1997 (4) TMI 253 - AT - Central Excise

Jurisdiction - Natural justice - Cross examination - Demand - Clandestine manufacture and removal

Issues Involved:
1. Jurisdiction of the Principal Collector and the adjudicating authority.
2. Validity and reliability of evidence, including heat registers and statements of witnesses.
3. Allegations of clandestine production and removal of goods.
4. Calculation of duty demand based on electricity consumption and other records.
5. Right to cross-examine witnesses.
6. Compliance with procedural requirements and jurisdictional authority.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Principal Collector and the Adjudicating Authority:
The appellants argued that the Principal Collector did not have quasi-judicial powers to issue a show-cause notice and that the adjudicating authority, Shri S. Kak, lacked jurisdiction. The Tribunal held that during the material period, the Principal Collector was exercising the powers of a Collector, as defined under Rule 2(viiia) of the Central Excise Rules. The Principal Collector was senior to the Collector and could exercise the powers of a Collector. Therefore, the show-cause notice was within the jurisdiction of the Principal Collector of Central Excise, North Zone, Delhi. Furthermore, Shri S. Kak was appointed as Collector w.e.f. 1-8-1990, and thus had the jurisdiction to adjudicate the case on 22-10-1992.

2. Validity and Reliability of Evidence:
The appellants contended that the heat registers were not reliable as they were not produced for cross-examination and were not explicitly labeled as heat registers. The Tribunal found that the registers were recovered from the appellants' premises and were maintained by Shri S.P. Gupta, who explained the entries. The Tribunal noted that non-production of Shri S.P. Gupta for cross-examination did not vitiate the proceedings as his statements were confined to explaining the entries in the registers, which were self-contained documents.

3. Allegations of Clandestine Production and Removal of Goods:
The Tribunal examined the statements of various individuals, including Shri V.K. Lila, who admitted to sending ingots to different rolling mills for conversion into flats and selling them in the market. The Tribunal found that the appellants' records revealed significant discrepancies between the actual production and the recorded production. The statements of Shri O.P. Gupta and Shri B.N. Paul corroborated the findings of clandestine production and removal of goods. The Tribunal concluded that the department had established the case beyond reasonable doubt, supported by the consumption of electricity and procurement of raw materials not shown in the statutory records.

4. Calculation of Duty Demand Based on Electricity Consumption and Other Records:
The appellants argued that the department's calculation of duty demand based on electricity consumption was incorrect. The Tribunal noted that technical literature showed that 650 units of electricity were required for producing one ton of ingots and castings in an induction furnace. The consumption of electricity and the number of heats recorded in the registers supported the department's calculations. The Tribunal found that the department had provided reasonable proof of the production quantities and the corresponding duty demand.

5. Right to Cross-Examine Witnesses:
The appellants contended that the statements of witnesses, including Shri B.N. Paul, S.K. Sharma, and R.K. Sharma, could not be relied upon as they were not produced for cross-examination. The Tribunal found that the statements of these witnesses were explanations of the entries in the records and that Shri O.P. Gupta, who was produced for cross-examination, confirmed his earlier statements. The Tribunal held that non-production of certain witnesses for cross-examination did not vitiate the proceedings as the evidence on record was sufficient to support the allegations.

6. Compliance with Procedural Requirements and Jurisdictional Authority:
The appellants argued that the show-cause notice and the impugned order were without jurisdiction and that the Principal Collector did not have the authority to issue the notice. The Tribunal held that the Principal Collector had the jurisdiction to issue the show-cause notice and that Shri S. Kak had the authority to adjudicate the case. The Tribunal found no legal infirmity in the order and upheld the findings of the adjudicating authority.

Conclusion:
The Tribunal upheld the impugned order, confirming the demand of Rs. 23,92,805.50 and the penalties imposed on the appellants. The appeal was rejected, and the department's case was found to be adequately supported by evidence and legal reasoning.

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