1998 (6) TMI 129 - AT - Central Excise

Summary

Issues: Violation of principles of natural justice, classification of goods under Central Excise Tariff, waiver of pre-deposit and stay of recovery.

In this case, the appellant sought waiver of pre-deposit and stay of recovery following an Order-in-Appeal that disposed of two Order-in-Originals passed by the Assistant Commissioner of Central Excise, Bangalore, involving an amount of Rs. 64,62,480/-. The dispute arose from the classification of goods manufactured by the appellant, with the department contending the item as a sewing thread under Heading 5401.20, while the appellant argued for classification under Heading 5403.41, claiming exemption under Notification No. 35/95-C.E. The Assistant Commissioner relied on test results without providing a copy to the appellant, leading to a violation of principles of natural justice. The Commissioner upheld this decision, further aggravating the issue of procedural fairness.

The appellant contended that they had a strong prima facie case on both the merits of the classification and the exemption claimed. They argued that the test reports were crucial evidence, yet they were not provided with copies to contest the findings effectively. The Commissioner's reliance on another test result not disclosed to the appellant further exacerbated the procedural irregularities. The appellant challenged the correctness of the test results, emphasizing the violation of principles of natural justice at both stages of the proceedings. They requested a re-test of the disputed results, highlighting the unfairness of relying on evidence from a separate proceeding.

The Tribunal, upon careful consideration, acknowledged the appellant's strong prima facie case regarding the violation of principles of natural justice. Consequently, the Tribunal granted waiver of pre-deposit, stayed the recovery, and decided to dispose of the appeals itself in accordance with the law. The Tribunal noted that the reliance on undisclosed test results without providing the appellant an opportunity to contest them constituted a clear violation of natural justice. Therefore, the impugned orders were set aside, and the matter was remanded to the Assistant Commissioner for a fresh consideration. The appellant was directed to be furnished with a copy of the test result, allowing them to challenge it with sufficient evidence and ensuring a fair opportunity for a hearing. Ultimately, both appeals were allowed by remanding the matter to the original authority for a proper reevaluation.