2001 (1) TMI 426 - AT - Central Excise

Summary

Issues:
Revenue's appeal against dropping of proceedings by Collector of Central Excise based on use of power in manufacturing tarpaulins and canvas cloth.

Analysis:
The appeal was filed by the Revenue against the dropping of proceedings by the Collector of Central Excise against the respondents. The respondents were engaged in manufacturing excisable goods, specifically tarpaulins and canvas cloth. The issue arose when it was discovered that the respondents were using power in the manufacturing process, contrary to the conditions of the exemption notifications. The Excise Officers found evidence of power being used during a surprise visit to the factory premises. Statements from various individuals, including partners, employees, and contractors, confirmed the use of electric motors in the manufacturing process. The duty demand was raised, and goods were seized, leading to a show cause notice and subsequent proceedings. The respondents denied the use of power in their reply to the show cause notice. However, the Collector of Central Excise dropped the proceedings, prompting the Revenue to appeal the decision.

During the appeal, the Revenue argued that there was substantial evidence, including statements from individuals involved in the manufacturing process, proving the use of power by the respondents. On the other hand, the respondents' counsel contended that there was no evidence connecting the seized goods with the use of power during the manufacturing process. The Tribunal reviewed the evidence, which clearly indicated the use of electric motors in the manufacturing of tarpaulins. Despite this evidence, the Collector failed to consider the statements and material evidence properly. The Tribunal found that the Collector's decision resulted in a miscarriage of justice as the evidence clearly pointed to the use of power in manufacturing, rendering the respondents ineligible for duty exemption.

Ultimately, the Tribunal set aside the Collector's order and remanded the matter back to the adjudicating authority for a fresh decision in accordance with the law. The Tribunal emphasized the importance of considering all evidence and providing both parties with a fair opportunity to present their case. The appeal of the Revenue was allowed by way of remand, highlighting the need for a thorough reevaluation of the case based on the evidence presented.