2016 (12) TMI 844 - AT - Central Excise

Valuation - suppression of value/undervaluation - clandestine removal - manufacturing and trading of photocopier machines / parts thereof - This is a second round of litigation. In the earlier round of litigation, this Tribunal has remanded the matter back to the adjudicating authority - Held that - On going through the remand order of this Tribunal dated 23.8.1999, we find that there was clear cut directions to the adjudicating authority that cross examination of the witnesses is required for proper adjudication and the other evidence which has been relied upon by the Revenue for the charge of clandestine removal and under-valuation are not sustainable. But the adjudicating authority has considered those evidence which has been discarded by this Tribunal in the earlier round of litigation. Further 11 witnesses has not turned up for cross examination, therefore the statements of these 11 witnesses cannot be made the basis to prove charge against the appellant. Moreover, the witness Shri Ashok Kumar who has been examined, has also deposed in favor of the appellant. In that circumstances, in the absence of any positive evidence against the appellant for clandestine removal and under-valuation, the charges are not sustainable. In that view, we hold that proceedings against the appellant have no legs to stand and therefore, same are set aside - appeal allowed - decided in favor of appellant.

Issues:
1. Remand proceedings in a case involving undervaluation and clandestine removal of goods.
2. Consideration of evidence and witness statements in adjudication.
3. Cross-examination requirement for proper adjudication.
4. Impugned order confirmation and imposition of penalties.

Issue 1: Remand proceedings in a case involving undervaluation and clandestine removal of goods

In this case, the appellants were engaged in manufacturing and trading of photocopier machines/parts, facing allegations of undervaluation and clandestine removal of goods. The Tribunal had previously remanded the matter back for denovo adjudication due to certain observations. The adjudicating authority confirmed the demand against the appellants along with interest and penalties, which was challenged by the appellants in the present appeal.

Issue 2: Consideration of evidence and witness statements in adjudication

During the remand proceedings, the Tribunal had directed that cross-examination of witnesses was necessary for proper adjudication. However, out of 12 witnesses, only one was cross-examined, and that witness deposed in favor of the appellant. The adjudicating authority relied on statements of witnesses who did not appear for cross-examination, which was against the Tribunal's directions from the earlier round of litigation. The Tribunal found that the charges of clandestine removal and undervaluation were not sustainable due to the lack of positive evidence against the appellant.

Issue 3: Cross-examination requirement for proper adjudication

The Tribunal emphasized the importance of cross-examination for a fair adjudication process. It noted that the adjudicating authority had not considered the replies of the appellants and had denied the right to cross-examine customers on valuation issues. The Tribunal found that the evidence on record was not adequate to support the higher valuation made by the department. Therefore, it deemed the case fit for remand to allow for proper cross-examination and consideration of all relevant evidence.

Issue 4: Impugned order confirmation and imposition of penalties

The impugned order confirming the demand and imposing penalties was challenged by the appellant, arguing that the order had no merits and should be set aside. The appellant contended that the statements of witnesses who were not cross-examined should not form the basis of the demand. The Tribunal, after considering the submissions and the earlier remand order, held that the proceedings against the appellant had no basis and set them aside, allowing the appeals with consequential relief.

In conclusion, the Tribunal found that the adjudication order was vitiated by the non-consideration of replies and the lack of proper cross-examination of witnesses. The charges against the appellant were deemed unsustainable due to the absence of positive evidence, leading to the setting aside of the proceedings and the allowance of the appeals.

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