2023 (11) TMI 1030 - AT - Central Excise

Principles of natural justice - order passed without participation of noticee - manufacturing of goods taking place or not - plant and machinery belonging to appellant or not - premises for carrying out impugned manufacturing activity are or were in his possession or not - relevancy on statements placed - corroborative evidences or not - HELD THAT - The impugned order was passed without the participation of the noticee except to the limited extent of filing reply to the show cause notice. Undoubtedly, the appellant had been placed on notice of the dates of hearing despite which there is demonstrated non-participation by the appellant. The seizure had not been effected by the central excise officers. We also take note that, other than the statements of the appellant herein and few others, no effort had been made by the central excise authorities to link procurement of raw materials and channelizing of the finished product with the appellant herein. In the absence of such corroborative evidence, statements which may have, otherwise, supported circumstantial evidence are of no relevance. Furthermore, the statements themselves had not been subject to the test of section 9D of Central Excise Act, 1944 for deployment towards the findings in the proceedings. The evidence on which the duty liability, and penalties, have been fastened on the appellant herein, has not been established even by preponderance of probability owing to non-establishment of relevancy of statements, as set out in section 19 of Central Excise Act, 1944, the matter requires fresh appreciation - Appeal allowed by way of remand.

Summary

Issues Involved:
1. Whether the appellant was involved in the manufacture of goods.
2. Whether the appellant's premises were used for manufacturing activities.
3. Whether the appellant is liable for duty under the Central Excise Act, 1944.
4. Whether the denial of cross-examination was justified.
5. Whether the evidence used to determine duty liability was valid.

Summary:

1. Involvement in Manufacture:
The appellant contended that no goods manufactured by him were concerned in the dispute, nor were any plant and machinery belonging to him involved. Despite this, the Commissioner of Central Goods and GST, Kolhapur, imposed a duty liability of Rs. 59,60,53,224/- for the period from March 2015 to August 2015 under section 11A of the Central Excise Act, 1944, along with interest and penalties.

2. Use of Premises:
The adjudicating authority relied on Rule 17(2) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, to deem production from 1st April of the year based on electricity usage at the premises. The premises at Old Chandur Marg and Shahpur were deemed operational from 1st April 2015 and 1st April 2014, respectively, leading to the quantification of duty liability.

3. Liability for Duty:
The adjudicating authority determined the duty liability based on the number of packing machines and the highest maximum retail price printed on the pouches. The appellant's premises were found to be operational from March 2013, as evidenced by electricity bills, and the duty was calculated accordingly.

4. Denial of Cross-Examination:
The appellant's request for cross-examination of witnesses, including Food Safety officers and police officers, was denied by the adjudicating authority. The authority cited case laws and concluded that no specific reasons were provided by the appellant to justify the need for cross-examination.

5. Validity of Evidence:
The adjudicating authority relied on the appellant's statements and corroborative evidence such as panchnamas, bank information, and electricity bills to establish clandestine manufacture and clearance of gutkha. The appellant's non-cooperation and delay tactics were noted, and the adjudication proceeded ex parte.

Conclusion:
The Tribunal found that the impugned order was passed without adequate participation from the appellant and that the requests for cross-examination were summarily denied without justification. The central excise officers did not conduct their investigation, and the evidence relied upon was not corroborated. The Tribunal expressed concern over the central excise authorities' approach towards prohibited goods and set aside the impugned order, allowing the appeal by way of remand for fresh appreciation of the evidence.

Order Pronounced:
The order was pronounced in the open court on 22/11/2023.