2000 (11) TMI 562 - AT - Central Excise

Summary

Issues:
1. Duty demand and penalty imposed by the Collector of Central Excise on a partnership concern for processing cotton fabrics without payment of duty.
2. Denial of cross-examination of witnesses and defense submissions leading to violation of principles of natural justice.

Analysis:

1. Duty Demand and Penalty:
The appeals arose from two separate orders passed by the Collector of Central Excise, Coimbatore, confirming duty demands and penalties on a partnership concern, M/s. Lakshmi Processing Mills. In the first appeal (E/480/94), duty demand of Rs. 1,94,580/- was confirmed under Rule 9(2) of the C.E. Rules, read with Section 11A of the Central Excise Rules, 1944. The Collector also imposed a penalty of Rs. 20,000/- on the appellants. The second appeal (E/481/94) was against a duty demand of Rs. 87,547/- and a penalty of Rs. 10,000/- imposed by the Collector. The duty demands were based on the processing of cotton fabrics and terry towels without payment of duty, as observed during visits to various premises associated with the appellants. The Collector confirmed the duty demands and penalties under relevant rules, ordering confiscation of seized goods and imposing fines. The defense challenged these orders, citing lack of cross-examination and denial of natural justice.

2. Violation of Principles of Natural Justice:
The defense argued that the denial of cross-examination of witnesses, including Shri A.A. Rangaswamy and the detecting officers, had prejudiced their case. The defense submissions, including a detailed chart prepared from seized diaries, were not adequately considered by the Collector in the orders. The Tribunal found that the reliance on the diaries by both the Revenue and the defense was not properly addressed in the Collector's orders, indicating a violation of natural justice. Additionally, the denial of cross-examination and the lack of detailed consideration of defense evidence led the Tribunal to conclude that the orders were flawed and required re-adjudication. The Tribunal directed the Collector to re-consider the request for cross-examination, allow a personal hearing for the appellants, and provide a reasoned speaking order after considering all defense materials. Consequently, the appeals were allowed for remand for de novo adjudication to ensure justice and adherence to principles of natural justice.

In conclusion, the judgment highlighted the duty demands and penalties imposed on a partnership concern for processing cotton fabrics without payment of duty, along with the violation of principles of natural justice due to the denial of cross-examination and inadequate consideration of defense evidence. The Tribunal emphasized the need for a fair re-adjudication process to address the deficiencies in the Collector's orders and ensure a just outcome.