2001 (11) TMI 134 - AT - Central Excise

Summary

Issues Involved:
1. Demand of Central Excise Duty
2. Imposition of Penalty
3. Allegation of Manufacturing and Clearing Photocopiers without Payment of Duty
4. Applicability of SSI Exemption Notification
5. Validity of Statements and Cross-Examination
6. Violation of Principles of Natural Justice

Summary of Judgment:

1. Demand of Central Excise Duty:
The Commissioner of Central Excise, Chennai, confirmed demands totaling Rs. 25,67,710 from four companies u/r 9(2) read with proviso to Section 11A(1) for manufacturing and clearing photocopiers without payment of duty.

2. Imposition of Penalty:
Penalties were imposed on the companies and an individual, Shri K.A. Shabu, under Rule 173Q and Rule 209A respectively, amounting to Rs. 30,67,710.

3. Allegation of Manufacturing and Clearing Photocopiers without Payment of Duty:
The main allegation was that the appellants imported photocopier components, assembled them into photocopiers under the brand name 'Canon', and cleared them without paying duty. The Commissioner held that the assembly of these components amounted to manufacture u/s 2(f) of the Act and was liable to duty under heading 90.09.

4. Applicability of SSI Exemption Notification:
The SSI Exemption Notification No. 175/86-C.E. and 1/93 was deemed inapplicable as the brand name 'Canon' belonged to a person not eligible for the exemption.

5. Validity of Statements and Cross-Examination:
The appellants contended that the statements from various persons were not reliable as some did not turn up for cross-examination, and those who did, stated they purchased second-hand machines. The Commissioner rejected these contentions, noting that retractions were made almost two years later, questioning their integrity.

6. Violation of Principles of Natural Justice:
The Tribunal found that the Commissioner had violated principles of natural justice by verifying invoices behind the appellants' back and relying on this evidence without giving them an opportunity to counter it. This procedural lapse necessitated setting aside the order and remanding the case for de novo consideration.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter for de novo consideration, emphasizing the need for proper examination of evidence, adherence to principles of natural justice, and consideration of the appellants' contentions regarding the nature of the goods and the applicability of SSI exemption.