2014 (11) TMI 867 - AT - Central Excise

Clandestine removal of goods - Benefit of Notification No. 214/86-C.E., dated 1-3-1986 - committee appointed by the adjudicating authority to verify the transactions in respect of the dispatches made by the Bhandup unit and the receipts at Nasik unit - Held that - Committee constituted for verification of the transactions consisted of four members; however, the report dated 21-10-2003 submitted by the committee is signed only by one person, which is rather unusual. Further we observe that the said report is signed by the Superintendent (Adjudication) whose role is to assist the adjudicating authority in the conduct of adjudication proceedings. The verification should have been done by some other officer(s) who is not associated with the adjudication process so as to impart an element of neutrality and impartiality. Be that as it may, we further observe that a copy of the verification report was not furnished to the investigating agency for their comments/rebuttal. As per the settled principles of adjudication as also the guidelines prescribed in the adjudication manual, when any new fact comes up for consideration, the party likely to be adversely affected by the same should be given an opportunity to rebut the new findings/facts. Unfortunately, this has not been done in the present case. Thus there is a clear violation of the principle of natural justice and therefore, on this ground alone, the impugned order is liable to be set aside - Matter remanded back - Decided in favour of Revenue.

Summary

Issues:
- Duty demand dropped by the adjudicating authority against the appellant M/s. Ceat Ltd., Bhandup, Mumbai.
- Allegation of duty short paid of &8377; 29,38,81,063/- along with interest and penal action proposed.
- Verification discrepancies between the quantity dispatched by Bhandup unit and received at Nasik unit.
- Violation of principles of natural justice in the verification process.
- Discrepancies in the quantity of DNTF transferred to Nasik unit.
- Arguments by Revenue regarding duty demand sustainability.
- Opposing contentions by the respondent assessee.
- Legal precedents cited by both parties.
- Consideration of verification report and evidences.
- Conclusion and remand decision by the Appellate Tribunal.

Analysis:

The case involves a duty demand dropped by the adjudicating authority against M/s. Ceat Ltd., Bhandup, Mumbai, amounting to &8377; 29,38,81,063/-, which was challenged by the Revenue. The dispute arose from discrepancies in the quantity of dipped nylon tyrecord fabric (DNTF) dispatched by the Bhandup unit to the Nasik unit without payment of duty. The Revenue contended that even after adjustments for computational errors, there remained an unexplained difference in the quantity of DNTF, justifying the duty demand. However, the respondent assessee argued that all dispatches were duly recorded and movements were documented, emphasizing the differences in recording parameters between transfer advices and statutory registers.

The Appellate Tribunal noted violations of natural justice in the verification process, where the investigating agency was not given an opportunity to rebut the findings of the verification committee. The Tribunal highlighted the need for neutrality and impartiality in such verifications and emphasized the importance of allowing parties to respond to new facts. The Tribunal found the verification report lacking in completeness and fairness, leading to a clear violation of natural justice principles, warranting the setting aside of the impugned order.

In its decision, the Tribunal allowed the appeal by way of remand, directing the matter to be sent back to the adjudicating authority for a fresh adjudication. The Tribunal instructed that both the investigating agency and the respondent assessee should be provided with the verification report and all relevant documents for further examination and submissions. The adjudicating authority was directed to complete the de novo adjudication proceedings within three months, considering the discrepancies and allowing for a fair opportunity for all parties to present their case.

Overall, the Tribunal's decision focused on upholding principles of natural justice, ensuring fairness in the verification process, and providing an opportunity for all parties to address the discrepancies in the case before reaching a final decision on the duty demand issue.