1999 (1) TMI 312 - AT - Central Excise

Issues Involved:
1. Misdeclaration of yarn type and duty evasion.
2. Procedural fairness and principles of natural justice.
3. Validity of evidence and additional documents.
4. Confiscation and penalty imposition.

Detailed Analysis:

1. Misdeclaration of Yarn Type and Duty Evasion:
The appeal arises from an order confirming the duty on DHCR yarn cleared as DHPR yarn, with the appellant accused of habitual misdeclaration from 1984 onwards. The Collector confirmed the duty amounting to Rs. 36,961.20 for the period from 5-3-1987 to 24-4-1987 and Rs. 7,26,096.39 for the period from 1984 to 4-3-1987. The appellants claimed the misdeclaration was a clerical error, but the Collector found the evidence sufficient to sustain the charge of systematic misrepresentation, leading to duty evasion. The Collector noted that the recording of DHCR yarn as DHPR yarn in statutory and private registers proved the charge, thus sustaining the demand for Rs. 36,961.20.

2. Procedural Fairness and Principles of Natural Justice:
The appellants argued that the Collector relied on evidence obtained behind their back, violating principles of natural justice. The Collector referred to technical books and informal discussions with officials, which were not disclosed to the appellants. This reliance on undisclosed material was deemed a violation of natural justice, necessitating the setting aside of the impugned order and remanding the matter for de novo consideration.

3. Validity of Evidence and Additional Documents:
The appellants presented additional evidence, including letters from various mills and expert opinions, to counter the Collector's findings. The Tribunal allowed the submission of these documents, emphasizing the need for a fair opportunity to rebut the Collector's conclusions. The Tribunal noted that the Collector's findings were influenced by his personal investigation, which was not part of the show cause notice, thus justifying the acceptance of additional evidence for a fair reassessment.

4. Confiscation and Penalty Imposition:
The Collector ordered the confiscation of 16,633 kgs of 31s SF DHCR yarn, valued at Rs. 6,32,054, with a redemption fine of Rs. 1,25,000. The Tribunal upheld this order, finding that the recording of the yarn as plain yarn was deliberate and not a clerical error. However, the combined penalty imposed by the Collector was to be re-determined during the de novo consideration. The Tribunal directed the Collector to reassess the duty liability and penalty based on the re-evaluated evidence.

Conclusion:
The Tribunal set aside the impugned order, except for the confiscation and redemption fine, and remanded the matter for de novo consideration. The Collector was instructed to reassess the case within four months, considering the additional evidence and ensuring procedural fairness. The appellants were expected to cooperate in the expedited proceedings.

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