2016 (11) TMI 686 - AT - Central Excise

Refund - principles of unjust enrichment - seeking audit report and details of information collected during special audit u/s 14A - Valuation - aerated waters falling under chapter 22 of CETA 1985 - assessable value not acceptable to Department - Held that - the appellant has indeed not been given a fair opportunity to adequately counter the findings in the cost audit report and the basis of such findings therein - It is very much in the realm of possibility that had the appellant been given full details of report/document regarding cost audit report he could have presented his defence accordingly. In the fitness of things we therefore order that appellant should be given a copy of the cost audit report and all relied upon material/documents and be given an opportunity for both written and oral submissions following which denovo finalization/proceedings should be done by original authority - appeal allowed by way of remand.

Summary

Issues:
1. Finalization of provisional assessments
2. Denial of opportunity to defend the case due to lack of access to cost audit report
3. Compliance with statutory provisions regarding special audit under Section 14A of Central Excise Act, 1944
4. Fairness in providing audit report and relied upon documents to the appellant
5. Necessity for appellant to have full details of the cost audit report for presenting a defense
6. Decision on appeals and remand to the original authority

Finalization of Provisional Assessments:
The appellants, manufacturers of aerated waters, faced provisional assessments due to the department's rejection of the assessable value adopted by them. The finalization of provisional assessments resulted in a computed total differential duty and excess duty paid, leading to appeals against these decisions. The Commissioner (Appeals) rejected the appeals, prompting further legal action.

Denial of Opportunity to Defend the Case:
During the hearing, the appellant's counsel highlighted that the appellant was not provided with the cost audit report before the issuance of the show cause notice. This lack of access deprived the appellant of the opportunity to defend their case adequately. The report was only furnished after the adjudication hearing upon request, raising concerns about procedural fairness.

Compliance with Statutory Provisions - Section 14A of Central Excise Act:
The judgment delves into Section 14A of the Central Excise Act, 1944, which outlines the procedure for special audit in certain cases. The provision empowers Central Excise Officers to direct manufacturers to undergo a cost audit by a nominated accountant. The statute ensures that manufacturers have the right to access materials gathered during the audit for use in proceedings.

Fairness in Providing Audit Report:
The judgment emphasizes the necessity of providing the appellant with a copy of the cost audit report and all relied-upon materials before or at the stage of issuing a show cause notice. Failure to do so hampers the appellant's ability to counter the findings effectively and violates the legal requirement for a fair opportunity to present a defense.

Necessity for Full Details of Cost Audit Report:
The court finds that the appellant's lack of access to the complete cost audit report and related documents hindered their defense presentation. Granting the appellant access to these details would have enabled a more robust defense strategy, potentially altering the outcome of the appeals against the differential duty and refund entitlement.

Decision on Appeals and Remand:
Ultimately, the appeals are allowed by way of remand to the original authority. The court orders that the appellant should receive a copy of the cost audit report and all relied-upon materials to facilitate both written and oral submissions. Following this, denovo finalization of proceedings should be conducted by the original authority, ensuring a fair opportunity for the appellant to present their case effectively.