2018 (4) TMI 949 - AT - Central Excise

Clandestine removal - allegation based on certain statements of third party i.e. Transporter and CHA - Held that - The director of appellant-company has categorically denied the receipt of unaccounted imported scrap. In this circumstances the adjudicating authority should have considered the submissions made by the appellant when the Director of the appellant company has denied and given contrary statements to statements given by the transporter and CHA - Appeals disposed of by way of remand to the adjudicating authority.

Summary

Issues: Alleged clandestine removal of goods, imposition of excise duty and penalties, appeal against order-in-original, consideration of statements by third parties, principles of natural justice.

In this case, the appellant was engaged in the manufacture of Aluminium profiles from Aluminium scrap. The department alleged that imported Aluminium scrap, consigned to other parties, was actually delivered to the appellant's factory. This led to the assumption that the final product was manufactured clandestinely. As a result, excise duty and penalties were imposed, with a specific penalty on the director of the appellant company. The appellant appealed the order-in-original, arguing that the entire demand was based on the alleged receipt of Aluminium scrap and that there was no evidence of clandestine manufacture and clearance. The appellant pointed out discrepancies in the statements obtained from third parties and requested a remand similar to a previous case involving Rajdhani Refinery Pvt. Ltd. The Revenue reiterated the findings of the impugned order.

Upon careful consideration, the Member (Judicial) found that the department's allegation of clandestine manufacture and clearance lacked evidence regarding the actual production and clearance of the final product. The director of the appellant company denied receiving unaccounted imported scrap, contradicting the statements of the transporter and CHA. The Member emphasized that the adjudicating authority should have considered the appellant's submissions, especially when there were conflicting statements. It was noted that cross-examination of witnesses should have been conducted before relying on their statements, in line with the principles of natural justice. Consequently, the matter was remanded to the adjudicating authority for a reasoned order, emphasizing the need to consider all submissions and comply with natural justice principles. All issues were kept open, and the appeals were disposed of through remand.

Overall, the judgment highlighted the importance of considering all evidence, addressing discrepancies in statements, and upholding principles of natural justice in adjudicating matters of alleged clandestine removal and imposition of duties and penalties.