2018 (8) TMI 1003 - AT - Central Excise

Enhancement of penalty u/s 11AC - cross-examination of witnesses - stentering process amounting to manufacture or not? - Held that - The appellant first time raised the issue regarding examination of the witnesses whose statements were relied upon by the adjudicating authority. Since this issue has not been considered at all by any of the lower authorities, the matter needs to be sent back on this aspect to the adjudicating authority on the issue whether the stentering process is amount to manufacture or otherwise - appeal allowed by way of remand.

Summary

Issues:
1. Appeal against order seeking enhancement of penalty under section 11AC.
2. Challenge to duty amount, interest, and penalty.
3. Use of statements as evidence without proper examination.
4. Whether stentering process amounts to manufacture.
5. Discrepancy in the computation of fabric quantity.
6. Reliance on buyers' statements for quantity confirmation.

Analysis:
1. The appeals were filed against an order seeking enhancement of penalty under section 11AC, which was reduced by the Commissioner (A). The appellant challenged the duty amount, interest, and remaining penalty. The case involved a Show Cause Notice proposing recovery of Central Excise duty on fabrics cleared without proper duty documents. The adjudicating authority confirmed the duty demand, interest, and imposed penalties. The appellant and the Revenue both filed appeals against the order.

2. The appellant's counsel raised concerns about the reliance on statements of various persons during the investigation without proper examination as per Central Excise Rules. The counsel argued that the stentering process alone does not amount to manufacture, and there were discrepancies in the computation of fabric quantity. The appellant's counsel cited several judgments to support their arguments. The Tribunal found merit in these submissions and decided to remand the matter to the adjudicating authority for a fresh order, keeping all issues open.

3. The Tribunal acknowledged that the issue of examining witnesses whose statements were relied upon had not been considered by the lower authorities. Therefore, the matter needed to be sent back to the adjudicating authority for proper consideration. Additionally, the Tribunal directed the adjudicating authority to determine whether the stentering process constituted manufacture and to review the various judgments cited by the appellant's counsel.

4. In conclusion, the Tribunal set aside the impugned order and remanded the case for further proceedings. The decision was pronounced in court on 25/07/2018.