2001 (7) TMI 229 - AT - Central Excise

Summary

Issues:
1. Violation of principles of natural justice by the Commissioner.
2. Alleged clandestine manufacture and clearance of M.S. Rods without payment of duty.
3. Imposition of penalty under Section 11AC and interest under Section 11AB of the C.E. Act, 1944.
4. Failure to grant abatement of duty from cum-duty price.
5. Appellants' financial stringency and request for waiver of duty and penalty.
6. Cross-examination rights of the appellants and reliance on statements.

Analysis:

1. Violation of principles of natural justice by the Commissioner:
The appellants raised concerns about the violation of natural justice principles by the Commissioner. They argued that certain depositions were not considered, and they were denied the opportunity to cross-examine individuals whose statements were relied upon. The Commissioner's reliance on an order passed after the notice was issued was also contested. The Appellate Tribunal found merit in these arguments and concluded that there was a violation of natural justice principles.

2. Alleged clandestine manufacture and clearance of M.S. Rods without payment of duty:
The Commissioner had imposed duty demand, penalty, and interest on the appellants for alleged clandestine manufacture and clearance of M.S. Rods without duty payment. Evidence suggested that the appellants were involved in purchasing steel ingots without proper documentation and manufacturing M.S. Rods without accounting for them, subsequently clearing them without paying duty. The Tribunal noted the Commissioner's detailed order establishing these facts.

3. Imposition of penalty under Section 11AC and interest under Section 11AB:
The Commissioner imposed penalty under Section 11AC and interest under Section 11AB of the C.E. Act, 1944. However, the appellants argued that these sections were introduced after the relevant period of the alleged clearances, making them inapplicable. The Tribunal agreed with this argument, stating that the penalty and interest could not be imposed retroactively.

4. Failure to grant abatement of duty from cum-duty price:
The appellants contended that the Commissioner did not grant abatement of duty from cum-duty price as required by law. Referring to a precedent, the Tribunal emphasized the necessity of providing abatement even for clearances made without duty payment. This failure by the Commissioner was noted as a flaw in the decision.

5. Appellants' financial stringency and request for waiver of duty and penalty:
The appellants highlighted their financial difficulties due to the closure of their unit and requested a total waiver of duty and penalty. Considering the prima facie case in favor of the appellants and the violation of natural justice, the Tribunal granted a waiver of duty, penalty, and interest, proceeding to dispose of the appeals.

6. Cross-examination rights of the appellants and reliance on statements:
The appellants raised concerns about not being allowed to cross-examine individuals whose statements were crucial to the case. The Tribunal found that this denial, along with the lack of findings on certain depositions, indicated that the Commissioner had not applied his mind properly. Consequently, the matter was remanded for de novo consideration, allowing the submission of further evidence and ensuring the appellants' right to cross-examine relevant individuals.