2019 (4) TMI 1339 - AT - Central Excise

Clandestine manufacture and removal - denial of cross-examination - Section 9D (i) of the Central Excise Act - corroborative evidences or not - HELD THAT - It is apparent from the record that the appellant has indeed indulged in trading activity from their office at Patna. The ld. Adjudicating authority has failed to take cognisance of this corroborative evidence to support the claim by the appellant that they have indulged in the trading activity on which there was no justification of raising the demand, considering that the appellant has indulged in clandestine manufactured goods. It is also on record that the adjudicating authority has not allowed cross examination of the investigating officer, who has prepared the investigation report against the assessee on the basis of resumed documents from their factory and office premises. The allegation of clandestine manufacture and clearance of the goods is serious charge as required to be substantiated by the corroborative evidence, which has not been done in this case. The clandestine manufacturing and clearance of the goods is required to be proved by the various other supporting evidence as clandestine manufacture thereof and sale thereof. No such investigation has been conducted by the investigating officer. In absence of such detailed investigation demand is not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of remand order from Hon'ble CESTAT
2. Liability to Central Excise duty on trading activity
3. Failure to consider evidence of trading activity
4. Denial of cross-examination of investigating officer
5. Allegations of clandestine manufacture and clearance
6. Imposition of penalty and interest

Analysis:

Interpretation of Remand Order:
The appeal was filed against the Order-in-Original, with the Hon'ble CESTAT directing the adjudicating authority to pass an appropriate order in a previous proceeding. The remand order emphasized considering the trading activity plea while deciding the case afresh.

Liability to Central Excise Duty:
The appellant engaged in manufacturing MS ingots and trading activities, arguing no Central Excise duty liability for trading conducted from the office, not the factory. The appellant's appeal contested allegations of clandestine removal without payment of duty, emphasizing no liability due to the nature of trading activities.

Failure to Consider Evidence:
The appellant's advocate highlighted that the adjudicating authority failed to consider evidence submitted, including records of trading activities, sales tax returns, and financial statements. The authority's disregard for corroborative evidence supporting the trading claim was a key contention.

Denial of Cross-Examination:
The adjudicating authority's refusal to allow cross-examination of the investigating officer was challenged, citing contravention of Central Excise Rule 9D(i). The denial was deemed impermissible under relevant legal provisions.

Allegations of Clandestine Activities:
Serious allegations of clandestine manufacture and clearance were raised, requiring substantiation with corroborative evidence. The absence of detailed investigation and supporting evidence rendered the demand unsustainable, as per legal precedents and principles.

Imposition of Penalty and Interest:
The appellant argued against the justification for imposing penalties and interest, asserting no cause for such actions. The imposition of penalties on individuals was also contested based on the lack of substantiated claims.

The Tribunal, in the second round of litigation, set aside the impugned order, citing the need to end the proceedings. Relying on legal precedents and the maxim of public interest in concluding litigation, the appeals were allowed with consequential relief, emphasizing the need for closure in the legal process.