2023 (8) TMI 1315 - AT - Central Excise

Valuation - adopting a lesser price than the price at which similar goods were sold by the said consignment agents on that date and place of removal during the period 01.07.1997 to 31.03.2001 - place of removal - price declaration as required under Rule 173C of erstwhile Central Excise Rules, 1944 - HELD THAT - The show cause notice is dated 25.07.2002. It is not disputed that the appellant had filed price declaration as required under Rule 173C of Central Excise Rules, 1944. However, the department noticed some price variation for certain invoices in regard to clearance of goods to consignment agents for which the demand has been issued - It is seen that due to non-availability of certain invoices the department has adopted the nearest comparable price. The appellant has been in continuous litigation against the demand of duty. It has been their consistent view that the quantification of demand is incorrect and they have discharged the duty as applicable during the material time. It is also their contention that they have been requesting the department to furnish documents relied upon by the department for quantification of the duty. Undisputedly, the original documents have been taken by the department during the investigation. It is seen that the direction of the Tribunal has not been complied by the department. The appellant had filed RTI application and in the reply dated 17.01.2018, the department has stated that the documents are not readily available. However, the de novo order has been passed by the adjudicating authority on 29.05.2018 - It cannot be understood how the department has been able to pass the de novo order without perusing the relied upon documents if the documents were not available. In case, the documents were available, the same ought to have been supplied to the appellant before passing the order. In the personal hearing dated 08.05.2018, the counsel appearing for the appellant has stated before the adjudicating authority that appellant has not received the required documents to put forward their defence with regard to the error in the quantification by the department. There is nothing to conclude that the documents (especially final sale invoices) were not taken away by department. In fact it is expressly stated in the SCN that documents were taken by the department. The appellant has been consistently contending that they have paid Rs.18,81,1515/-. Commissioner (Appeals) in the earlier round of litigation after perusal of available records accepted this contention of the appellant and ordered for appropriation of Rs.18,81,515/- and so also reduced the penalty to Rs.7,91,568/- holding that the balance differential duty payable by the appellant would be only Rs.7,91,568/-. Taking all these aspects into consideration we do find that there is some confusion with regard to the quantification of the duty. If the Department had obtained original records of the appellant at the time of inspection / investigation, these records ought to have been returned to the appellant after retaining the photo copy. It is forthcoming from records that appellant has not been able to sufficiently put forward their defence due to non-supply of relied upon documents. This is indeed violation of principles of natural justice. The impugned order is modified - the duty demand to the tune of Rs.18,81,515/- is upheld and the balance is set aside - the penalties imposed are entirely set aside - Appeal allowed in part.

Summary

Issues Involved:
1. Calculation error and differential duty.
2. Supply of relied upon documents.
3. Invocation of extended period and imposition of penalties.
4. Compliance with Tribunal's directions and principles of natural justice.

Summary:

1. Calculation Error and Differential Duty:
The appellant contended that there was a calculation error in the differential duty, which should be Rs.17,07,752/- instead of Rs.26,73,083/-. They claimed to have already paid Rs.18,81,515/-. The Commissioner (Appeals) initially reduced the penalty, acknowledging the payment but upheld the duty demand. In de novo adjudication, the original authority reaffirmed the higher demand and imposed equal penalties, disregarding the appellant's claim of prior payment.

2. Supply of Relied Upon Documents:
The appellant argued that they were not provided with the documents relied upon by the department to compute the duty demand. Despite multiple requests and Tribunal directions, the department failed to supply the complete set of documents. The Tribunal noted that the department's failure to provide these documents hindered the appellant's ability to defend their case, leading to a violation of natural justice.

3. Invocation of Extended Period and Imposition of Penalties:
The show cause notice was issued on 25.07.2002 for the period 01.07.1997 to 31.03.2001, invoking the extended period for differential duty demand. The appellant argued that there was no suppression of facts as they had already paid a significant portion of the duty before the issuance of the notice. The Tribunal found inconsistencies in the quantification of the duty and noted that the appellant's prior payment should have been considered.

4. Compliance with Tribunal's Directions and Principles of Natural Justice:
The Tribunal had previously remanded the case, directing the department to allow the appellant to peruse the documents. The department's non-compliance with these directions and the appellant's inability to access the necessary documents were highlighted as significant procedural lapses. The Tribunal emphasized that the burden of proof lies with the department to substantiate the allegations in the show cause notice.

Conclusion:
The Tribunal concluded that the duty demand should be reduced to Rs.18,81,515/-, which the appellant had already paid before the issuance of the show cause notice. The penalties imposed were entirely set aside, and the appeal was disposed of on these terms, highlighting the department's failure to adhere to principles of natural justice and the Tribunal's directions.