2017 (11) TMI 1102 - HC - Central Excise

Clandestine removal - conversion of hot rolled Aluminium Strips/Coils into cold rolled aluminium coils - manufacture or not? - Held that - the Tribunal has to consider afresh on facts first and then on the law which has been cited by both the sides. In that view of the matter, in view of judgments cited by both the sides, we remit back the matters to the Tribunal - Endeavour is made by the counsel for the assessee that no point or substantial question was raised in the appeal. In our considered opinion, Tribunal is to consider the points raised in these appeals. In these matters of taxation we should not go into technalities where Tribunal has not followed the law - matter is remanded to the Tribunal for decision abroad - appeal allowed by way of remand.

Issues Involved:

1. Extent of burden required to be discharged by the Department to establish clandestine removal of goods.
2. Admissibility of statements recorded under Section 14 of the Central Excise Act as evidence of clandestine removal of goods without cross-examination of witnesses.

Issue-wise Detailed Analysis:

1. Extent of Burden Required to Establish Clandestine Removal of Goods:

The court examined the extent of burden required to be discharged by the Department to prove clandestine removal of goods by the respondents. The Tribunal had previously allowed the appeal of the assessee without reversing the findings of the Commissioner (Excise), who had concluded that the conversion of hot rolled Aluminium Strips/Coils into cold rolled aluminium coils amounted to manufacture under Section 2(f) of the Central Excise Act, 1944, attracting Central Excise duty. The Commissioner’s order emphasized that the process resulted in a new product with a distinct character and use, thus qualifying as manufacture. The Tribunal’s failure to address these findings was deemed a significant oversight.

2. Admissibility of Statements Under Section 14 of the Central Excise Act:

The court also addressed whether statements recorded under Section 14 of the Central Excise Act constituted admissions of clandestine removal of goods and whether such statements should be disregarded in the absence of cross-examination. The Commissioner had relied on various statements from employees and corroborative evidence, such as follow-up reports from buyers and transport details, to establish clandestine removal. However, the Tribunal did not provide specific findings on these aspects and simply set aside the Commissioner’s order without detailed reasoning.

Reconsideration by the Tribunal:

The court found that the Tribunal had committed an error by not reversing the specific findings of the Commissioner and not addressing the substantial questions of law framed during the admission of the appeals. The Tribunal was directed to reconsider the matter afresh, taking into account the facts and legal precedents cited by both parties. The Tribunal was instructed to evaluate the evidence and legal arguments thoroughly, including the admissibility of statements under Section 14 and the burden of proof required to establish clandestine removal.

Conclusion:

The appeals were remitted back to the Tribunal for a fresh decision, with instructions to consider the Commissioner’s findings and the relevant legal precedents. Both parties were directed to appear before the Tribunal on a specified date. The court emphasized the need for the Tribunal to address the points raised in the appeals and to consider the benefit of relevant circulars and prevailing law. The appeals were disposed of with these directions.

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