1992 (2) TMI 217 - AT - Central Excise

Issues Involved:
1. Limitation period for the demand of duty.
2. Evidence of clandestine removal of metal containers.
3. Non-supply of relevant documents to the appellants.
4. Adherence to principles of natural justice.

Issue-wise Detailed Analysis:

1. Limitation Period for the Demand of Duty:
The appellants contended that the demand is barred by limitation and that the extended period is not applicable to the facts of this case. The Show Cause notice was issued after a period of six months. The impugned order did not explain how the extended period was applicable. The relevant portion of the impugned order stated: "In this case 1,32,634 pcs. of metal containers were manufactured by the said assessee and removed by them under nil duty G.P. 1 under Rule 173H without accounting for them in R.G.-1 register and without paying the Central Excise Duty amounting to Rs. 1,29,572.23 N.P. and the same is recoverable from them under Rule 9(2) of the Central Excise Rules read with Section 11A of the Central Excises and Salt Act, 1944." The order did not show how there was clandestine removal with intent to evade duty, nor did it discuss the point raised by the appellants regarding the absence of such allegations in the Show Cause notice.

2. Evidence of Clandestine Removal of Metal Containers:
The department alleged that the appellants had clandestinely removed 1,32,634 pieces of assorted size metal containers without paying the required duty. The order stated: "I, therefore, hold that the goods returned by the customers could not be repaired and that those were replaced by the new containers manufactured by them and delivered under Nil duty G.P.-l in the guise of repaired goods without properly accounting for them in relevant Central Excise records and without paying the appropriate Central Excise duty leviable thereon." However, the order did not provide a detailed discussion on the evidence supporting this conclusion, making it a non-speaking order.

3. Non-Supply of Relevant Documents to the Appellants:
The appellants argued that they were not supplied with all the documents relied upon by the department, which prejudiced their ability to defend themselves. Specifically, two letters from M/s. Hindustan Lever Ltd. were referred to in the Show Cause notice but were not made available to the appellants. The learned S.D.R. admitted that these letters were not available in the department's file. The non-supply of these documents was significant as the appellants claimed that these letters would strengthen their case that the materials in question could be repaired.

4. Adherence to Principles of Natural Justice:
The impugned order was found to have violated principles of natural justice. It did not adequately discuss the contentions of the appellants or provide reasons for rejecting their arguments. The Supreme Court in Siemens Engg. and Mfg. Co. v. Union of India emphasized that every quasi-judicial order must be supported by reasons and that administrative authorities must accord fair and proper hearings to affected persons and give clear and explicit reasons in support of their orders. The non-supply of crucial documents and the lack of a reasoned order meant that the appellants did not have a real and effective opportunity to meet the case against them.

Conclusion:
The appeal was allowed by way of remand. The adjudicating authority was directed to supply the two documents referred to above to the appellants, grant a personal hearing, consider all arguments raised by the appellants, and thereafter pass a speaking order in light of the observations made.

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