2017 (9) TMI 1185 - HC - Central Excise

Clandestine manufacture and removal - no evidentary value - it has been claimed that entire demand is based on mere assumptions and presumptions without a concrete proof to substantiate the same - Held that - issues raised before CESTAT, Madras have not been properly adverted, as required - reliance placed in the case of H.V.P.N.L. Versus Mahavir 2000 (9) TMI 1063 - SUPREME COURT , where it was held that the appellate forum is bound to refer to the pleadings of the case, submissions of the counsel, necessary points for consideration, discuss the evidence, and then to dispose of the matter by giving valid reasons - matter is remitted to the CESTAT, with a direction to consider the pleadings, grounds of appeal raised and pass orders, in accordance with law - appeal allowed by way of remand.

Summary

Issues:
Challenge to Final Order of CESTAT regarding duty imposition, penalty, and interest on cotton yarn manufacturing; Allegations of clandestine removal of goods based on Broker's Commission file; Adjudication disregarding rebuttal evidence; Rejection of appeal by Commissioner (Appeals) and CESTAT; Substantial legal questions raised in Civil Miscellaneous Appeal.

Analysis:
The appeal challenges a Final Order by CESTAT concerning duty, penalty, and interest on cotton yarn manufacturing. The case originated from an inspection in 1998 where a Broker's Commission file was found in the factory premises. A show cause notice was issued in 2000, demanding duty, penalty, and interest. The appellant refuted the allegations with evidence, questioning the evidentiary value of statements. However, the adjudicating authority imposed duty, interest, and penalty without proper appreciation of the case's merits.

The appellant appealed to the Commissioner (Appeals) and then to CESTAT, both of which upheld the lower authority's decision. The Civil Miscellaneous Appeal raised substantial legal questions, including the evidentiary value of private records like the Broker's Commission file, the permissibility of abatement of duty, and the rejection of appeal grounds by CESTAT without due consideration.

During the hearing, the appellant's counsel argued that the demand was based on assumptions without concrete proof of clandestine removal. The respondent's counsel acknowledged that the issues before CESTAT were not adequately addressed. Citing relevant Supreme Court decisions, the judgment emphasized the necessity for appellate forums to consider pleadings, submissions, evidence, and provide valid reasons for their decisions.

In light of the above considerations and legal principles, the High Court set aside the Final Order and remitted the matter to CESTAT for reevaluation. The Court directed CESTAT to consider the pleadings and appeal grounds thoroughly and make a decision within four weeks from the date of the order. Ultimately, the Civil Miscellaneous Appeal was allowed based on the facts and circumstances of the case.