issues: Allegations of duty evasion and suppression of production quantities leading to demand of duty, confiscation of goods, and imposition of penalty.

Analysis:
1. The case involved allegations against M/s. Jayalakshmi Printing Mills for evasion of Central Excise duty by dispatching processed fabrics without payment of duty, using a different identity as M/s. Bharath Printing Mills to suppress production quantities and evade duty. The investigation revealed discrepancies in production records and dispatch of fabrics without proper documentation.

2. The Tribunal's Final Orders in 2000 and 2002 resulted in readjudications, leading to the current appeal challenging the demand raised unjustly without examining all material facts. The appellant argued that if duty was demandable, it should only be from M/s. Bharath Printing Mills, not M/s. Jayalakshmi Printing Mills.

3. The Revenue opposed the appellant's contention, supporting the readjudication process. Both sides were heard, and the record was examined by the Tribunal.

4. The Adjudicating Commissioner's order was criticized for not applying his mind objectively and prejudging the case without proper evaluation of evidence. The show cause notice indicated clearances by M/s. Jayalakshmi Printing Mills to M/s. Bharath Printing Mills, suggesting separate entities engaged in manufacturing.

5. The impugned order was found to be superficial, lacking in-depth analysis. The Authority failed to properly consider the evidence gathered during the investigation and did not establish the existence of two distinct units and their respective liabilities based on the evidence.

6. The Tribunal directed the Adjudicating Authority to redo the adjudication process, emphasizing the need for a thorough examination of the controversy, material facts, evidence, and legal aspects. The Authority was instructed to provide a fair hearing to the appellant, considering all defenses and previous Tribunal directions, within a specified timeframe to avoid wastage of time and public resources.

7. Consequently, both appeals were remanded to the Adjudicating Authority for a fresh adjudication, with clear directions to ensure a comprehensive and reasoned order within a specified timeline, taking into account all relevant aspects and defense pleas.