1992 (9) TMI 185 - Commissioner - Central Excise

Summary

Issues:
1. Admissibility of modvat credit on aluminium ingots.
2. Validity of impugned order confirming demand.
3. Application of principles of natural justice in the adjudication proceedings.

Analysis:
1. The appellant, engaged in manufacturing Ferro aluminium, availed modvat credit on aluminium purchased from the open market. The Department alleged that deemed credit of Rs. 1,42,572.25 was wrongly taken as the aluminium ingots were non-duty paid. The Assistant Collector issued a show cause notice under Section 11A read with Rule 57-1 of the Central Excise Rules, which led to the impugned order confirming the demand.

2. During the hearing, the appellant's advocate raised concerns regarding the basis of the Assistant Collector's conclusion, particularly highlighting that the quantity of aluminium ingots in question was significantly less than what was considered in the order. The advocate argued a violation of natural justice as the letter from M/s. Vardhman Enterprises, crucial to the decision, was not disclosed in the show cause notice or provided to the appellant for a response.

3. The Judge found merit in the appellant's arguments, emphasizing the importance of disclosing all relevant documents to the assessee during adjudication proceedings. The failure to provide the letter from M/s. Vardhman Enterprises and the unilateral reliance on it by the Assistant Collector were deemed as violations of natural justice. Consequently, the impugned order was set aside, and the case remanded for a fresh examination with directions to ensure full disclosure of all materials to the appellant and an opportunity for a fair hearing.

In conclusion, the appeal succeeded on the grounds of principles of natural justice, leading to the allowance of the appeal by way of remand for a fresh examination by the Assistant Collector. The Judge refrained from delving into the merits of the case due to the procedural irregularities identified.