2018 (7) TMI 155 - AT - Central Excise

Principles of Natural Justice - it is the contention of appellant that materials collected on verification ordered after conclusion of personal hearing has been used to their detriment without placing them on notice. The invoices for eleven months supplied by the appellant had been extrapolated for the entire period of demand and that too with a mere assertion - Held that - The adjudicating authority has failed to discharge its responsibility of ascertaining the tax liability the special privilege of daily discharge of tax liability arising out of the specific peculiarities in the manufacturing process and sanctified by instructions/circulars of Central Board of Excise and Customs indicates the intention to deviate from the normal practice of duty liability - It is in this context that the decisions cited supra must be seen and the principles laid down therein should have been complied with by the adjudicating authority. The failure to afford adjustments of excess against short fall is attributable to insufficient assistance in the adjudication proceedings. Therefore the adjudicating authority must be given an opportunity to conform to judicial decisions. The adjudicating authority is directed to evaluate the submissions made by the appellants and the applicability of the cited judicial pronouncement to determine the liability if any afresh - appeal allowed by way of remand.

Issues Involved:
1. Violation of principles of natural justice.
2. Discrepancies in duty payments and reconciliation.
3. Extrapolation of invoices and presumption of duty evasion.
4. Quantification of duty liability based on transaction value.
5. Adjustment of excess duty paid against shortfalls.

Issue-wise Detailed Analysis:

1. Violation of Principles of Natural Justice:
The appellants contended that the materials collected post-personal hearing were used against them without prior notice, violating principles of natural justice. The Tribunal agreed that the adjudicating authority failed to notify the appellants about these materials, which were detrimental to their case.

2. Discrepancies in Duty Payments and Reconciliation:
The appellants, a steel manufacturer, were allowed to discharge central excise duties through consolidated debits. Discrepancies were found during an audit for the period from January 1994 to February 1998, leading to a demand of ?45,91,24,705.26. The Commissioner confirmed a demand of ?34,62,23,989.89 but dropped ?11,29,00,715.87. The Tribunal noted that the adjudicating authority did not properly reconcile the clearances, which could have shown excess payments in some cases.

3. Extrapolation of Invoices and Presumption of Duty Evasion:
The adjudicating authority extrapolated data from eleven months of invoices to the entire period, presuming duty evasion. The appellants argued that this method was factually incorrect and that duty was paid for the thirty invoices in question. The Tribunal found this extrapolation arbitrary and unsupported by evidence.

4. Quantification of Duty Liability Based on Transaction Value:
The Tribunal referenced the decision in Thumbay Holdings Pvt Ltd., which emphasized that duty should be quantified based on transaction value for each removal, not on arbitrary averages. The Tribunal agreed that the adjudicating authority should have ascertained the transaction value for each removal to determine the duty liability accurately.

5. Adjustment of Excess Duty Paid Against Shortfalls:
The appellants argued that excess payments should offset shortfalls, citing the Tribunal's decision in Rashtriya Ispat Nigam Ltd. The Tribunal noted that the adjudicating authority failed to consider this adjustment, which was necessary for accurate duty determination. The Tribunal found that the adjudicating authority did not follow the Board's circular allowing such adjustments.

Conclusion:
The Tribunal set aside the impugned order, directing the adjudicating authority to reassess the duty liability by evaluating the appellants' submissions and applying the cited judicial pronouncements. The appeals were allowed by way of remand, enabling the adjudicating authority to rectify the identified issues and conform to judicial decisions.

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