2009 (8) TMI 546 - AT - Central Excise

Adjudication- Natural Justice- M/s. Subhnen Decor Pvt. Limited is engaged in the manufacture of Pre-laminated Board of various sizes and thickness falling under Chapter 44 and Decorative Laminate Sheets falling under Chapter 48 of Central Excise Tariff Act, 1985, under the Brand Name URO . Officers of Directorate General of Central Excise Intelligence conducted search operations of factory, office, residence premises of their dealers. Proceedings were initiated against the manufacturing unit alleging under valuation of their products and consequently proposing to confirm the differential demand of duty along with imposition of penalties upon various persons. One of the dealers who are cross-examined, deposing that his statement recorded under pressure and disallowing his signature thereon. Statement of dealers who deposed in favour of assessee, discarded on ground that they were not relied on. Held that- this was impermissible as revenue could not pick evidence in their favour and ignore those in favour of assessee. Matter remanded for cross examination of dealers whose statement was relied on by revenue. It was more so as neither incriminating documents nor unaccounted cash was recovered from assessee.

Summary

Issues: Allegation of under-valuation of products leading to demand of duty and penalties; Violation of principles of natural justice in passing the impugned order.

In this case, the manufacturing unit was accused of under-valuing Pre-laminated Board and Decorative Laminate Sheets, leading to initiation of proceedings for confirming the differential demand of duty and imposing penalties. The Revenue's case was primarily based on price lists recovered from dealers' premises and statements of some dealers. The appellant contended that the Revenue selectively relied on statements favoring them, ignoring those supporting the appellant. The appellant argued that all collected material should be disclosed, and cross-examination of witnesses should be allowed. The adjudicating authority permitted cross-examination of one dealer, whose statement was later retracted, leading to the revelation that the prices were subject to discounts offered to customers. The Tribunal found merit in the appellant's argument, emphasizing the importance of fair trial and cross-examination to uphold principles of natural justice.

The Tribunal noted that the Revenue's case heavily relied on retracted statements and price lists from dealers, which were subject to discounts, impacting the valuation of goods. It was highlighted that the statements supporting the appellant's case were disregarded, indicating a biased approach by the Revenue. Moreover, no incriminating documents or unaccounted cash were found at the appellant's premises. The Tribunal stressed the necessity of offering all deponents for cross-examination to ensure a fair adjudication process. Consequently, the impugned order was set aside, and the matter was remanded to the Commissioner for fresh adjudication, emphasizing the observance of natural justice principles, including the right to cross-examine witnesses and present the appellant's perspective.

In conclusion, the Tribunal overturned the impugned order due to the violation of natural justice principles and directed a reevaluation of the case by the Commissioner. The decision highlighted the importance of fairness in adjudication processes, ensuring all evidence is considered, and witnesses are available for cross-examination to uphold the rights of the appellant.