2015 (4) TMI 775 - AT - Central Excise

Clandestine removal of goods - Denial of cross examination request - principle of ejusdem genris and harmonious construction - arbitrarily rejection of the report of Institute of Paper Technology - Held that - In this case charge of clandestine removal has been alleged against the appellants on the basis of certain records and statements of some persons relied upon were not allowed to be cross examined remained unproved. Moreover, report of the Institute of Paper Technology to determine the production capacity by the appellant was rejected by the adjudicating authority on the premise that the said report could not be applied to past period. The adjudicating authority is not an expert to determine the production capacity but an expert from the Institute of Paper Technology examined the production capacity of the appellant and after inspection of the factory of the appellants and collecting necessary data for production capacity, the expert determined the production capacity for working plant during the period 1996-97 and 1997-98. Therefore, without tangible evidence or without being obtaining expert s opinion on the issue the said report determining the production capacity cannot be rejected by the adjudicating authority. Moreover, machine log sheets were specifically directed by the Tribunal to examine in depth but the adjudicating authority rejected those machine log sheets on the ground that the same are manipulated and afterthought. In these circumstances, I hold that the adjudicating authority has not considered any defence taken by the appellant in remand proceedings. But pass the order by confirming the demand against the appellants and imposition of penalty in mechanical manner. - Impugne order is set aside - Decided in favour of assessee.

Summary

Issues:
- Confirmation of demand of duty against M/s.Kawatra Papers Ltd.
- Confiscation of building, plant, machinery, and paper
- Imposition of penalties on involved parties
- Allegations of clandestine removal of paper
- Rejection of cross-examination and reliance on statements
- Rejection of Institute of Paper Technology report
- Examination of machine log sheets
- Violation of principles of natural justice
- Criteria for confirming clandestine removal charge
- Rejection of production capacity determination
- Consideration of defense in remand proceedings
- Imposition of penalty without proper consideration

Detailed Analysis:

1. Confirmation of Demand: The appellate tribunal dealt with the confirmation of a duty demand against M/s.Kawatra Papers Ltd., along with the confiscation of assets and imposition of penalties on involved parties.

2. Allegations of Clandestine Removal: The case involved allegations of clandestine removal of paper by M/s.Kawatra Papers Ltd. to M/s.Himgiri Paper Enterprises Pvt.Ltd. during a specific period, supported by various documents and statements.

3. Rejection of Cross-Examination: The tribunal found the rejection of cross-examination by the adjudicating authority as a violation of natural justice, emphasizing the importance of allowing the appellant to cross-examine witnesses.

4. Rejection of Reports: The rejection of the Institute of Paper Technology report and the manipulation of machine log sheets were key points of contention in the judgment.

5. Criteria for Clandestine Removal: The tribunal outlined specific criteria for confirming charges of clandestine removal, emphasizing the need for tangible evidence and proper procedures.

6. Consideration of Defense: The adjudicating authority was criticized for not adequately considering the defense presented by the appellant in the remand proceedings, leading to a mechanical confirmation of demands and penalties.

7. Conclusion: Ultimately, the tribunal set aside the impugned order, allowing the appeals and providing consequential relief, highlighting the importance of following due process and considering all relevant evidence in such cases.

This detailed analysis of the judgment showcases the complex legal issues involved, including procedural fairness, evidentiary standards, and the criteria for establishing charges of clandestine activities in excise matters.